Transport ministry requests funds for projects 

 

The Ministry of Transport has sent related documents to the Prime Minister to ask for an advance of VND400billion (US$20 million) to implement three major traffic projects.

 

The ministry plans to use VND300 billion ($15 million) for building the Ba Ren Bridge on 1A Highway in Quang Nam Province and the Cau Chanh Bridge on 37 Highway in Hai Duong Province. The remaining fund will be used for the Huong An Bridge on 1A Highway in Quang Nam Province. The Huong An Bridge project is at the completion stage but has run out of funds to complete.

 

To date, vehicles have to use temporary bridges causing dangerous conditions during the rainy season.

 

Earlier, the ministry had proposed to the Prime Minister to advance VND1, 342 billion ($67 million) to complete certain projects that are scheduled to complete by this year.

 

Sluggish CPI in Hanoi, HCMC 

 

The General Statistics Office stated that the consumer price index (CPI) in Hanoi and Ho Chi Minh City had slowed down in May. 

 

The CPI in May had surged 2.38% compared to the previous year.

 

The highest increase continued to be seen in medicine and health services which soared by 4.25% , restaurant and food services  increased by 3.77%, electricity, water and fuel surged by 2.95% and transportation increased by 2.77%.

 

HCM City CPI rose by 16.15% year-on-year and increased by 10.86% compared to December 2010.

 

Meanwhile, Hanoi’s CPI in May increased by 1.76% over the last month and 19.08% compared to the same period last year.

 

The biggest price hike in the month was seen in housing, electricity, water, fuel and building materials with 2.99%, followed by food and restaurant services with 2.25% and transportation services with 2.23%.

 

Other categories including beverages, tobacco and home appliances saw a month-on-month increase of less than 2%.

 

Local businesses fazed by high lending interest rates 

 

Many producers said they were under heavy pressures from high lending interest rates as the government tightened the monetary policy to fight against accelerating inflation.

 

Le Quang Thung, acting chairman of the Vietnam Rubber Group, said the rubber industry was growing strongly, but local businesses in the sector were grappling with high lending rates.

 

Especially those who had to import materials from overseas were hit hardest, Thung added.

 

“For example, rubber producers winning a purchase order worth VND100 billion (US$5 million) have to pay a value-added tax of 5 percent [equal to VND5 billion]. And the tax will be refunded one year later,” he said.

 

“However, the producers will have to borrow from bank to pay the tax as they need a huge amount of capitals for the order. With the lending rate if 22 percent per annum, the businesses will have to spend an interest expense of VND1.1 billion annually.”

 

Analysts said most businesses in productive sectors were very cautious on borrowing from banks to expand businesses, while many property projects were deferred due to credit crunch.

 

Tran Thanh Tung, director of a private firm in District 5 in Ho Chi Minh City, said small companies like his firm cannot afford the current lending interest rates as their average profit margin amounts to below 10 percent only.

 

“We will hardly repay the debt, if we borrow from banks. But without loans from lenders, we will have to cope with a shortage of capitals for production. Therefore, we had to come up with a bitter decision – laying off some employees and reducing the operation.”

 

Local businesses are under heavy pressures from high lending rates, Tran Quoc Manh, vice chairman of HCMC Handicraft and Wood Industry Association, told Dau Tu Tai Chinh Newspaper.

 

“To survive the hard time, many producers have to halt the production of their traditional products and switch to ones with high return rate,” Manh said.

 

Duong Quoc Thai, general director of the Saigon Plastic Packaging JSC, said his firm had borrowed from different banks, with different interest rates ranging from 17 percent per annum to 21 percent.

 

“The profit this month was used for loan repayment and employee salary. Earlier, with the interest rate of 14 percent, local businesses could earn a profit margin of 2-3 percent or even nothing,” Thai said.

 

“We now have to find a way to improve the output and quantity via upgrading equipments and production techniques.”

 

Thai also noticed that despite the high lending rates, many businesses still kept their prices unchanged or raised slightly by 5-10 percent in an effort to keep regular customers.

 

Consumer prices rose 17.51 percent in April from a year earlier, the most in 28 months, stoked by increases in fuel and electricity prices. The country’s central bank devalued its currency by about 7 percent on Feb. 11 as it tried to curb Vietnam’s trade deficit

 

The government has tightened several rates multiple times since they started tightening monetary policy in mid-February. The government has also vowed to rein in spending to tame the highest inflation among major Asian economies.

 

Foreign banks loan $457 mln to Vietnam Airlines

 

Citibank, Development Bank of Singapore (DBS), and HSBC Monday entered a joint financing agreement under which they will lend Vietnam Airlines (VNA) $457 million for purchasing eight new airplanes.

 

The national flag carrier is expected to use the loan to buy 8 Airbus A321-231S airplanes from French aircraft maker Airbus.

 

The lending includes a $400 million loan arranged by HSBC and Citibank with the support of European credit insurers represented by France-based credit insurance firm Euler Hermes, a subsidiary of German Allianz Group.

 

The rest, funded by HSBC and DBS, is guaranteed by the Ministry of Finance.

 

Eight new aircraft, which will be handed over within this year, will enable VNA to offer more medium and long-haul domestic and international flights.

 

The carrier in 2007 and 2009 signed a contract to buy 26 new Airbus A321-231A for 2011-2014 delivery. This is part of plans to expand the fleet to 115 aircraft by 2015 and 170 by 2020.

 

"The contract will help realize Vietnam Airlines’ plans to improve and expand the fleet to enhance its performance on a global scale," said Pham Ngoc Minh, general director of VNA.

 

Sumit Dutta, CEO of HSBC Vietnam said that following the success of the financing agreement made in 2009 for the purchase of 6 ATR 500, HSBC Vietnam now continues to assist VNA’s plan to expand and become a world-class carrier.

 

More Asian sweets come to Vietnam

 

Some confectionery brands from Asian countries like Indonesia, Malaysia and Thailand have recently emerged in Vietnam supermarkets with reasonable prices and appetizing flavors.

 

While domestic confectionery manufacturers have been increasing prices, an average price of VND25-35,000 (US$1-1.5) per pack of imported sweets are an attractive alternative.

 

Only in the first quarter of 2011, confectionery firms have imported $46 million worth of confectionery and cereal products, according to the Ministry of Industry and Trade.

 

Country has 39 golf courses too many: ministry

 

The Ministry of Planning and Investment has found out 39 golf course development projects aren’t included in the national plan approved by the Prime Minister in 2009.

 

Hoang Ngoc Phong, deputy head of the ministry’s Development Strategy Institute said Monday that under the Golf Course Development Plan of Vietnam to 2020, only 90 golf courses would be built countrywide by 2020.

 

Now that there is an extra 39 projects, the ministry suggests three solutions.

 

First, the premier would propose a change of plan, fixing once and for all the number of golf courses to be built from now until 2010 (118).

 

Or the 2009 plan for 90 golf courses will stay unchanged, but the 5 projects that have been canceled for slow progress and changed investment purposes will be replaced with another 5 projects that were licensed before 2009.

 

Third, the government can add 11 more projects that meet requirements.

 

GE Oil & Gas to supply equipment to PetroVietnam

 

GE Oil & Gas Drilling & Production Technology has inked deal with Bien Dong Petroleum Operating Co, a subsidiary of Vietnam Oil and Gas Group (PetroVietnam), to supply equipment for offshore drilling.

 

The recently-signed $30 million deal has marked the largest single contract for surface wellheads and subsea trees in Vietnam by any international equipment manufacturers.

 

Under a contract, GE will provide 16 sets of high-pressure, high-temperature (HPHT) surface wellheads and subsea production trees, along with associated equipment and services, for deployment in Phase 1 of the development for blocks 05.2 and 05.3 of the Hai Thach and Moc Tinh gas fields.

 

The high-tech equipment, with the capability to operate at 350°F and 15,000 psi, is a first for Vietnam. The contract follows GE's recent agreement with Total Malaysia to supply ultra HPHT equipment (450° F and 15,000 psi).

 

"GE hopes to build on this contract award by continuing to support Vietnam's burgeoning oil and gas industry with high-tech, high-performance equipment and services from across our integrated oil and gas portfolio," Sam Aquillano, vice president of drilling & production under GE Oil & Gas said.

 

GE Oil & Gas has a local presence in Hanoi for turbomachinery equipment and services and in Ho Chi Minh City for VetcoGray subsea equipment and services.

 

It also provides advanced technology equipment and services to other high-profile projects in Vietnam, such as the BP Pipeline, Dung Quat Refinery, Phu My Refinery, Camau Fertilizer and Vietsovpetro.

 

Last year, GE signed a memorandum of understanding (MOU) with PetroVietnam, paving the way for the future supply of advanced oil and gas equipment, services and spare parts to optimize the total life-cycle value of key oil and gas projects in Vietnam.

 

The contract further affirms GE's position as a significant wellhead and subsea production tree supplier for surface HPHT and ultra HPHT equipment in Asia and follows a recent award with Total Malaysia for ultra HPHT equipment (450°F and 15,000 psi).

 

GE Oil & Gas specializes in advanced technology equipment and services for all segments of the oil and gas industry, from drilling and production, LNG, pipelines and storage to industrial power generation, refining and petrochemicals.

 

It also provides pipeline integrity solutions, including inspection and data management, and designs and manufactures wire-line and drilling measurement solutions for the oilfield services segment.

 

The US-based GE operates in more than 100 countries and employs about 300,000 people worldwide.

 

Lao Central Bank Governor welcomed in Hanoi

 

Vietnamese and Lao banks should strengthen experience exchange and investment cooperation, making practical contributions to bilateral ties as well as the development of each country.

 

Deputy Prime Minister Nguyen Sinh Hung made this statement while receiving Governor of the Central Bank of Laos (CBL) Bounsong Sommalavong in Hanoi on May 23.

 

Deputy PM Hung applauded the Lao Central Bank Governor’s visit, saying that it would help foster the relationship between the two countries, especially in the banking and securities sectors.

 

He said he wished that based on the traditional friendship, special solidarity and comprehensive cooperation between the two Parties, two States and two peoples, the two sides will facilitate their banks’ operations as well as strengthen cooperation in improving financial and stock markets.

 

“ Vietnam is ready to share experience and closely coordinate with Laos in solving difficulties, helping to bring the bilateral relations to a new level of development,” he said.

 

For his part, Governor Bounsong Sommalavong vowed to create favourable conditions for Vietnamese banks to operate in Laos.

 

He expressed his desire to continue receiving active cooperation and support from Vietnam’s banks, adding that the Lao Development Bank and the Vietnam Bank for Trade and Industry (Vietinbank) signed a cooperative agreement during the visit.

 

Supermarkets woo kids ahead of Children's Day

 

Supermarkets in Ho Chi Minh City are providing play areas for children and organizing activities for them instead of offering discounts for the upcoming International Children's Day.

 

Toy sales have been hit because of concerns over the continuing inflation and toy safety, and so they are focusing their promotions for the occasion on persuading people to bring their children to supermarkets.

 

Starting this week, Co.op Mart is also organizing painting sessions, screening cartoons, and having music shows.

 

Big C Supercenter, whose campaign began on the 11th, will have circus shows at weekends besides magic shows and drawing and karaoke sessions.

 

Central bank honors foreign banker

 

Thomas William Tobin, former CEO of HSBC Bank (Vietnam) Ltd, has just been awarded a Certificate of Merit by Vietnam's central bank.

 

Tobin was conferred the prestigious accolade by the director of the State Bank of Vietnam’s Emulation and Commendation Department Saturday for his outstanding performance and contributions to Vietnam’s banking industry from 2009 to 2010.

 

The Canadian was a member of the Banking Working Group that advises the central bank on improving the growth of the banking industry.

 

HSBC Vietnam was incorporated in 2009 and has since expanded from two branches to 16.

 

Besides promoting the nation among individual investors, HSBC Vietnam has also done road shows in the US, UK, Singapore, and Hong Kong to raise Vietnam’s profile as an investment destination.

 

Failed steel processing zone to become industrial zone

 

Prime Minister Nguyen Tan Dung has approved the conversion of the failed Ca Na Steel Processing Zone in the southern central province of Ninh Thuan to an industrial zone by 2015.

 

Earlier in February, the premier granted the request of the Ninh Thuan Province People’s Committee to close down the steel processing project since its investors had not followed some of the project’s terms.

 

The project was initiated in November 2008 by a Malaysian investor, Lion and the Vietnam Shipbuilding Industry Group (Vinashin) with a total capital investment of US$9.8 billion.

 

The project was targeted to reach capacity of 14.42 million tons of steel per year.

 

Tenova opens representative office in HCMC

 

Tenova Group, Italy’s worldwide supplier for the metal and mining industries, officially opened its representative office in Ho Chi Minh City at an inauguration ceremony held in the city Friday.

 

The ceremony was attended by Italian Ambassador Lorenzo Angeloni and Fanutti Giuliano - head of the representative office located in Saigon Trade Center.

 

The event also attracted participation of many local and international businesses from metal and mining industries.

 

Addressing at the ceremony, Mr. Lorenzo Angeloni considered Ho Chi Minh City the most promising site for Tenova to develop and expand business in Vietnam.

 

Tenova was chosen by Pomina and Thep Viet Steel Group to provide equipment to a steel factory capable of producing more than 1 million tons per year of liquid steel.

 

The factory is scheduled to be operational at the end of 2011 in Phu My Industrial Zone, near HCMC.

 

This plant will be the second to enjoy equipment from Tenova.

 

The first equipment installation was in 2007.

 

Tenova designs and supplies advanced technologies, products, and services for the metal and mining industries. The company has 33 operating companies in five continents.

 

Vietnam orders foreign lenders to curb credit growth 

 

The State Bank of Vietnam has banned foreign bank branches from setting credit growth targets of higher than 20 percent, persisting with a tight monetary policy to fight inflation.

 

According to a statement dated Friday, the central bank said most foreign branches in Vietnam have planned to keep credit growth below 20 percent and tried to cut back on lending to non-production sector. Some banks, however, have not moved to reduce their lending operations.

 

As a result, the central bank has ordered all foreign bank branches to control their lending, especially for real estate and stock market transactions. “The State Bank of Vietnam will not accept any plans by foreign financial institutions and bank branches to have credit expand by more than 20 percent this year,” the statement said.

 

Vietnam posted credit growth of more than 5 percent in the first four months of this year, which is in line with the target of keeping it at 20 percent for the year, central bank data showed.

 

The government cut the target for credit growth from the initial 23 percent as part of a series of measures to rein in inflation and restore economic stability.

 

The central bank has repeated its order to cut back on credit for the non-production sector several times this year. The goal is to limit credit to the non-production sector at 22 percent of total loans by June 30, and at 16 percent by the end of the year.

 

According to statistics mentioned on the central bank website, Vietnam now has 48 branches of foreign banks operating in the country.

 

In a separate posting on the website Friday, the monetary authority said Vietnam’s gold and currency markets have stabilized and the use of dollar in the economy has been curbed.

 

Dollar gap between official and black market rates closed: report 

 

There is no longer a mismatch between official and unofficial exchange rates as banks in Ho Chi Minh City have been buying and selling more dollars, Tuoi Tre newspaper reported Friday.

 

The report cited the central bank’s branch in the city as saying that between March 1 and May 15, banks bought US$7.14 billion from enterprises and individuals. Dollar sales by individuals amounted to $575 million. During the same period, banks sold $7.72 billion worth of dollars to their clients.

 

According to the central bank branch, dollar sales at banks surged after the authorities strengthened inspections of the black market, forcing it to shrink.

 

The gap between official and unofficial exchange rates has been closing, it said.

 

The dollar is now traded at around at VND20,800. That compares to the rate of VND20,935 quoted by Vietcombank a month ago.

 

SBV urged to slash US dollar rates

 

The Viet Nam Association of Financial Investors has called for the central bank to slash the deposit interest rate on US dollars.

 

Nguyen Hoang Hai, general secretary of the association, said deposit interest rates on the US dollar for enterprises should be cut to zero from the current rate of 1 per cent while the rate of 3 per cent applied for citizens should be reduced to 1 per cent.

 

However, with a cap of 1 per cent for individuals, bank reserves should be increased to prevent banks raising their own rates to lure customers, he said.

 

"The State Bank of Viet Nam (SBV) should lower the rates as a premise for cutting the interest rates on dong, which are too high, while ensuring that it would not affect monetary policies," Hai said.

 

He said the economy and enterprises would benefit more from the interest rate cut.

 

"If the method is successful, the central bank should continue to reduce the deposit interest rates for citizens to zero. Furthermore, an extra fee should be imposed for individuals' savings in foreign currencies."

 

According to the association, last month the SBV restrained US dollar deposit interest rates to 3 per cent and 1 per cent for individuals and corporations, respectively.

 

Along with an obligatory regulation of commercial banks to increase their current reserves by 2 per cent, the exchange rate between the dong and the US dollar declined by 5 per cent on the market while commercial banks' US dollar supply was in surplus.

 

Also, citizens had a trend to sell their foreign currencies and deposit in the domestic currency.

 

Many argued that if the central bank lowered deposit interest rates, remittance might decline.

 

In response, the financial investors' association said that a fee of 2 per cent was applied for money transfers from Viet Nam to another country and there were risks involved in the transfer process causing individuals to hesitate.

 

The association also added that now was the best time for the central bank to implement the method to remove dollarisation while aiming to halt bank deposit and lending activities in US dollar.

 

SSFC and TAP ink 5-year support contract

 

A five-year maintenance agreement has been signed between the Southern Service Flight Company (SSFC) and Turbomeca Asia Pacific (TAP) for three Turbomeca engines operated by SSFC aircraft at Vung Tau Airport in Vung Tau City. To mark the occasion, TAP unveiled a plaque to celebrate 70,000 hours of flight time with Turbomeca engines.

 

Foreign banker Tobin receives recognition

 

Thomas Tobin, a former CEO of HSBC Bank Viet Nam, last Saturday received a Certificate of Merit from the State Bank of Viet Nam for his excellent performance and contribution to the country's banking industry from 2009 to 2010.

 

He is the first foreign banker to receive this award from the national banking authority.

 

Tobin, whose Viet Nam tenure expired this month, has personally played a major role in the Banking Working Group by advising the State Bank of Viet Nam on affairs related to improving and fostering the growth of Viet Nam's banking industry.

 

FPT Group boosts pre-tax profits by 9%

 

The software producer FPT Group posted a pre-tax profit of VND661 billion (US$33.2 million), a year-on-year increase of 9 per cent, during the first quarter of 2011 despite the difficult economic situation.

 

The group's revenues reached over VND6.91 trillion ($337 million), a year-on-year increase of 17.4 per cent.

 

Ace Life leads domestic insurance market

 

The ACE Life Insurance Company Ltd currently heads the Vietnamese life insurance market in terms of the total amount it insured during 2010, according to a Ministry of Finance's report.

 

ACE Life's total premium reached VND731 billion (US$35 million) last year, equivalent to 150 per cent that of 2009, propelling the company into second place as the largest foreign life insurer with a 12 per cent market share.

 

Stainless steel producer Thien Quang to list shares

 

Thien Quang Corporation has submitted to the Ha Noi Stock Exchange to list 10 million shares in the market. The listing amount costs the company's equity value of VND100 billion (US$4.9 million). Thien Quang Corp, located in northern Hung Yen Province, specialises in producing iron, stainless steel and soldering iron.

 

Ha Thanh Securities Co told to revise all contracts

 

The State Securities Commission yesterday asked Ha Thanh Securities Co to revise all contracts between the company and their clients and banks. The requirement follows the absconding of company chairman Truong Duy Son who left a debt of VND100 billion (US$4.9 million).

 

Media reports said Son opened his own account and borrowed commercial banks money to trade stocks. But the unfavourable market caused him losses estimated at VND100 billion. He absconded and left the debt to the company. Ha Thanh Securities cancelled his position from April 17.

 

The State Securities Commission ordered the brokerage house to hold an irregular shareholder meeting to vote in a new chairman, a legal representative and a spokesman, in order to retain the business and ensure payment to clients. The commission worked with the Securities Depository Centre to check the clients' accounts in Ha Thanh Securities as well as establish a team to supervise the company's business.

 

Bao Viet Holdings sees profits rise 9% in Q1

 

HCM City-listed insurer Bao Viet Holdings (BVH) announced a pretax profit of VND345 billion (US$16.4 million) in the first three months, a 9 per cent increase from the corresponding period last year.

 

The company earned a total premium of VND3.3 trillion ($157.1 million), a 21 per cent growth in the year, of which premium from life insurance brought in VND2.2 trillion in the first quarter, a year-on-year increase of 13 per cent.

 

BVH yesterday closed off 4.5 per cent to VND74,000 a share.

 

Cao Son Coal Company to pay 18% dividend

 

Cao Son Coal Company (TCS) decided to pay its 2010 dividend on June 14, which is set at 18 per cent. Investors can register for the payment till May 27.

 

The company will offer 5 million shares as a bonus to existing shareholders at a 2:1 ratio. Rights to bonus shares are not transferable but shareholders can transfer shares after receiving them.

 

EVN seeks advice after FPT pullout

 

The Electricity of Viet Nam plans to consult the Prime Minister for suggestions regarding the withdrawal of an FPT deposit of more than VND700 billion (US$34 million) meant for repurchasing EVN Telecom shares, said Dinh Quang Tri, deputy general director of Electricity of Viet Nam.

 

FPT declared not to repurchase Electricity of Viet Nam's (EVN) shares on April 15 despite its initial plans of obtaining a 60 per cent stake in EVN. Withdrawal of the deal has been attributed to a new equitisation plan approved by the Government which would allow FPT to hold only a 49 per cent stake in EVN.

 

New General Director of FPT Truong Dinh Anh said that new government regulations as well as contract terms were no longer suitable for purposes of a deal between FPT and EVN.

 

According to Anh, Government Decree No 25/2011ND-CP, aimed at guiding the implementation of the Law on Telecommunications from June 1, stipulates that an institution or individual, which holds over 20 per cent of the charter capital or shares in a telecommunications company, will not be allowed to hold over 20 per cent in another company operating in the same market.

 

EVN deputy general director Dinh Quang Tri said that if either side chose to break their contract, each would be compensated with the amount of deposit already in the bank's possesion. The fate of FPT's deposit, unilaterally withdrawn from the repurchase of EVN shares, remains unanswered.

 

Sugar production climbs by 21.3 percent

 

Vietnam produced 1.13 million tonnes of sugar in the 2010-11 sugarcane seasons, up 21.3 percent against the last season, according to the Vietnam Sugarcane and Sugar Association.

 

Association chairman Nguyen Thanh Long said at a meeting held in Hanoi on May 20 that sugar plants nationwide had processed 12 million tonnes of sugarcane this season.

 

He said the quantity of sugarcane and sugar had increase in all the three regions of the country.

 

The central region posted the highest production increase of more than 30 percent compared to the last season, he said.

 

Most sugar plants bought sugarcane at prices advised by the Ministry of Agriculture and Rural Development, the meeting heard.

 

Sugarcane was sold at the fields for VND900,000 – VND1.1 million a tonne, earning farmers profits up to 50 percent higher than the last season, the association said.

 

It reported that as of the end of April, the quantity of sugar in stock at plants nationwide was 525,000 tonnes, enough to meet local consumption needs until October when a new sugarcane harvest season would begin.

 

Participants at the meeting also said that despite the increase in production, sugar plants were facing difficulties in selling their output.

 

Doan Xuan Hoa, deputy head of the Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production, said sugar prices had increased in recent times and sales had remained stagnant.

 

Hoa attributed this to the high bank interest rates that trading companies had to pay, making it difficult for them to purchase large quantities of sugar.

 

The situation was worsened by the smuggling of sugar into the country, estimated at 200-300 tonnes for this year.

 

Association members expressed concerns at the meeting that smuggled sugar would have serious impacts on domestic production and the task of stabilising the local sugar market would become more difficult.

 

The association petitioned the Government for measures to restrict sugar imports via Government-granted quotas as well as through smuggling.

 

Trinh Minh Chau, the association's deputy chairman, said the Government should get tough on sugar trade fraud and force the re-export of all smuggled sugar.