Broker ownership rules stir market
 
Shares rallied yesterday on both of the nation's stock exchanges, although trading remained sluggish.

On the Ha Noi Stock Exchange, the HNX-Index added 0.6 per cent over the previous day's close to end yesterday's session at 70.09 points. The value of trades was essentially unchanged from Wednesday, standing at VND360.6 billion (US$17.1 million) on a volume of some 39.6 million shares. Of nearly 400 listed stocks, over 160 codes advanced while 70 posted declines.

The HNX30 Index, tracking the northern bourse's leading shares by capitalisation and liquidity, rose by over 1 per cent to reach 133.49 points.

VNDirect Securities Co (VND) was the most-active share with 4 million shares changing hands. It increased 3.8 per cent yesterday.

On the HCM City Stock Exchange, the VN-Index edged up by 0.46 per cent to 414.80 points, as advancers outnumbered decliners by 154-75.

The value of trades amounted to just over half of the previous day's level, reaching only VND415.7 billion ($19.7 million). Volume also fell 29.2 per cent to just 30.8 million shares.

Nineteen of the 30 shares tracked by the VN30 Index posted gains, while three others tumbled, allowing the index to climb to 490.78 points, an increase of 0.5 per cent.

Investment group Tan Tao (ITA) was the most-active share in HCM City with around three million exchanged. ITA gained 1.5 per cent to close at VND6,900 per share.

Shares of securities companies witnessed more intensive increases yesterday, with brokerages such as Bao Viet Securities (BVS), Vietnam Investment Securities (IVS), Saigon Securities Inc (SSI), Agribank Securities (AGR) and Sai Gon – Ha Noi (SHS) all closing up by 1.6-4.8 per cent.

"Besides the profits these companies have made, the expected regulation to allow foreign investors to wholly own domestic brokerages has helped boost these shares," Kim Eng Securities Co analysts noted.

Despite a recent uptrend, investors remained cautious after the long market decline, they said, noting that a new downturn driven by weakening global markets could ultimately erase gains made earlier in the year.

Market traders cease trading due to slow sales

Many traders at both wholesale and traditional markets in Hanoi have stopped trading due to slow sales.

Prices of food and vegetables in many local markets have dropped against late June, but stalls continue to attract few customers.

Nguyen Thi Hau, a seller at Dich Vong wholesale market in Cau Giay District said, “Pork prices have fallen VND5,000 per kilo, but I’m still facing slow sales. These days, I’m buying half the amount of pork I did previously.”

The situation is the same at other traditional markets. Bui Thi Hien, a vegetable seller at Buoi Market in Ba Dinh Market, complained that the number of customers she has served has been on the decline. She sometimes has had to shoulder losses due to her stock going off.

Representatives from the management board of Phung Khoang and Dich Vong markets said that overall sales had decreased by around 30%.

Prices of vegetables have dropped VND500-1,000 per kilo. Egg prices have also tending to decline, to around VND200-300 each.

Other stalls such as footwear, clothes and household appliances have also faced a similar situation. At peak hours, customers can drive their bicycles or motorbikes around the often empty markets. Sellers gather to gossip, watch TV or read newspapers.

Van, a footwear seller, at Nghia Tan Market in Cau Giay District, moaned, “only a handful of cutomers come to the market these days, sometimes it seems the market is mostly traders.”

Traders throughout markets in the capital are serving just 2-3 customers per day. Modest profits are failing to cover stall rental fees, compelling many to cease trading, she added.

Revenues of traders at Dong Xuan, Hanoi’s central wholesale market have sharply decreased, with some stall holders suffering two-third declines in revenue. Some sellers only open their stalls at weekend.

Most of the sellers said slow sales were due to tightened spending. Consumers are prioritising staples before any other purchases. Supermarkets and trade centres however have launched big promotions, attracting more customers.

Le Thi Hoa, a customer at Nghia Tan Market, shared that her family has had to simplify their meals due to limited finances.

She previously would buy the whole chicken, but now opts for a few hundred grams a meal. Salaries have only marginally increased; encouraging people to take advantage of supermarket promotions and affecting traditional markets.

Greater efforts needed to reach yearly rice export target

Although domestic rice exporters faced difficulties in the first half of this year, there is hope that Vietnam will achieve its yearly target for 7 million tones if it can export to potential markets.

Vietnam has so far earned US$1.626 billion from exporting more than 3.4 million tonnes of rice, above the set target for six months, but still 500,000 tonnes less than the same period last year, according to the Vietnam Food Association (VFA).

Businesses in Mekong Delta provinces are bustling about purchasing 500,000 tonnes of rice for temporary stockpiling in response to the national programme launched on July 10.

VFA Chairman Truong Thanh Phong cites some difficulties faced by domestic rice exporters as lower purchasing power and tougher competition from other major exporters in the world.

However, Phong argues, Vietnam could reach the yearly target by exporting high-quality rice. Over the past six months, China has imported large volumes of Vietnamese high-quality fragrant rice.

By mid-June, the number of export contracts for high quality rice had doubled from a year earlier.

VFA Vice Chairman Pham Van Bay says the export volume of average quality Vietnamese rice in the first half of 2012 dropped to 21 percent from 43 percent last year. Meanwhile, nearly three million tonnes (50 percent) of high-quality rice has been exported under the signed contracts, double last year’s figure.

In the face of fierce competition from India and Myanmar, the VFA has warned businesses to export only 20-25 percent of low-quality rice.

Vietnamese fragrant rice is much sought after in major markets with 350,000 tonnes shipped by mid-June. Yet the VFA says fragrant and high-quality rice account for only 5-7 percent of the two million tonnes of rice in stock.

For that reason, many rice exporters find it difficult to sign export contracts in advance as the supply of fragrant rice can not meet their growing demand.

The Asian, European and African markets that often import low-quality rice now want to buy high-quality fragrant rice. Vietnam’s fragrant rice is sold at US$560-600/tonne but its jasmine rice at US$620-630/ tonne while the price for Hom mali and KDM rice is up to US$800/tonne.

Most rice importers prefer Vietnam’s fragrant rice as it is US$50-100 per tonne cheaper than Thailand’s.

Deputy Minister of Industry and Trade Nguyen Thanh Bien says while focusing on their key export markets such as Indonesia, the Philippines, Africa, and China, domestic rice exporters need to penetrate the Republic of Korea (RoK), Japan and other potential markets.

The RoK has recently signed a contract to buy 300,000 tonnes of rice from Vietnam while Japan is surveying the Vietnamese market to possibly import 600,000 tonnes of high-quality rice. Taiwan and Hong Kong are also keen to import large volumes of Vietnamese rice.

Vietnam has agreed to export 1.2 million tonnes of high-quality fragrant rice to China, which is still considered a major regional market. However, the VFA has warned domestic businesses to be careful about payment methods when dealing with their Chinese counterparts.

From now until the end of this year, Vietnam needs to go ahead with its exploitation of every potential market within reach, Bien says.

VFA Chairman Truong Thanh Phong emphasizes that Vietnam needs to develop exclusive rice growing areas to meet the demand for high-quality rice from potential markets such as the RoK and Japan.

CPI continues to dip, posts 2nd consecutive fall

Vietnam’s consumer price index (CPI) in July continued to post a negative growth rate of 0.29 percent, the second drop in a row, according to the General Statistics Office of Vietnam (GSO).

With the new CPI figure, the country’s CPI rose 2.22 percent from December 2011 and 5.35 percent year on year. The respective figures of June were 2.52 percent and 6.9 percent.

This was the lowest annual inflation since November 2009.

Of the 11 groups of commodities and services used for the CPI calculation, four saw prices drop against the previous month, including food-foodstuff-catering services (-0.46 percent), housing and construction material (-0.03 percent), transport (-2.71 percent), and posts and telecoms (-0.08 percent).

Since the four aforementioned groups with a negative growth rate in prices have a weighting of about 61.54 percent in the GSO's price basket, which has been expanded to cover 573 items from 495, they pulled the whole index down.

The remaining areas, excluding medicine and medical services, saw prices edging up over June, ranging from 0.22 percent to 0.51 percent.

Medicine and medical services saw prices shoot up by 3.36 percent in July.

The CPI growth rate in seven of Vietnam’s eight economic regions turned negative, ranging from 0.19 percent to 1.06 percent. The North Eastern region alone saw a 0.95 percent rise.

Excluded from the CPI calculation, the gold price index in June decreased 0.31 percent and 7.8 percent over the previous month and December 2011, respectively.

The US dollar price index slipped 0.05 percent and 0.85 percent from December 2011 over the previous month and December 2011, respectively.

Vietnam’s consumer price index (CPI) posted minus 0.26 percent growth in June 2012, the first drop in 38 consecutive months.

Hanoi’s CPI in July continued to fall 0.29 percent from the previous month and rose 4.64 percent over the same period last year, the Hanoi Statistics Office reported.

Thus, this is the third consecutive month in 2012 the capital city’s CPI has seen a month-on-month fall, and marked the strongest decline since early this year so far. It also marked the strongest fall since 2009.

In the month, as many as eight groups of commodities posted increases in price, of which highest rise was seen in the group of garment and textile, headwear and footwear (1.09 percent), and household appliances (0.81 percent), while six remaining groups posted slight rises.

Three groups with falls in CPI helped reduce the common price index, namely restaurant and catering services (-0.21 percent) and housing, electricity, water, fuel and construction materials (-1.2 percent), while the strongest fall was for the transport group (-2.9 percent), thanks to the constant reductions of oil and gas prices recently.

Ho Chi Minh City’s consumer price index (CPI) in July continued to fall further by 0.57 percent from the previous month, the HCMC Statistics Office said. The month-on- month fall in June was 0.43 percent.

The city’s CPI in July rose 4.3 percent from last July.

Five of 11 groups of commodities and services saw a rise in price index, but the rise was negligible, of which the strongest increase was seen in the education group, with only 0.23 percent from the previous month.

On the downside, another five of 11 groups of items decreased in CPI, of which the two groups with particularly high declines contributed to the general fall of the city’s CPI, including the transport group (down 2.89 percent) and the group of housing, electricity, water and fuel (down 2.15 percent).

In comparison with December 2011, the city’s CPI in July increased by 1.47 percent.

However, it is forecasted that the month-on-month CPI will increase in the remaining months of this year as prices of electricity and healthcare services were adjusted up after producers cleared inventories and gained repayment.

In the southern province of Long An in July, prices of consumer goods were stable over the previous month, while the general index fell 0.06 percent month on month.

In southern Dong Nai Province, CPI this month July fell 0.25 percent from June and rose only 3.03 percent from December 2011.

In Da Nang, CPI in July decreased 0.21 percent month on month and rose 6.1 percent from last July.

Vietnam’s CPI is likely to rise less than 0.3 percent a month in the third quarter before picking up in the Q4/2012, according to Bao Viet Securities Co (BVSC) in its recent report to its customers.

The company also lowered its 2012 inflation forecast to 5.5-6.5 percent since “June CPI suddenly turned around”, it said.

The company viewed slowing inflation as an opportunity for the State Bank of Vietnam to hold off on aneasing policy to support growth and focus on a lower interest rate.

However, BVSC said the negative CPI growth in June can be seen as an early alarm for Vietnam to take action proactively.

“But the figure is not worrying as we can only call it deflation when CPI falls continuously for at least two quarters.”

Rubber manufacturers cornered by export duty

Many rubber manufacturers in the southern province of Tay Ninh are on the brink of shutting down their facilities as their products, latex and compound rubbers, are now subject to a 3 percent export duty.

Vietnamese-made rubber has been exported at prices US$100 – 200 a ton lower than similar products from Malaysia, Indonesia, and Thailand, according to industry players.

The average exporting price for a ton of rubber now fetches some $2,700 – 2,800 a ton, and with the 3 percent tax levied on the shipments, prices will increase by $80 a ton, which makes Vietnamese rubber less competitive than its rivals.

“Customers will thus turn their back on our products, but we will incur losses if we keep selling at the old prices,” one of the beleaguered manufacturers in Tay Ninh who wished not to be named told Tuoi Tre.

And yet all rubber makers in the southern province are in a tough spot over the export tariff concern.

The paradox is that if they cease production, customers will leave, but they will suffer losses if they continue production otherwise.

Nguyen Quang Hop, a representative for Hung Thinh Co Ltd in Tan Bien District, said the machinery worth $400,000 the company imported from Sweden in late 2011 now has to remain inactive.

The machines fail to produce even a single piece of product, said Hop.

“We will only receive losses if we sell the products at old prices to clients,” he lamented.

The company’s facility, which was invested with more than $250,000 three years ago, now functions as a warehouse as there is almost no production.

The plant used to produce five tons of latex an hour, with 50 laborers working 10 hours a day to meet demand, he recalled.

“But the 3 percent export tax forced it to shut down, and the workers had to move to another production line.”

According to circular no 145 issued by the Ministry of Finance, which took effect on December 8, 2011, the export tax levied on natural and compound rubbers would be increased from zero to 3 percent.

The duty was imposed in a bid to “encourage the domestic rubber manufacturing sector, rather than just focusing on exporting natural rubber,” the ministry reasoned.

However, the fiat was criticized by many rubber exporters, as rubber is one of the commodities that is encouraged for export by the government.

Last year saw rubber exporting prices peak at $6,000 a ton, and exporters still enjoyed profits despite the 3 percent tax, they said.

But this year, with prices falling to only $2,700 a ton, their products are now unmarketable, exporters added.

Le Ba Tho, sales executive of Tay Ninh Rubber JSC, said the company has to switch to producing other rubber products to avoid the tax, although its export staple is latex, which accounts for 70 percent of the total production.

“Latex export turnover thus dropped to only 30 – 40 percent in the first half of this year,” said Tho.

He added, however, that the new products have few markets, and the company has planned to return to latex production.

“It’s also unreasonable that only compound and latex rubbers are taxed, while there are many other rubber products,” he said.

VN, Australia boost trade in agro-forestry-seafood

A seminar on trade and investment opportunities in Vietnam ’s agro-forestry-seafood sector was held in Sydney, Australia on July 23.

The event took place during a July 20-31 working visit by Deputy Minister of Agriculture and Rural Development Diep Kinh Tan to Australia and New Zealand to promote trade and investment in the agro-forestry-seafood sector

At the seminar, Tan said that Vietnam and Australia see great potential for trade and investment cooperation in the agro-forestry-seafood sector, especially when the two sides have been realising commitments in the framework of the ASEAN-Australia-New Zealand Free Trade Area and are participating in the Trans-Pacific Partnership (TPP) Agreement.

Vietnam has carried out a number of policies providing incentives to investment in the agricultural sector, creating a more favourable environment for foreign investment, he said.

However, Tan noted a limited foreign investment flow to agriculture and rural development, with only 950 projects with a total registered capital of US$4.8 billion.

The Deputy Minister called on Australian partners to further boost trade and investment cooperation with Vietnam in the sector.

Australian businesses showed their interest in measures to strengthen cooperation with Vietnam in this field, including organising training courses and exchanging experts.

They suggested Vietnam create more favourable conditions for farmers to get better access to new technologies in agriculture and rural development.

Hanoi sees export turnover increase of 6.6 percent

Hanoi enjoyed a 6.6 percent increase in export turnover for the first seven months of this year from one year ago, reaching almost US$5.9 billion.

However, export revenues in July dropped 1.1 percent compare with the previous month to 987 million USD. The figure also represented a 0.3 percent decrease year-on-year.

Five out of 11 main export lines still managed to earn more than the level in the previous month, which are: garment and textiles, electronics, computer components and peripheral device, handicrafts, electric wire and cable.

The export turnover is forecast to see higher growth towards the end of the year.

HCM City’s trade surplus hits US$1 billion in 7 months

Ho Chi Minh City’s trade surplus in the past seven months has reached more than 1 billion, including US$0.42 billion in July, according to the municipal Department of Statistics.

Its exports in the reviewed period are down 1.1 percent to US$16.1 billion but its imports up 4.5 percent to US$15.03 billion.

In July alone, exports from the State-owned sector accounted for the highest proportion of 48.7 percent, followed by the foreign-invested sector (28.2 percent) and the non-State owned sector (more than 23.1 percent).

The non-state owned sector took the lead in terms of import value (46.7 percent), followed by the State-owned sector (26.8 percent) and the foreign-invested sector (26.5 percent).

Vinh Phuc calls for US investment

Many businesses from Japan, the Republic of Korea, China and other countries have invested in northern Vinh Phuc province but there is none from the US.

This was revealed at a forum held by the US Embassy in coordination with a working mission from Vinh Phuc province in Washington DC on July 23.

In his presentation Secretary of the Provincial Party Committee Pham Van Vong said owning to its favourable geographic position, natural conditions and abundant human resources, Vinh Phuc has maintained economic growth at more than 18 percent over the past 10 years.

However, he said, the province urgently needs more foreign investors, especially in the fields of high technology, electronics, mechanical engineering, health care, and education.

Many participants in the forum showed their keen interest in the province and proposed measures to help it attract more investors, particularly from the US.

Mexico, Vietnam trade exchange enjoys steady growth

Two-way trade between Vietnam and Mexico in the first five months of this year saw fairly strong growth, helping fortify Vietnam’s trade surplus with the second largest economy in Latin America.

The recent statistics released by the Trade Office of the Vietnamese Embassy in Mexico showed that Vietnam earned nearly US$467 million from exports to Mexico in this period, a year-on-year increase of 25 percent.

In May, Vietnam’s export turnover to the Latin American country reached US$96.3 million, up almost 12 percent over the same month last year.

Vietnam has shipped mainly traditional commodities to Mexico such as garment and textile products, seafood, footwear, printer, coffee and rubber.

In the first five months of this year, Vietnam imported US$39.8 million worth of commodities from Mexico, up 76.1 percent year-on-year.

In the context of global crisis, especially the complications of public debt in Europe, Mexico’s economy maintains positive development with GDP growth of 4.6 percent in this year’s first quarter.

The country reached over US$2.6 billion in trade surplus with foreign countries in the reviewed period.

Australia, Vietnam promote agricultural investment

A seminar to promote Vietnamese agriculture, forestry and aquatic products was held in Sydney on July 23.

The event is part of Deputy Minister of Agricultural and Rural Development Diep Kinh Tan’s working visit to Australia and New Zealand from July 20-31.

Addressing the seminar, Deputy Minister Tan noted Australia has strong advantages for producing, processing and exporting agricultural products.

Vietnam highly values the great potential for trade and investment cooperation with Australia, especially as both sides are implementing the commitments in the ASEAN-Australia and ASEAN-New Zealand Free Trade Agreements, and negotiating the Trans-Pacific Partnership agreement, he said.

The Deputy Minister confirmed that Vietnam has created preferential investment policies for agriculture to attract more foreign investment.

However, capital flow into the sector remains modest with only 950 projects registering a total of US$4.8 billion, much lower than foreign direct investment in other sectors.

Tan urged Australian businesses to boost cooperation and investment in Vietnamese agriculture, forestry and aquaculture.

Paper makers seek to avoid anti-dumping lawsuits

The Vietnam Pulp and Paper Association (VPPA) is working closely with the Vietnam Competitive Authority (VCA) to help paper exporters avoid a possible anti-dumping lawsuit from the US.

The VCA recently warned that Vietnamese paper makers might face a high risk of an anti-dumping lawsuit filed by the US.

We will meet with our businesses to deal with the case when necessary, said VPPA Secretary General Vu Ngoc Bao.

According to the Ministry of Industry and Trade (MoIT), Vietnam and Egypt are among the largest paper exporters to the US.

In 2011 Vietnam shipped nearly 125 million tonnes to the US, which is 14 million tonnes less than in 2010.

Despite a small volume, the Vietnamese paper is sold at a relatively low price of US$0.588 per unit, much less than the average price of US$0.657 per unit from other countries.

US paper producers cannot compete with foreign exporters’ prices in their domestic market and they have had to scale down their production. This means they are likely to band together and file an anti-dumping petition against Vietnamese exporters.

To try to handle the situation, the VPPA has informed domestic exporters about the current selling prices in their importing countries and has asked them not to sign orders at lower prices.

They are also urged to keep in contact with US importers to follow changes in the US paper making industry and provide the VPPA with information about foreign investment businesses, especially those from China and India, that are having anti-dumping taxes imposed on them so Vietnam can prevent them from using their investment in the country to dodge anti-dumping taxes in the US.

Confusion arises over land prices

The same old issue of land use fees will remain controversial if policymakers fail to harmonize the interests of people, businesses and the State.

Land use fees currently pose a great challenge to property developers, who stress the fee payment exceeds their tolerance and that of the market.

Site clearance compensations at market prices, together with land use fee payments, will push up property prices. Therefore, land use fees once again provoked debate at a seminar on the mechanism for land recovery, compensation, support, resettlement and land evaluation held by the HCMC Real Estate Association (HoREA) in HCMC last week.

Lawyer Nguyen Thi Cam from Dat Luat Law Firm said paying land use fees following land use purpose changes as stipulated in the prevalent regulations indicates inappropriate points. With approval of the authority, farmland can be easily converted into residential land and the State imposes fees based on the new land use purpose.

When investors receive land use rights, they have already compensated the original land users, meaning land use right transfer prices contain the cost of investment in land, said Cam.

Land use fees are now determined in accordance with land use right transfer prices, making land prices rise.

The lawyer stressed the need for a clear and transparent distinction between land prices with the original use purposes, land prices with other purposes after planning and land prices after infrastructure development. The State will collect a certain amount of profits gained from non-investment activities, with attention to the harmony of interests between land users, investors and the State

For example, the original land price is VND2 million per square meter; post-planning land price is VND5 million, and land price after infrastructure development VND8 million. The State should collect fees on the VND3-million difference, with a certain amount used to support the people whose land is recovered.

HoREA chairman Le Hoang Chau suggested if the mechanism of land use fee deduction is maintained, the entire costs of compensation and site clearance should be deducted for investors.

Speaking at the fifth meeting of the HCMC People’s Council last week, HCMC vice chairman Le Manh Ha said property prices now stay high in the city, mainly because of land prices rather than construction costs. The biggest bottleneck to social and economic growth is high land prices, he noted.

Land makes up a huge proportion in financial resources, and also accounts for 70% of all complaints. Therefore, the bottleneck in land must be removed and land policy must be revised in order to break the bottleneck.

It is currently regulated that land prices must closely follow land use right transfer prices under normal conditions and must be adjusted to fill any big gap with the land use right transfer prices in the market. However, many businesses see such a regulation infeasible.

Lawyer Cam said it is unnecessary to issue a land price quotation sheet every year as specified in Section 4, Article 56 of the 2003 Land Law. In fact, the land prices quoted by local governments are inconsistent with market prices, so they do not work in reality.

Most enterprises propose land prices should follow market prices and be kept stable for a period of five years, making it easy for businesses and residents to map out business and investment plans and for the State to collect fees and taxes.

State enterprises to restructure

Prime Minister Nguyen Tan Dung has approved a project to restructure State-owned enterprises (SOEs).

All these economic groups and corporations must end investments in non-core business lines before 2015.

The ministries and sectors must re-arrange, restructure or dissolve enterprises that are inefficient and have no way of paying their debts.

It is intended that the SOEs be given a more reasonable production and business structure, made to concentrate on their core business lines, and provide public services and products for society, defence and security.

The hope is that this will enable them to play a decisive role in regulating and stabilising the macro-economy.

The restructuring is also aimed at improving competitive ability and returns on equity.

The project aims to promptly approve plans to renovate enterprises made by ministries, sectors, provinces, cities, economic groups and SOEs themselves.

Enterprise renovation plans must be submitted to relevant offices for approval by the third quarter of this year, said the Prime Minister.

The enterprises must build plans on restructuring their financial sector so that they hold on to just their core businesses while resolving any ongoing financial problems.

Corporations and economic groups with difficulties in finance should restructure capital and assets to find capital for urgent projects, limiting losses and merging inefficient projects.

Nguyen Duc Kien, deputy chairman of the National Assembly's Economic Committee, said each corporation and economic group must withdraw capital from non-core business based on the principle of preserving their equity.

This was hard work, Kien said, because profit from non-core business was often higher than from the main business.

Tran Dinh Thien, head of the Viet Nam Economic Institute, said that to promote the restructure of SOEs, State management offices should focus on inspecting, supervising and controlling SOEs.

Nguyen Dinh Cung, deputy head of the Central Institute for Economic Management, said the State should demand transparency because the State could not properly supervise the efforts without it.

EVN forecasts big gains from divestments

Electricity of Viet Nam (EVN) expects significant capital gains when it divests from the insurance and real estate sectors in compliance with the Prime Minister's order that State-owned enterprises focus investment solely on core lines of business by 2015.

EVN deputy director Dinh Quang Tri has confirmed that the group has VND1.1 trillion (US$52.3 million) invested in insurance and real estate, as well as VND757 billion ($36 million) invested in An Binh Bank, amounting to a 20-per-cent interest in the lender.

EVN has proposed selling its stake in the bank to the Geleximco Group at a price of VND10,000 per share, Tri said.

"The stock's price on over-the-counter (OTC) market has been very low, at around VND7,000 to 7,200 per share," he noted.

EVN also holds a 22.5-per-cent stake in the Global Insurance Co (GIC), worth an estimated VND125 billion ($5.9 million). To comply with the Prime Minister's order, EVN has targeted to reduce its holdings in GIC to less than 20 per cent by 2015.

ERGO, a leading German insurance group, has expressed interest in increasing its percentage at GIC and has been in negotiations with EVN, Tri confirmed, noting that ERGO originally acquired GIC stock at VND40,000 per share and that the Ministry of Finance would have to receive approval to own more than 20 per cent of a Vietnamese insurance company.

In real estate, EVN has invested VND103 billlion ($4.9 million) in Central Real Estate Co and Sai Gon Real Estate Co. If EVN were to divest from Central Real Estate, the company would have to sell its land holdings to buy back shares, bringing a huge capital windfall to EVN, Tri said.

EVN has not found a buyer for its stake in An Binh Securities Co since the stock market has been stagnant. Tri expected a buyer would be found by 2015, as the market improved.

Bonds help firms raise capital

Enterprises with the capacity to do so should consider raising capital through bond issues, reducing their dependence on bank loans, experts say.

They say that bonds can now be seen as a safe and effective way for many enterprises to mobilise capital, particularly for long and medium-term needs, particularly at a time when it is hard to access bank loans at acceptable interest rates.

Despite several cuts effected recently in both deposit and loan interest rates, access to bank loans has not improved significantly as enterprises struggle to meet loan conditions in tough economic circumstances, and banks are wary of lending in the context of rising bad debts.

Currently, as much as 80 per cent of the capital needed by enterprises come from banks, and this reliance can reduce only if long-term capital channels are developed, the experts say.

With the capital raised through bonds, enterprises can make long-term business development plans and exert better control over interest rate risks. They can also stabilise their capital resources and build up their credibility in the financial market.

In recent years, some major enterprises, corporations and State-run economic groups have been successful in raising capital through bonds.

The latest is Viet Nam National Coal and Mineral Industries Group (Vincomin). The corporation has successfully issued VND500 billion ($24 million) worth of bonds in the domestic market, a part of its yearly plan of VND3 trillion ($143 million).

The bonds, with a five-year term and a floating interest rate, will help Vinacomin fund its coal, minerals and power generation projects.

The Viet Nam Bank for Industry and Trade (VietinBank) and the Australia and New Zealand Banking Group (ANZ) are the issuing agents for Vinacomin.

Vinacomin's bond issue is said to mark the restart of Vietnamese corporate bonds after a freeze that has lasted almost two years.

Tarez Muhmood, general director of ANZ Viet Nam, told Thoi Bao Kinh Te Viet Nam that Vinacomin's bond issue is a judicious decision to raise long and medium-term capital resources when the country's macro-economy started to see positive changes and the liquidity of dong has improved.

Le Duc Tho, deputy director of Vietinbank, also said that Vinacomin's successful bonds issue proves that investor confidence is returning.

"This is the appropriate time for investors to return to investing in bonds," Tho told the newspaper.

However, an official with a major foreign bank said that bond issuance would be successful only for enterprises with effective operations that have clear and transparent financial reports.

The bond issuers are also required to have clear capital use plans and financial statements checked by foreign and domestic auditors, he said.

To ensure success, enterprises should prepare related documents and have them ready so they can take quick advantage of opportunities when they arise, he suggested.

At a time when the world economy in general and the Vietnamese economy in particular are still facing several difficulties and risks, enterprises without sound fundamentals are likely to find it difficult to issue bonds to raise capital, he said.

Garment exporters face downturn

Textile and garment producers were struggling from a lack of export contracts and market difficulties due to the ongoing public debt crisis in the EU, said the Viet Nam Textile and Apparel Association (Vitas).

Deputy chairman of Vitas Pham Xuan Hong said that only large textile and garment exporters had received contracts for the third quarter. Many small-and medium-sized producers had been forced to narrow production due to a lack of demand.

Hong said that consumption demands in the EU had decreased sharply in past months, and export orders had fallen roughly 20-30 per cent over the same period last year.

According to the General Statistics Office, the industry growth rate was only 8.7 per cent in the first half of the year, much lower than the rising rate of 30 per cent last year.

If the situation continued, textile and garment producers would be forced to make workers redundant, and roughly 20 per cent of them would lose their jobs, Vitas said.

Hong said besides the reduction in export orders, local textile and garment producers, especially smaller enterprises, had also faced major challenges to meet with stricter regulations on quality and social responsibility required by European markets.

To meet the regulations, producers would have to pay higher input costs which would make it difficult to price their products competitively, Hong said.

Vietnamese textile and garment exporters are also having to compete with fierce competition from China, Cambodia, Bangladesh and Myanmar. Together with Cambodia and Bangladesh, Myanmar's textile and garment exports to the EU will soon enjoy tax exemption.

The devaluation of the euro against the US dollar has also reduced profits for Vietnamese exporters who have to pay for imported raw materials from mainland China, Thailand and Taiwan in US dollars while receiving payment from European customers in euros.

VC Corp to help bank develop e-pay portal

Viet Nam Communications (VC Corp) said it had teamed up with the Bank for Investment and Development of Viet Nam (BIDV) to develop an e-payment portal.

The portal, called SohaPay, will help BIDV's credit card customers to pay for online purchases with links to SohaPay such as muachung.vn, enbac.com and rongbay.com.

The company, which has already partnered up with Techcombank on SohaPay, said it had attracted 500,000 frequent users to the portal.

"With BIDV and Techcombank, in the next 2-3 years, we plan to have 10 million people using SohaPay," said VC Corp deputy director Nguyen The Tan.

Tan said e-commerce in Viet Nam had developed rapidly over the past few years with about one-third of the business community earning part of their incomes from online trading, accounting for some 15 per cent of their total revenue.

However, with e-payment platforms still in their infancy, online purchases remained modest, he said.

Meanwhile, BIDV's deputy general director Tran Xuan Hoang said the co-operation would also help the bank to attract VC Corp customers to its banking services. "It will also be a step forward in our plan to become the country's leading retail bank by 2015," Hoang added.

Based in Ha Noi, VC Corp manages 90 websites, ranging from e-commerce and e-payments, to online newspapers, solutions and services.

Etihad to fly HCM City route

Etihad Airways has announced plans to begin daily direct flights between HCM City and UAE in October next year.

The Abu Dhabi-based airline said the service to HCM City is meant to meet the growing demand from Viet Nam's rapidly expanding economy and would support the country's increasing commercial ties with the United Arab Emirates, especially Abu Dhabi.

It will be Etihad's sixth destination in the region where it also flies to Bangkok, Jakarta, Kuala Lumpur, Manila and Singapore.

Robert Bosch may up investment

Robert Bosch Viet Nam Co is considering a plan to up its total investment capital to US$322 million in its factory at Long Thanh Industrial Zone in the southern Dong Nai Province, an addition of $63 million.

This is the Germany-based Bosch Group's first investment in Viet Nam. It is the production facility for push-belts used in gearboxes with continuously variable transmission.

The additional investment will help the factory raise total productity to 4.3 million products a year from 3.2 million products.-

Construction begins on flour mill

Construction of a US$47.4 million wheat flour mill project developed by VFM-Wilmar in the northeastern province of Quang Ninh began last week.

The Singapore-backed project in the Cai Lan Industrial Zone will have a production capacity of 500 tonnes of wheat flour per day. It is expected to go into production within 18 months.

Canon eyes $500m market share

Japan's leading camera manufacturer Canon aims to have the highest market share in Viet Nam in SLR (single-lens reflex)and compact digital cameras and jet-ink and laser printers by 2016, a Canon Asia official has announced.

The company also aims for more than US$500 million revenue in Viet Nam by that time, Hideki Ozawa, president of Canon Asia Marketing Group has said.

At a press conference yesterday, Ozawa said the company was forming Canon Marketing Viet Nam Co Limited in the country to import and distribute as well as offer sales and services.-

Foreigners to clarify credit plans

The State Bank of Viet Nam yesterday issued a document to request foreign credit institutions and banks in Viet Nam to send reports on their credit products and programmes to the central bank before August 2.

The move is part of Resolution No13 NQ/CP, issued by the Government on May 10, this year. The resolution is aimed at finding solutions for struggling enterprises while supporting the market.

Credit products and programmes undertaken from now to the end of this year will help deal with the obstacles facing businesses.

The reports must provide comprehensive details of products and campaigns; their duration; applied subjects; participation conditions; total outstanding loans for the programmes; and interest rates.

City to get underground terminal

A 45,000 sq.m underground structural cluster including a terminal for metro systems and a trade center will be built underneath Le Loi Street and the Ben Thanh Market Square in HCM City's District 1.

The project, jointly set up by the city's Municipal Management Authority for Urban Railway (MAUR) and the Japan International Cooperation Agency (JICA), promises to create a new face for the southern economic hub.

Le Khac Huynh, deputy director of MAUR, said the cluster would start operations in 2017, at the same time as the Metro Line 1 and Line 2.

The terminal, built 40m underground, will consist of two parts: three storeys for four metro systems – the first floor for Line 1 and 3A, the second for Line 2, and the third for Line 4. These will be surrounded by retail shops.

A trade centre covering 25,500sq.m will be located underground along Le Loi Street.

Besides taking full advantage of underground space, the trade cente aimed to provide comfortable services for metro passengers, Huynh said.

He said profits earned from the center would be used to cover investment costs of the metro lines.

"This model has been applied successfully in many countries worldwide, including Japan," Huynh said.

According to MAUR, total cost for the cluster could reach US$900 million, $429 million of which will be for the terminal and $479 million for the trade centre.

After the project is approved by the Government, the city will call for investment from private investors and proceed with procedures to obtain loans from Japan's ODA fund.

Construction will be split into several phases. The terminal for Metro Line 1 and Line 2 will be built in Phase 1. The surrounding shops and terminals for other metro lines will be completed in Phase 2. The underground space for the trade centre, which will stand above the Metro Line 1, will be prepared first. The centre will be built when sufficient funds are available.

The construction will have a major impact on existing underground structures. However, MAUR said the city People's Committee will directly provide "proper" instructions on the relocation of underground systems, including electricity, water, and telecommunication infrastructure.

Work on Metro Line 1, running from Ben Thanh Market (District 1) to the Suoi Tien Area (District 9), is scheduled to begin on August 28. It will have 14 terminals, three of them underground.

Besides the Metro Line 1, the city plans six metro lines. These are: the 20-km Line 2 from Thu Thiem Pennisula (District 2) to the Tay Ninh Bus Station (District 12); the 23-km Line 3A and Line 3B from Ben Thanh Market (District 1) to Tan Kien and from Cong Hoa Crossroads (Tan Binh District) to Hiep Binh Phuc (Thu Duc District); the 24-km Line 4 from Nguyen Van Linh to Ben Cat Bridge (District 12); the 17-km Line 5 from Sai Gon Bridge (Dist 2) to Can Giuoc Bus Station (District 8); and the 6-km Line 6 from Ba Queo (Tan Binh District) to Phu Lam (District 6).

Vegetable growers profit from good practices

Applying good agricultural practices (VietGap) to vegetable farming has improved the lives of the members of HCM City's Phuoc An Cooperative, according to its chairman.

Tran Van Thich said the application of VietGap has helped cut costs while improving vegetable quality.

The co-operative's profits shot up from VND210.3 million (US$10,080) in 2009 to nearly VND325 million last year, he said, expecting it to reach VND500 million this year.

Workers' salaries have doubled to VND3 million now, he added.

The co-operative and its members had faced many difficulties at the time of switching to the new standard because it was quite different from their traditional practices, he said.

Nguyen Thi Le Hoa, a city official from an agency that oversees safe vegetable production, said the task required close monitoring in the form of maintaining detailed records of soil treatment, water sources, use of fertilisers and pesticides, the time of harvest, processing and transport, making it hard on farmers.

Speaking at a meeting in HCM City last Friday to review a pilot project on using good production practices in vegetable farming at Phuoc An and another co-operative, Tan Trung, she said her agency has been working hard to help farmers maintain detailed records since 2009 when the project began.

"But farmers now understand and carefully follow VietGap operating procedures, especially record keeping," she said.

Farmers joining the pilot project were not only instructed in production techniques but also taught about brand building and marketing and provided with guaranteed outlets for their vegetables.

Thich said vegetable growers' incomes used to be extremely unstable in the past due to price fluctuations.

But all of the cooperative's vegetables have assured outlets now, while the new farming techniques help cut costs, offering more profit, he said.

Hoa said many vegetable farmers have registered to apply VietGap standards after seeing the efficiency of the model.

Last week the HCM City Department of Agriculture and Rural Development certified that Phuoc An and Tan Trung Cooperatives met VietGap standards.

Hoa said the standards would be applied by more vegetable co-operatives in the coming time, including Phu Loc, Phuoc Binh, and Hung Dien Co-operatives.

Nguyen Van Duc Tien, head of the city Plant Protection Sub-department, said: "The city plans to set up retail stalls at wholesale markets such as Binh Dien and Thu Duc to provide more outlets for safe vegetables."

The pilot project is part of the food agricultural product quality development and control project funded by the Canadian International Development Agency.

Currently 182 individuals and organisations growing vegetables on 90ha have received the VietGap certificate, and supply around 11,450 tonnes of safe vegetables every year.