VN stocks could reserve course this week

The domestic stock market has experienced a long value accumulation period, which observers note could end this coming week.

This follows comments about a potential interest rate hike later this year by US Federal Reserve chief Janet Yellen.

"The VN-Index and HNX-Index are likely to change the trend this week, and this should be strong enough news to act as a ‘trigger' for this change," analysts at BIDV Securities Co wrote in a report.

On Friday, Yellen said she expected the US Federal Reserve Bank to begin raising interest rates later this year, assuming inflation remains stable and the economy is strong.

The Fed postponed an expected interest rate hike at this month's policy meeting, citing global growth risks. Thus, the market is still not entirely convinced by Yellen's comment that the Fed would raise rates this year, instead expecting an increase in March 2016.

However, foreign investors have repeated their net sell activities in the Vietnamese market recently, and many analysts believed this could be in preparation for the Fed's rate hike.

"If the Fed raises interest rates, higher returns on lower risk assets in the US will attract capital inflows from the rest of the world to this country to seek low risk-adjusted returns on securities and index funds," analysts at Bao Viet Securities Co wrote in a report on September 17.

Meanwhile, foreign investors extended their net selling streak to six days in a row, with a total net sales value reaching almost VND789 billion (US$35.1 million).

Overall, the two stock indices rose slightly last week, but liquidity remained at low levels on the two exchanges.

In HCM City, the VN-Index edged up 0.74 per cent over the week, closing Friday at 570.38 points. The HNX-Index on the Ha Noi Stock Exchange gained 1.18 per cent after six rising sessions, ending the week at 78.67 points.

The daily trading volume in HCM City's market reached nearly 105 million shares, averaging VND1.78 trillion ($79.1 million) per session, down slightly from the previous session. These figures were also much lower compared with the three-month average of 135 million shares and VND2 trillion ($88.9 million).

The volume of trade in Ha Noi's market rose nearly 11 per cent over the previous week, however, averaging 36.5 million shares worth VND427 billion ($19 million). This level was still lower than the average of the last 20 weeks.

Fourteen of 20 sectors saw gains last week, led by information and technology shares which had an average growth of 7.9 per cent. Construction, real estate and banking sectors also performed well, with increases of 4.1 per cent, 0.4 per cent and 0.1 per cent, respectively.

According to analysts at Maybank KimEng Securities Co, the impact of the Fed's raising interest rates are mainly psychological at the current time, and the market is still in the stage of value accumulation.

"Both stock indices need to soon overcome their previous peaks of 574 points for the VN-Index and 78.5 points for the HNX-Index to be able to maintain the uptrend in the short term," they said in a note. 

SSC approves two more investment funds

The State Securities Commission of Vietnam (SSC) has allowed Techcom Capital to set up Techcom Equity Fund (TCEF) and Techcom Bond Fund (TCBF) with initial chartered capital of over VND60 billion (US$2.6 million).

Techcom Capital is wholly owned by the Vietnam Technological and Commercial Joint Stock Bank (Techcombank).

According to Techcom Capital, TCEF and TCBF are open-ended funds and their fund certificates have the face value of VND100,000 each. Standard Chartered Vietnam is the supervisory bank of the funds.

TCEF will invest in leading enterprises in a sector or those having potential to become large in addition to businesses with great growth potential in the long run and expected to bring in high profit for investors and large caps.

TCBF will buy Government bonds and corporate bonds issued by prestigious enterprises or guaranteed by well-known banks.

Dang Luu Dung, chief executive officer of Techcom Capital, said the establishment of TCEF and TCBF will provide investors, especially individuals, with more investment options. He added the enterprise pledges to support investors to realize their finance and investment plans.

The establishment of the two funds is in line with the latest developments of the local market as experts said foreign investors have paid more attention to Vietnam’s stock markets.   

Can Tho to spend big on urban upgrade project

The Mekong Delta city of Can Tho will spend more than US$380 million implementing a project to control flooding in its inner-city area totaling 2,675 hectares.

Around 70% of the total amount is expected to come from official development assistance (ODA) loans and 30% from the city’s reciprocal capital. The planned area for the urban upgrade project covers Ninh Kieu and Binh Thuy districts.

The project is part of a master development plan for Can Tho, heard a meeting on Wednesday. Leaders of Can Tho had a meeting with the city’s management board for development projects on Wednesday to discuss the plan and climate change adaptation for the city, the Vietnam News Agency reports.

The management board said the project is scheduled for completion in late 2017 with a focus on solutions to flood control and improvements in urban cityscape, transport infrastructure and urban management and sustainable development.

In order to control flooding in Can Tho’s inner-city area, the management board will upgrade part of the embankments along the Can Tho River and Cai Son Canal; build two water transport locks at Cai Khe and Dau Sau, 13 sluices, two flood control reservoirs; and dredge 14 canals.

About US$7.75 million of the total funding for the project will be used to upgrade the city’s water drainage system and mud handling station with a capacity of 150 cubic meters per day to facilitate water drainage.

Regarding solutions to transport infrastructure development, the board suggested building Quang Trung 2 Bridge in parallel with the present Quang Trung Bridge at a cost of US$18.93 million.

The project includes expanding Tran Hoang Na Street and Bridge at a cost of US$43.71 million and build a new road linking Cach Mang Thang Tam Street and Provincial Road 918 at US$26.74 million.

JBA seeks more incentives for auto industry

The Japan Business Association in Vietnam (JBA) has sent a document to the Ministry of Finance proposing more incentives to support the development of the domestic auto industry.  

Shimon Tokuyama, chairman of JBA, said the association petitioned the finance ministry to offer more incentives for auto manufacturers in the revised law on taxes drafted by the ministry. The draft is set to be submitted to the National Assembly for consideration in October.

JBA wants the ministry to back domestic auto production by helping firms invest in equipment and take out bank loans. The organization also asks the ministry to provide financial aid for investments in production of auto parts and add corporate income tax incentives in the draft law.

JBA proposes the ministry remove import tariffs on auto parts which are not manufactured in Vietnam.

Regarding the special consumption tax, the association suggested tax reductions for under-nine-seat autos with engine capacity of 1,000cc to less than 2,000cc.

JBA wants the revised law to take effect from the beginning of July next year.

The association said it heard that the import tariff on completely built-up (CBU) autos manufactured in ASEAN countries would drop from 50% to 40% in January 2016, 30% in January 2017 and 0% in January 2018. However, related regulations have not been issued, so JBA hoped the Government to publicize a road map for tax reductions to assist businesses in working out production plans.

Members of the Japan Business Association in Vietnam are auto manufacturers and assemblers such as Toyota, Honda and Suzuki.

According to the revised law on taxes, auto producers can enjoy a corporate income tax of 10% in the first 15 years.

A tax exemption in the first next four years and a tax cut of 50% in the following nine years will be offered to enterprises having projects to manufacture priority types of autos and meet requirements for investment capital, employees and disbursement as regulated in the laws on special consumption tax and corporate income tax. Tax incentives also apply to projects to turn out important parts of an auto like engines and gearboxes.

The revised law on taxes includes amendments and supplements to corporate income tax, personal income tax, value added tax, special consumption tax, land use tax on non-farming area, environmental protection tax and tax management.

Three state-owned subsidiaries trade shares on UPCoM

The stocks of three subsidiaries of large state-owned corporations were traded on the unlisted public company market (UPCoM) on September 24.

The trading was part of the Vietnamese government's plan to equitise state-owned enterprises (SOEs). Before being listed on the local stock market, shares have to be traded in the local UPCoM.

On the first trading day, Cam Ranh Port JSC, a subsidiary of the Vietnam National Shipping Lines, traded more than 24.5 million shares under the code CCR at a reference price of VND10,200 (US$0.45).

Spanning 89ha, the port handles cargo, warehouses and freight yards, cargo storage and shipping and road transport, besides a shipping agency, ship chandlers and other services.

Cam Ranh Port, with an initial charter capital of VND245 billion (US$10.88 million) in 2015, plans to raise it to VND3,339 billion ($14.8 million) by 2018. It also aims to earn VND137 billion ($6.09 million) in revenue this year, and raise it to VND2,233 billion ($9.92 million) by 2018.

Meanwhile, 1.89 million shares of Uong Bi Electrical and Engineering JSC (UEM), a subsidiary of the Vietnam National Coal, were also traded at a reference price of VND12,400 ($0.55) each.

UEM, spread over 10,000sq.m in the northern Quang Ninh Province, mostly supplies equipment and facilities for the coal industry. Last year UEM earned the revenue of VND134.1 billion ($5.96 million) and the after-tax profit of VND3.9 billion ($173,333).

The Song Da Investment Construction and Fire Prevention JSC, belonging to the Song Da Group, also traded 2.25 million shares under the code SDX at a reference price of VND8,700 ($0.38) each.

SDX specialises in supplying and installing fire prevention equipment and facilities for construction works in Viet Nam.

Last year, it achieved net sales worth VND30.8 billion ($1.38 million).

HNX to honour enterprises for transparency

The Hanoi Stock Exchange (HNX) will honour 30 most-transparent enterprises listed on the HNX on October 2.

The HNX will also honour 10 businesses that made the greatest progress in information disclosure and transparency in 2014.

The programme is part of the 2015 annual listed companies' meeting of the HNX. It aims to encourage listed companies to enhance their knowledge of and improve corporate governance.

The programme accesses 354 listed companies on the HNX by using information provided by them and the information published on websites and the mass media, such as invitation letters, meeting documents, resolutions and minutes of annual meetings of shareholders, as well as financial reports, management reports and information published annually and periodically.

The HNX has chosen the National Economics University as the independent evaluation unit. It is capable of collecting and evaluating information as per domestic and international regulations.

First ‘green' LEED building project announced in Viet Nam

An apartment project that meets the US's most popular and widely used green building rating system will be used for the first time in Viet Nam.

Phuc Khang Corporation, the project's investor, and Green Consult Asia under the US's Green Building Council signed a contract on Sunday for the nearly VND1.3 trillion (US$57.7-million) project in District 8, HCM City, which meets the US-based Leadership in Energy & Environmental Design (LEED) standards.

Phuc Khang Corporation General Director Luu Thi Thanh Mau said the Diamond Lotus project will be blanketed with green. Its apartments were designed to let in direct sunlight, wind and fresh air.

Covering 1.68 hectares, the project includes three blocks connected at the top by a 5,000sq.m sky park, she said.

Melissa Merryweather, Director of Green Consult Asia, said the LEED certification is used to assess building projects in their design, construction and operation, aiming to reduce 30 per cent of energy use and half of total water use, creating environmentally friendly living conditions.

Binh Duong: FDI attraction surpasses yearly target

The southern province of Binh Duong attracted nearly 1.5 billion USD in foreign direct investment (FDI) in the first nine months of this year, up 27 percent from the same period last year and surpassing this year’s target by 47.7 percent.

During the period, the province licensed 141 new FDI projects worth 817 million USD. It also saw 660 million USD added to 89 existing projects.

The fruitful result is attributed to the locality’s continued administrative procedure reform, enhanced investment promotion, and well-prepared industrial park infrastructure.

This year, Binh Duong signed cooperation agreements with the Japanese prefecture of Yamaguchi and Italy’s Emilia Romagna region.

The province is currently home to 2,525 valid FDI projects from 39 countries and territories with a total investment capital of 21.9 billion USD.

Japan remains its largest investor with 4.87 billion USD, accounting for 22.7 percent of the total investment capital.

Cambodia, Laos, Vietnam hold talks on trade

Cambodia, Laos and Vietnam held the third round of talks on an agreement on trade promotion and facilitation in the Development Triangle between the three countries in the Lao province of Champasak on September 23-24.

The creation of the agreement looks to realise the 8th joint statement on cooperation in the Development Triangle held in Vientiane capital of Laos at the end of 2014 with a view to promoting trade activities among the three countries’ provinces located in the triangle.

In this round of talks, delegates discussed and gave opinions on the draft of the agreement, especially issues relating to agriculture, forestry, transportation and security.

The draft was created from the Cambodia-Laos-Vietnam Summits in Vietnam and Cambodia.

Hanoi sees strong economic performance in Q3

Hanoi continued seeing positive economic development in its third quarter with gross regional domestic product (GRDP) growth of 9.2 percent, higher than those of the previous quarters and the same period last year, according to Director of the municipal Department of Planning and Investment Ngo Van Quy.

In the first nine months of this year, the capital’s GRDP rose 8.3 percent, the highest rise in the last four years, said Quy.

In the third quarter, growth was seen in all sectors, especially industry with 8.2 percent, construction with 11.9 percent, and service with 8.8 percent. The city welcomed about 1.6 million foreign visitors, up 13.8 percent year-on-year.

Meanwhile, agriculture also saw about 2 percent growth and 18 additional communes proposed to be recognised as new-style rural areas, raising the total number of communes meeting the programme’s standards to 127.

Total budget collection in the first nine months of this year was estimated at 105.89 trillion VND, equivalent to 74.7 percent of the estimate.

Inflation continues to be under control while consumer price index rose 0.71 percent, the lowest rise in many years.

In a bid to boost business, the city allocated 65 billion VND to a trade and investment programme and spent 35.3 billion VND to support local enterprises.

However, the capital’s exports remained low despite a slight 2.9 percent rise in the third quarter and only 0.2 percent in the first nine months, far below the targeted 8-9 percent.

The number of newly-established enterprises in September was 14,142, up 37.6 percent. However, dissolved firms mounted to 10,523, a 27.5 percent rise year on year.

Director of the municipal Department of Industry and Trade Le Hong Thang attributed the poor export performance to fluctuating exchange rates as well as a rise in the prices of several input factors such as water and power.

Traditional export products like rice and coffee declined 6.6 and 21 percent, respectively, while exports to major markets like Russia and the US also declined, he added.

Thang held that in order to reach the 11.2 percent target in the last quarter of this year, the city should focus on speeding up administrative reforms and consider cutting the price of land rent for enterprises and creating land reserves for industry.

Chairman of the Hanoi People’s Committee Nguyen The Thao said that it is necessary to roll out stronger measures to support businesses, especially in capital and markets, if the city wants to fulfil the growth goal of 9-9.5 percent for the whole year.

It is also crucial to work harder to see a 1.5 percent decrease in the household poverty rate this year, he said. He asked municipal departments and agencies to improve their service attitudes and responsibility to better serve citizens and enterprises.

Enterprises urged to get creative

Besides the important role of the government in creating a favorable, transparent business environment, local enterprises should become more active and creative in preparing for more intensive global integration.

During a recent conference held in Ho Chi Minh City on business competitiveness and free trade agreements, Dr. Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management, said that most small- and medium-sized enterprises in Vietnam had not considered wider global integration in their business strategies.

Most foreign-invested companies in Vietnam, however, have developed strategies to prepare for the ASEAN Economic Community which takes effect by year-end.

"The benefit of integration is finding out actual success or failure, and the capacity, of enterprises. Things that develop due to special protection or priority will not exist. The areas in which we have an advantage include agriculture, aquaculture, garments and textiles, footwear, furniture, and others," Thanh said.

The logistics sector has a great deal of potential for the future. In Hai Phong, for example, thousands of enterprises have been established in this sector recently.

The service sector also has potential, as the Samsung factory alone, for example, needs 2,000 security guards, Thanh said.

Regarding the role of creativity and technology in enhancing competitiveness, he said that simple low-tech equipment and solutions still held possibilities, such as a wastebasket opened with feet, scissors for left-handed people, or paper used to wrap toothpaste tubes (instead of plastic) in hotels.

Thanh said that after the US and Vietnam established diplomatic relations in 1995, many business people feared they would not be successful in exporting to the big market.

But one year later, the US became Vietnam's biggest export market. Fifteen years later, Vietnam's export turnover to the US had risen 30-fold.

"There is still a lot of room for Vietnamese enterprises to export to the market as Vietnamese goods contribute only one percent of the US imports," he said.

Local companies must make adjustments and examine their strategies carefully in order to survive, he said.

As for the upcoming Trans Pacific Partnership (TPP), local enterprises should be more active in seeking information about the FTA as the negotiating countries have been reluctant to disclose details about the ongoing negotiations.

Economic expert Bui Van said he had tried to asked governments of some countries for information but had been turned down as the countries had committed to not revealing negotiation details.

"However, enterprises have a right to guess with the assistance of consulting organisations. We are able to make guesses about TPP according to the ‘rule' of the US, which is leading the TPP," Van said.

Thanh said that Vietnam had participated in negotiating or signing 15 free trade agreements, but most enterprises know only 14 agreements.

Many enterprises still do not know much about the FTA between ASEAN and Hong Kong now under negotiation.

Dang Duc Thanh, Chairman of the Vietnamese Economist Club, said after studying 30 successful enterprises in Vietnam, he found they had developed good business strategies after studying the market carefully, and mobilised funds from shareholders instead of taking out loans.

He said Vinamilk was equitised in 2004 with total investment fund of 1.5 trillion VND. Now, the State-owned capital at the company totals 2 billion USD (40 trillion VND).

Kinh Do Company was founded in 1993 with 1.4 billion VND. Recently, a part of the company was sold to an American investor for 270 million USD, Thanh said.

Binh Duong achieves over 2.5-billion-USD trade surplus

The southern province of Binh Duong recorded a trade surplus of 2.5 billion USD in the first nine months of this year.

The provincial export turnover jumped 17.6 percent from the same period last year to hit 14 billion USD with key exports seeing stellar growth, including garments (11.2 percent), footwear (15.7 percent), wooden furniture (12.6 percent), telephones and spare parts (14.8 percent) and electronic products (15.8 percent).

The results were attributed to stable import materials and export product prices, spurring competitiveness for local commodities in traditional markets such as the US, the EU, Japan and ASEAN countries.

Many large enterprises in the locality have signed contracts for export through the end of the first quarter in 2016 with orders surging 15 percent.

The province’s imports in the first nine months were estimated at nearly 11.5 billion USD, an annual increase of 17.5 percent.

Of the total, the foreign-investment sector accounted for 78.9 percent, importing mainly machines and equipment, fabric and footwear materials.

Vietnam – a bright spot among emerging markets

Vietnam is considered a bright spot among emerging markets together with Hungary, Romania, Poland and the Czech Republic with its high and stable growth rate, according a recent article posted in the UK’s Financial Times.

The article said the Southeast Asian nation’s 2014 economic growth was well above its average growth for the five years prior. From 2008-2014, Vietnam’s economy increased by nearly 40 percent of the gross domestic product (GDP), doubling Poland’s rate. Meanwhile, Romani, the Czech Republic and Hungary saw no rise during the period.

The article cited market forecasts of Consensus Economics as saying that Vietnam’s economy could reach a growth rate of 6.1 percent in 2015 and 6.2 percent in 2016.

The Vietnamese Government had previously set a growth target of 6.2 percent for this year, but Prime Minister Nguyen Tan Dung acknowledged in June that the figure could increase to 6.4 percent.

The Asian Development Bank (ADB) forecast Vietnam’s economic growth in 2015 will be 6.5 percent and 6.6 percent in 2016, respectively.

The country’s economic growth could reach 6.5 percent in 2015 and around 7 percent in 2016 during an interview with the Financial Times, Chief Executive of Dragon Capital Dominic Scriven told the newspaper.

According to the General Department of Vietnam Customs, the foreign direct investment (FDI) sector earned over 72.35 billion USD from exports in the first eight months of this year, accounting for 67.9 percent of the total export turnover.

However, the article pointed out risks the market is facing such as its loose monetary policy, inflation and the nation’s banking system bad debt ratio reaching up to 15 percent of GDP.-

Industrial production index down 0.78 pct in third quarter

The national index of industrial production fell 0.78 percent in the third quarter from the same period last year, causing a year-on-year decrease of 0.74 percent in the first nine months of this year, the General Statistics Office (GSO) reported on September 24.

The situation is attributed to the reduction in the prices of minerals (1.41 percent) and processing-manufacturing products (0.37 percent), according to General Director of the Department of Price Statistics Vu Thi Thu Thuy.

Six out of 10 processing-manufacturing product groups saw production index decreases in the quarter, including electronics (1.81 percent), metals (1.37 percent), chemicals (1.03 percent), processed foodstuff (1.01 percent), beverages (0.87 percent) and textiles (0.27 percent).

The GSO said the drop in the prices of metal ore products and coal in the period contributed to the falling production index of mining products.

However, the production indexes of electricity and power supply as well as clean water, waste water and waste-water treatment in the reviewed quarter increased 1.94 percent and 0.46 percent, respectively.

Lao Cai enlarges cinnamon cultivation acreage

The northern province of Lao Cai will scale up its cinnamon plantations to 25,000 hectares by 2025, a 2.5-fold increase from current land use, said To Manh Tien, Vice Director of the provincial Department of Agriculture and Rural Development.

Cinnamon planting areas will be expanded to 50 communes in four districts of Bao Thang, Van Ban, Bao Yen and Bac Ha with ideal conditions to develop cinnamon for essential oils.

The province also zoned off 150 hectares of land for breeding cinnamon saplings in Nam Det, Nam Tha, Xuan Hoa, Phu Nhuan and Phong Hai towns to ensure adequate supply for local germination. An oil-manufacturing company and four cinnamon wood fine-art processing stations are set to be constructed in the locality as well.

Lao Cai is currently encouraging and creating favourable conditions for enterprise investment, such as providing preferential loans, tax reductions and material zone localisations, a move to increase the quality and value of cinnamon products. It is also designing mechanisms to manage businesses production and the extracting of cinnamon oil.

Meanwhile, local farmers have been supported through trade promotion and product popularisation efforts as well as methods to advance quality.

First oriental pharmacy factory inaugurated in Central Highlands

The first large-scale oriental medicine factory was inaugurated on September 24 in Phu Hoi Industrial Zone in the Duc Trong district of the Central Highlands province of Lam Dong.

The facility, worth more than 100 billion VND (4.46 million USD) funded by the Lam Dong Pharmaceutical JSC (Ladophar), will be built on 10,000 square metres and equipped with advanced technologies.

It is the 42nd oriental medicine processing facility established nationwide and meets the Good Laboratory practice (GLP) standards recommended by the World Health Organisation (WHO).

The factory has an annual production capacity of 800 tonnes of herbal pharmaceuticals and 280 tonnes of dried and soft artichoke extract, according to Ladophar General Director Pham Thi XuanHuong.

The company aims to fully tap potential of artichoke, the local typical medicinal plant to provide materials for other domestic and international pharmaceutical enterprises, Huong said.

Lam Dong, one of the eight key zones for developing national medicinal plants, is home to a wide variety of special, precious and rare medicinal vegetation.

The facility is also expected to develop an herbal material area, contributing to preserving the valued sources of medicinal plants.

SOEs shares begin trading

The stocks of three subsidiaries of large State-owned corporations were traded yesterday on the unlisted public company market (UPCoM).

The trading was part of the Vietnamese government's plan to equitise State-owned enterprises (SOEs). Before being listed on the local stock market, shares have to be traded in the local UPCoM.

On the first trading day, Cam Ranh Port JSC, a subsidiary of the Viet Nam National Shipping Lines, traded more than 24.5 million shares under the code CCR at a reference price of VND10,200 (US$0.45).

Spanning 89ha, the port handles cargo, warehouses and freight yards, cargo storage and shipping and road transport, besides a shipping agency, ship chandlers and other services.

Cam Ranh Port, with an initial charter capital of VND245 billion (US$10.88 million) in 2015, plans to raise it to VND3,339 billion ($14.8 million) by 2018. It also aims to earn VND137 billion ($6.09 million) in revenue this year, and raise it to VND2,233 billion ($9.92 million) by 2018.

Meanwhile, 1.89 million shares of Uong Bi Electrical and Engineering JSC (UEM), a subsidiary of the Viet Nam National Coal, were also traded at a reference price of VND12,400 ($0.55) each.

UEM, spread over 10,000sq.m in the northern Quang Ninh Province, mostly supplies equipment and facilities for the coal industry.

Last year UEM earned the revenue of VND134.1 billion ($5.96 million) and the after-tax profit of VND3.9 billion ($173,333).

The Song Da Investment Construction and Fire Prevention JSC, belonging to the Song Da Group, also traded 2.25 million shares under the code SDX at a reference price of VND8,700 ($0.38) each.

SDX specialises in supplying and installing fire prevention equipment and facilities for construction works in Viet Nam.

Last year, it achieved net sales worth VND30.8 billion ($1.38 million).

Sacombank boosts capital

The State Bank of Viet Nam (SBV) has approved an increase in Sacombank's capital by nearly 52 per cent to VND18.8 trillion (US$838 million), the HCM Stock Exchange reported on Wednesday.

The decision came after the merger between the Southern Bank and Sacombank (STB) took effect on September 14.

The SBV's decision will remain effective for a year and it will become invalid if Sacombank is unable to raise the capital, or the bank's board of directors, and/or the shareholders, decide on other solutions to raise capital.

After the merger, the new bank will retain the Sacombank name with total assets of VND290.8 trillion ($13 billion) and total equity of VND22.6 trillion ($1 billion).

Sacombank will have 567 offices in Viet Nam, Laos and Cambodia, employing 15,510 people.

However, Tram Be, vice chairman of Sacombank's Board of Directors, will not be a part of the board of the new bank. The State Bank of Vie t Nam will take over the stakes in the Southern Bank, currently Sacombank, and the new Sacombank from Be and his relatives, and appoint the central bank's officials to run the new bank after the merger.

VN business climate slow improving

Improvements in the business environment of Viet Nam remained below expectations although the Resolution 19/NQ-CP has been in implementation for six months, a conference heard yesterday.

The conference also suggested comprehensive efforts to be made from central to local levels to create breakthroughs.

Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM), said that the promulgation of the resolution in March created opportunities for Viet Nam to improve the business environment and enhance national competitiveness in line with international criteria for the first time.

However, the results after six months of implementation were disappointing from the perspective of the business community, which might erode their confidence in the government, Cung said, adding that the lack of abidance of ministries and government's agencies was among the causes.

As of Wednesday, the Ministry of Planning and Investment received reports of only four ministries and organisations together with three provinces and cities about the implementation of the resolution although reports were required to be submitted quarterly.

Findings of the three-month survey by the CIEM revealed that feelings of businesses about improvements of the business environment were not as good as expected. The CIEM said surveyed businesses highly appreciated the government's efforts in administrative reform in tax filings and payment and customs procedures. However, businesses felt that tax filing time was cut just by 110 hours or 20 per cent while the Ministry of Finance reported that the tax filing time was cut from 537 hours in 2014 to currently 117 hours, and even beyond the resolution's target of 171 hours.

The difference was attributed to inconsistent policies, the CIEM said.

In response, a representative from the General Department of Taxation said that the finance ministry's calculations were based on criteria of the World Bank with constancy from experts. The CIEM also pointed out existing problems in tax refunds, dissolving procedures, companies' failures in keeping updated with policy changes and slow technology renovations.

In addition, specialised examinations for customs clearance were costly and inefficient, according to the CIEM, citing that businesses did not see many improvements in reform of specialised examinations in term of time, procedures and cost.

Cung said that the co-ordination among ministries and Government organisations remained weak, reflecting the slow reforms in sectors which required joint efforts.

SMEs still find it hard to access loans

Small- and medium-sized enterprises still face difficulties in trying to access loans and do not have too many options with regard to channels for mobilisation of capital.

Statistics from the Vietnam Chamber of Commerce and Industry (VCCI) revealed at the conference on capital access for SMEs held in Ha Noi yesterday showed that SMEs accounted for 98 per cent of businesses operating in the country and provided jobs to 51 per cent of labourers.

The SMEs contributed more than 40 per cent of Viet Nam's GDP, 31 per cent of industrial production, 78 per cent of total retail sale turnover and 64 per cent of passenger transport both inside and outside the country.

"However, a majority of SMEs have weak capacity in terms of credit and competitiveness," Nguyen Dai Lai, deputy director of the Credit Information Centre (CIC), said.

Total capital for production and businesses of SMEs from 2010 to 2015 accounted for 36-38 per cent of the total capital for all businesses in Viet Nam. It meant that up to 68 per cent of SMEs had to use their own capital for production and trading.

Lai said the figures reveal big challenges ahead for local SMEs.

Another statistic from the Viet Nam Bank Association (VNBA) showed that by the end of June, the credit balance for SMEs was VND976.7 trillion (US$43.4 billion), increasing 4 per cent from last year.

There were around 180,000 SMEs with loans in credit institutions.

The association said SMEs lacked conditions to insure their loans at banks though their bad debt rate was low.

"Banks suffer a shortage of trust in credit relationships with SMEs. In reality, several SMEs have not built up trust with banks in terms of their financial situation, thus making them ineligible for loans," he added.

In addition, the SMEs have not had a feasible investment project and transparency to be eligible for loans.

Can Van Luc, vice president of the Bank for Investment and Development of Vietnam (BIDV) agreed that banks have accounted for a big portion of the capital in the country's financial system.

The imbalance is caused by businesses that have limited access to loans, Luc said.

The scale of the local stock market last year was equivalent to 32 per cent of GDP, lower level than the average of 50 per cent in the ASEAN region. The bond market was also on a smaller scale than other countries in the region as 87 per cent was government bonds.

"The issue is how to create trust between banks and businesses for the common purpose of profit," Vo Tri Thanh, deputy head of the Centre Institute for Economic Management, said. However, SMEs should be transparent in their operations as well as ensure better control of money flow to gain the trust of banks.

The State Bank of Vietnam has also asked credit institutions to increase reliable loans for SMEs.

Accordingly, credit institutions would build a process to collect and exploit information on credit ratings in co-operation with branches of foreign banks.

If the Prime Minister approves a proposal to increase the minimum salary by 12.4 per cent, enterprises say, then the commensurate increase in social insurance should be delayed to give them some breathing space.

At a conference on issues in institutional reform and integration and enhancing the competitiveness of enterprises in the new context, held by the Vietnam Chamber of Commerce and Industry (VCCI) on September 24 in Ho Chi Minh City, Chairman of the Saigon Garmex JSC, Mr. Le Quang Hung, said that the company must spend about VND36 billion ($1.6 million) per year on social insurance, health insurance, and union fees. If the minimum wage rises by 12.4 per cent this amount would increase by VND5 billion ($222,000) annually. Meanwhile, the company is unable to increase the price of its products in markets such as Europe and Japan due to the economic circumstances. “Not to mention the possibility of electricity prices rising, which will also force us to think about how to grow,” Mr Hung said.

VCCI Chairman Vu Tien Loc told the gathering that the National Wage Council approved an increase rate of 12.4 per cent to the minimum wage for 2016 and this will increase other payments such as social insurance and health insurance. As the Prime Minister is yet to approve the increase, he added, businesses are still able to lobby the government and complain that the increase is too high.

Within the framework of the conference a number of business representatives and associations also reflected on problems such as administrative procedures, which are still creating difficulties and obstacles to doing business in Vietnam.

According to a representative from the Ho Chi Minh City Export Processing Zone Association, businesses are not afraid of the challenges posed by integration but Vietnam seems to be turning opportunities into challenges. For example, many new laws have been enacted but accompanying decrees and circulars for implementation are still to come.

Nha Rong - Khanh Hoi Port to become urban area

The Equitization Steering Committee of Sai Gon Port Co. will hold the first shareholder meeting establishing the Saigon Port Joint Stock Company on September 28.

In the business plan to be submitted to the meeting, Saigon Port expresses a desire to receive shareholder approval to cooperate with Vingroup to establish the Vien Dong Pearl Urban Development and Investment Co. to change the land use at Nha Rong - Khanh Hoi Port in District 4, Ho Chi Minh City, building an urban area. Saigon Port will hold 26 per cent of the new company’s charter capital and total investment in the project will be over VND11 trillion ($488.9 million). Vien Dong Pearl aims to sell real estate products in the urban area from 2018 and offer a dividend to shareholders of 10 per cent each year.

Regarding business plans after equitization, the Nha Rong - Khanh Hoi Port will reduce its land use in preparation for relocation in the middle of next year. The company will restructure a number of deep-water ports to secure capital for investment and development. It will also complete the construction of Saigon - Hiep Phuoc Port in Ho Chi Minh City and put it into operation in 2016.

In the fourth quarter of this year the company aims to record VND291.8 billion ($12.9 million) in revenue and VND16.7 billion ($742,000) in after-tax profit.

Ground broken at Sai Gon- Ba Be Eco-Tourism Area

Saigontourist worked with the Bac Kan Provincial People’s Committee in Vietnam’s north to hold a breaking ground ceremony for the four-star Sai Gon - Ba Be Eco-Tourism Area on September 26 in Ba Be National Park. This is the first tourism project being implemented in a cooperative program for socio-economic development between Ho Chi Minh City and Bac Kan province.

Investment in the first phase of the eco-tourism area will be on 5.43 ha, consisting of 63 rooms and 30 bungalows together with restaurants and entertainment services.

“This is the beginning of our company’s strategy of expanding our business in the 2015-2020 period and vision towards 2030, diversifying and improving the quality of our products and services, increasing the competitive advantage of our business, and contributing to the development of local and national tourism,” said Mr. Tran Hung Viet, General Director of Saigontourist.

Coordinating investment to diversify and improve product quality and unify standards is part of Saigontourist’s long-term strategy. In its 40 years the company has invested in hotel and resort projects in more than 30 cities and provinces around the country, such as the four-star Saigon - Ha Long Hotel in Quang Ninh province, launched in 2002 with 228 rooms, the four-star Saigon - Phu Tho Hotel, announced at the end of 2014 and with 110 rooms, a 600-seat restaurant and a 700-seat conference room, and the four-star Saigon - Ban Gioc resort in Cao Bang province.

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