Gold jumps after surge in global price

Domestic gold prices shot up by VND700,000 a tael yesterday, the highest in last six months, after a sudden surge in the global market.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery were up 0.76 per cent and trading was at $1,691.6 a troy ounce, up from a session low of $1,646.45 and down from a high of $1,671.55 a troy ounce early during the session.

Saigon Jewelry Company, the country’s largest gold trader and producer of gold bullion, under the popular brand name ‘SJC’, hiked around VND600,000 compared to yesterday’s closing session, bringing the metal to VND44.95 million and selling at VND45.15 million.

Meanwhile Bao Tin Minh Chau in Hanoi quoted at VND44.9-45.14 million a tael for bid and ask respectively, while Nguyen Vu Shop in Dinh Tien Hoang Street in District 1 listed at VND45.0-45.12 for bid and ask respectively as of 10.30am Vietnamese time.

Saigon Jewelry Company was allowed to convert 48,000 taels of faulty gold bars into standardized SJC bullion, and those of other brands into standardized SJC bullion to stabilize the market. Le Hung Dung, from SJC, said converting takes little time; however, it takes longer time to check non-SJC bars because there are many brand names.

Elsewhere on the Comex, silver for December delivery was up 1.69 per cent and trading at $30.962 a troy ounce, while copper for December delivery was down 0.34 per cent and trading at $3.435 a pound.

Coffee exports fetch $ 2.66 bln in first eight months

Coffee exports in the first eight months were estimated to include 1.26 million tons, earning $2.66 billion, up by 31.9 per cent in volume and 26.3 per cent in value against the same period last year.

The United States and Germany were the two biggest import markets for Vietnamese coffee, accounting for 12.5 per cent and 12.4 per cent of the export value, respectively.

Noticeably, coffee exports to Indonesia and Mexico surged sharply by about 9.5 times and 3.5 times against the same period last year.

However, coffee exports may fall in the future due to supply shortages, according to the Viet Nam Coffee and Cacao Association. Coffee exports are expected to increase when the next crop is harvested in late 2012.

Motorbike, auto fees proposal faces opposition  

The Vietnam Automobile Transportation Association has shown their opposition to the Ministry of Transport’s proposal on raising certain types of taxes on motorbike and autos.

The Ministry of Transport's motorbike and auto fees proposal faces the opposition from the Automobile Transportation Association.

In a recent document sent to the Ministry of Transport, the association said the adjustment of the special consumption tax and registration fees included in the draft regulation on restricting private vehicles in big cities does not fit the current economic situation.

Nguyen Manh Hung, the association's Chairman, said that application of import, special consumption and value added taxes has already pushed Vietnamese auto prices 2.5-3 times higher than those of other regional countries. So far this year, registration fees have been increased 12%-20% in Hanoi and 10%-15% in HCM City. Fees for registration and licensing have also been increased considerably. In Hanoi, this fees for vehicles of below 10 seats not in the transport business have been increased to VND20 million (USD952.3) from VND2 million (USD95.2)

Registration fees for motorbikes costing more than VND40 million (USD1,904) have doubled to VND4 million (USD190.4) from VND2 million.

“All fees for motorbikes and personal vehicles have increased recently, and they should not be increased further. People will not be able to afford to buy anymore," Hung added.

The association is also opposed to the imposition of environmental fees for motorbikes and autos, saying that currently, the fee of VND1,000 per litre on petrol and oil has already been stipulated in the Law on Environment.

“Motorbikes and autos have to pay the fees for the use of fuel, and it would be redundant to apply one further environmental fees,” the official asserted.

The association has also recommended removing proposed fees on private vehicles entering the city centre, because circulation fees on vehicles at peak hours is included in the draft regulation on restricting private vehicles in big cities.

Hung explained that, “Traffic jams in Hanoi and HCM City occur mostly at rush hour, while the traffic situation is normal at other times.To apply two separate fees would be too much.”

Petrol traders complain about losses despite price hikes   

Petroleum traders continue to complain over losses although oil and petrol prices have been raised four times just since July 20.

They have said they now suffer from a loss of between VND500-800 per litre of petrol or oil and that the support of the Petroleum Price Stabilisation Fund, with subsidies of VND500 per litre of petrol and VND300 per litre of oil is very modest. For this reason, they say, they are considering another price increase in the days to come.

"Approval for the price increase is coming too late for our proposal. Losses are mounting while we wait, even though we have only proposed an increase of less than half of what has been recommended. Support from the Petroleum Price Stabalisation Fund is just insufficient," said a representative from SaigonPetro.

Traders proposed an increase of VND1,200 per litre of petrol on August 23. However as of August 28, the Ministry of Finance approved a rise of only VND650 per litre.

Le Thanh Man, Deputy Director of Dong Thap Petroleum Trading Import Export Company Limited (Petimex), said at the time of the price hike proposal, his company incurred losses of around VND1,000 per litre of petrol, but over the past ten days, the loss has climbed to VND2,000 per litre of petrol and VND1,500 per litre of diesel.

They argue that an rise of VND650 per litre of petrol and VND300 per litre of diesel would only make up for 43% of the firm’s losses for petrol and 33% for diesel.

A representative from a petroleum wholesaler said, petroleum importers have been facing price squeeze from foreign partners during this week, since Dung Quat Oil Refinery has halted operation for repair. Meanwhile, the Ministry of Finance’s regulated insurance and transport surcharges for oil and petrol is just USD2.5-3 per barrel, compared to the real figure of USD7-8 that importers had to spend during the time of Dung Quat Oil Refinery’s suspension.

After the petrol price increase on August 28, many retailers complained that they have been having  difficulties in getting shipments from wholesalers, who would rather wait for the price to rise than sell at a loss. Many of the retailers rely on each other to keep the pumps flowing but this has only a stop-gap solution.

The owner of a petrol station in Hanoi said, since August 29, he has not been able to find adequate supply and has had to hang up signs saying they were out of petrol.

Many retail petrol stations have also used certain tactics to save money, such as reducing staff or keeping unusual business hours.

Despite the petrol price rise, the commissions given by petrol wholesalers to retailers has remained almost unchanged. SaigonPetro still offers a commission of VND300 per litre.

Meanwhile, transport fees account for up to VND150 per litre, a cost that hurts the retailers.

Retailers of Petrolimex were offered a commission rate of VND200 per litre of petrol and VND200 per litre of oil. PVOil’s commission is VND240 per litre of petrol and VND300 per litre of oil, however, with high transport fees from Haiphong to Hanoi, retailers are only able to make a profit of only VND80 per litre of oil and must take losses on petrol.

Economic slump pushes property trading floors out of work

A number of real estate trading floors have disappeared or changed business after a time operating in the gloomy market.

The D. C. Real Estate Trading Floor on Yen Hoa Street had to close after a year. The head of the trading floor said, "Due to the slump in real estate market, many companies and trading floors have shut down and in debt into billions of VND. We can't maintain operations, so we’ve closed to limit the losses."

Even some of the busiest trading floors such as the ones on Nguyen Thi Dinh, Trung Hoa Nhan Chinh or Le Van Luong streets look near empty.

The still working trading floors have to depend on investors to maintain work or change businesses.

Along Le Van Luong Street, more than half of 40 trading floors have closed. Many of them changed into cafe shops, karaoke bars or rented out the building.

Le Ngoc Quynh, Director of online trading floor, nhadat24.net, said only 15% of the staff had been retained. The once busy companies can't escape the impact of the economic downturn and associated losses. The DTJ Trading Floor has also sold furniture and construction materials to remain in business.

To attract customers, the Sohovietnam Trading Floor offers consultancy services in contributing capital in apartments, hotels or resort projects.

The property transaction market in both Hanoi and HCM City has remained sluggish in the first half of 2012. Both transaction floors have experienced very low transaction figures. Because the private investors haven't regained trust in the market, waiting for lower prices, few trades have been completed.

In a recent report by Hanoi Department of Construction, 122 over 500 trading floors have suspended operations and over 200 floors reported no successful trades.

Tran Hop Dung, Hanoi Construction Department's chief of the Economic Management Division said, "The trading floors are mostly established by investors to promote and sell their own projects so competition is low. Besides, the lack of information and long-term plans are also a problem."

Nguyen Hoang Nam, Head of the Info Trading Floor under Ocean Group said his floor had encountered difficulties recently. But in these times, the property trading floors must provide suitable products and services for the market.

According to the heads of local Department of Construction, enterprises should remain calm and see the bigger picture to overcome their current difficulties. This was also a perfect time to consider company restructuring to meet market's needs.

DongA Bank joins IFC’s global finance program

DongA Bank on Wednesday signed an agreement with the International Finance Corporation (IFC), a member of the World Bank Group, to provide a trade finance guarantee facility worth US$20 million under the IFC’s Global Trade Finance Program (GTFP).

IFC will issue guarantees to assist DongA in fulfilling obligations towards beneficiary banks in trade finance transactions. To reach the agreement, DongA Bank has to meet IFC’s standards in banking governance, finance, credit and risk management.

Through the GTFP network, DongA can establish working partnerships with hundreds of international and regional banks in the program. The bank can finance its import and export clients through various trade instruments from import letters of credit, standby letters of credit to guarantees, bills of exchange and promissory notes for trade financing.

Home market vital for wood processors: survey

Many wood firms have been doing good business at home since they began to look back at the local market several years ago, according to a survey of the Handicraft and Wood Industry Association of HCMC (Hawa).

The survey of 96 members of Hawa shows they gained a combined US$101.6 million in domestic sales last year. This is the latest survey conducted by Hawa on the local business performance of its members.

“Sales figures of furniture makers in the local market prove that we have not fully tapped our home market potential over the years. With proper investment in the domestic market, businesses can totally increase their revenues in the coming time,” said Hawa vice chairman Huynh Van Hanh.

He said local firms had found it increasingly hard to sell their goods to traditional markets, so many of them had got back to the local market. The rising domestic sales volume is an encouraging result.

According to the survey, the total export turnover of 96 Hawa members in 2011 was US$497 million.

The percentage of enterprises using materials from their own farms is also satisfactory. According to 47 respondents concerning this issue, they imported only US$35.7 million worth of wood last year while the value of wood sourced from local farms was US$71.3 million.

The survey was conducted from April to August 2012, focusing on the business results of Hawa member companies and the difficulties they were facing so as to figure out appropriate solutions.

According the Vietnam Timber and Forest Product Association (Vietforest), the local market is currently dominated by products imported from China, Malaysia and Taiwan. A market survey of Vietforest shows Vietnamese products only account for around 20% of the furniture sales.

The local furniture market holds big potential given huge demand of the country with a population of around 90 million. It is estimated that the local market will generate some US$1 billion in sales revenue for the industry.

Sugar oversupply in sight

The Ministry of Agriculture and Rural Development has forecast the 2012-2013 crop may see a sugar oversupply of around 200,000 tons, raising questions about the industry’s production efficiency.

In the 2012-2013 sugar crop, the area under sugarcane growing will reach 300,000 hectares with output of around 18.9 million tons while sugar mills will be able to produce an estimated 1.6 million tons, according to the agriculture ministry’s predictions. Excluding domestic consumption and the nation’s World Trade Organization commitment to import 74,000 tons, 200,000 tons of local sugar will become redundant.

Moreover, according to the Ministry of Industry and Trade, some 100,000 tons of sugar produced at the sugar refinery of Hoang Anh Gia Lai Group (HAGL) in Laos might be brought back to Vietnam in 2012-2013. However, HAGL chairman Doan Nguyen Duc said his company had not decided whether to send its Lao-made sugar back to Vietnam or not.

Sugar smuggled from Thailand, which can amount to hundreds of thousands of tons, should also be taken into account.

Nguyen Hai, general secretary of the Vietnam Sugar Association, said enterprises could export the excess sugar volume. However, the export outlook is not so bright as Vietnam’s export prices are quite high.

If the forecast of the agriculture ministry came true, sugar traders would have to cope with huge pressure in the coming time, leading to a tough competition between local high-priced products and cheap imports, and even among local sugar mills.

Nguyen Van Loc, general director of Bien Hoa Sugar Joint Stock Company, recently told the media that if enterprises continued to face problems with cheap smuggled sugar, they could no longer maintain their production and farmers would suffer.

If supply was redundant, sugar mills would buy sugarcane at low prices, and thus sugarcane growers would likely switch to other crops, resulting in price and output volatility in the next crops, said Professor Vo Tong Xuan, an agriculture expert.

Xuan said the crux of the matter is the average sugarcane output per hectare of Vietnam remained too low, at 45-55 tons, versus the average of 75-80 tons in other sugarcane growing countries, while production costs in Vietnam are higher than the world’s average.

Half city’s waste for energy, fertilizer production

HCMC aims to cut its landfill rate in half, while 45% of garbage will be categorized and used for compost fertilizer production and 5% will be used to generate power until 2015.

Speaking at a meeting on Thursday, Nguyen Van Phuoc, deputy director of the HCMC Department of Natural Resources and Environment, said that the city was calling for investors in projects that produce power and compost fertilizer from garbage.

According to the department, HCMC discharges nearly 7,000 tons of garbage every day, with 90% buried and the rest used to produce compost fertilizer.

The existing landfill sites in HCMC, Go Cat and Dong Thanh are overloaded.

The difficulty in waste incineration technology investment lies in high costs, but this sector has still received the attention of investors, Phuoc said.

Some investors keen to deploy a project to incinerate garbage to produce power in HCMC are Tam Sinh Nghia with a daily capacity of 2,000 tons of garbage, Singapore-based Keppel Seghers Engineering with 2,000 tons and International Energy and Environment Company (IEE) with 1,000 tons.

However, according to the department, the city is still considering these projects as the treatment costs offered by such firms are rather pricey such as Keppel with up to US$32 a ton and Tam Sinh Nghia at around US$26 a ton.

Phuoc said that the cost of incinerating garbage to generate power in some foreign countries could amount to some US$40-50 per ton,

With nearly 7,000 tons of garbage discharged each day and a burying cost of US$18-19 per ton, the amount that the city has to pay for treatment of all garbage is not low.

Therefore, with an 8% annual rise, if garbage is categorized, recycled and used for power and fertilizer production in a more effective way, it will help reduce landfill areas, recycle natural resources and energy as well as reduce environmental pollution.

Vietnam-Argentina Center opens in Buenos Aires

A Vietnam-Argentina centre was opened in the South American capital of Buenos Aires earlier this week to promote Vietnamese culture and bolster ties between the countries, reports VietnamPlus.

A Vietnamese delegation led by the Head of Department of Fine Arts, Photography and Exhibitions Vi Kien Thanh attended the official ceremony along with leaders from the Argentina-Vietnam Cultural Institute (ICAV).

Chairman of the center Pham Lien said its purpose is to bring the nations together through various events such as Vietnamese talk shows, film screenings, seminars, art exhibitions, fashion shows, tourism fairs, traditional dance, theatre and music performances, as well as culinary art and Vietnamese language lessons.

Ambassador to Argentina Nguyen Van Dao applauded the activities held by the Argentina-Vietnam Cultural Institute over the past 15 years that promoted friendship and solidarity.

The ceremony was wrapped up with a fashion show featuring a collection of traditional Vietnamese clothes modeled by Argentine beauties.

The centre was designed to implement the cultural cooperation program in the 2010-2012 period as signed by both nations’ leaders during Prime Minister Nguyen Tan Dung’s official visit to Argentina two years ago.

VietinBank offers VND15 trillion for businesses at preferential rates

The Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) announced yesterday that it will offer two preferential rate loan packages totaling VND15 trillion (US$720 million) for enterprises to help them overcome their current economic difficulties.

Until mid-September, the bank will provide VND10 trillion (US$480 million) in business loans at 8.95% interest per year for a maximum of 12 months.

This preferential package will be applied for small, medium-sized and large scale businesses that do not operate in the fields of real estate, stocks or water transport.

The lender will also offer VND5 trillion (US$240 million) in short, medium and long-term loans to individuals and household businesses at 10.99% annual interest until the end of 2012.

These loans rates will apply for enterprises operating in trade, industry, services, agriculture, and rural development.

Cooking gas prices increase by VND51,000

The domestic retail price for a 12 kg cylinder of cooking gas rose by VND51,000 as of today.

The price of cooking gas in Ho Chi Minh City increased to VND418,000-VND425,000 per 12 kg canister at 7.30 am on Saturday, the second price hike since August 1.

Cooking gas prices went up VND52,000 per 12 kg cylinder earlier at the beginning of August, resulting in a total increase of VND103,000 per canister within the last month.

Gas distributors say that the rise is due to the price of gas imported for September increasing to US$950 per tonne, up US$175 per tonne compared to the previous month.

Statistics show that the retail price of cooking gas has increased seven times since the beginning of this year, a total of VND240,000 per 12kg canister, while the price has only been reduced four times by a total of VND163,000 per canister.

Vietnam, China boost economic co-operation
 
Vietnam and China have seen many rapid developments in bilateral co-operation in economics, trade and tourism, said To Quoc Tuan, Vietnam’s Consul General in Guangdong province, China.

The leaders of both countries have recently reached several important agreements to step up bilateral economic and trade relations, said Tuan at the Vietnam-Guangdong Economic, Trade and Tourism Forum in Guangzhou City on August 30.

Both countries are keen to increase bilateral trade to US$60 billion by 2015, nearly doubling the figure from when China’s Vice President Xi Jinping visited Vietnam last December, added the diplomat.

More co-operation in economics, trade, culture, education-training and science-technology between Vietnam and Guangdong province in particular will help with the two countries’ development, said Tuan.

According to him, many Vietnamese ministries and provinces have signed agreements with the Chinese province and many major businesses from Guangdong are also investing and expanding their operations in Vietnam.

Import-export turnover between Vietnam and the Chinese province rose from US$2.4 billion in 2007 to US$5.8 billion in 2010.

Bilateral trade between Vietnam and Guangdong rose by 31.7% to US$7.6 billion in 2011, accounting for 21.7% of the total trade value between the two countries.

Liang Guixuan from Guangdong’s Foreign Economic Co-operation Department reviewed the developments in economic, trade and tourism co-operation between Guangdong and Vietnam, saying he hopes it will continue to grow further.

At the forum, the participants proposed that both parties create the best possible conditions for each others businesses communities.

On the day, the Vietnamese General Consulate to Guangzhou hosted a celebration of the 67th anniversary of National Day (September 2), seeing the attendance of local leaders, diplomats and many overseas Vietnamese.

Province to boost tourism industry
 
The central province of Quang Nam hosted a record 2.3 million tourists in the first eight months of this year, earning VND3 trillion (US$143 million).

The figure was announced on Thursday at a conference in Hoi An Town to sum up 15 years of Quang Nam tourism.

Last year, the province, home to world heritage sites Hoi An, My Son sanctuary, and Cham Island biosphere reserve, hosted 2.5 million tourists.

In 1997 the province earned only VND47 billion ($2.2 million).

"We have made efforts in building charming destinations while travel agencies have made great contributions to the province having gained record earnings from tourism," said Vice Chairman of Quang Nam People's Committee Tran Minh Ca, adding that Hoi An had launched free wireless internet for tourists in the Old Quarter.

"The province plans to be the centre of the tourism industry among the central provinces by 2020. We have made efforts to create the most favourable conditions for investors in tourism," he said, adding that the province had already attracted 110 tourism projects.

Investors had built 80 international standard hotels and resorts with a total 5,000 rooms while the provincial tourism industry had created 15,000 jobs, he said.

"We are proud that the province still preserves cultural values as well as a healthy environment and friendly hospitality," said Vice Chairman of Hoi An People's Committee Truong Van Bay.

"Hoi An has boosted sustainable development in tourism and promoted environmental protection," Bay said. "We also are looking at developing eco-tour sites in the town."

Quang Nam Provincial People's Committee has co-operated with international organisations in building Hoi An and My Son Sanctuary as safe and green destinations.

Enterprises in Danang lukewarm to banks’ capital offer

Not a single enterprise attended a conference on interest rates and capital access held in Danang City on Tuesday despite the organizer had sent scores of invitation letters to them, a phenomenon explained by a local official as the business circle’s disbelief in banks’ promises.

Phung Tan Viet, vice chairman of Danang City, raised the question whether enterprises were no longer confident in lip services from banks as the interest rate remains preventively high despite repeated call for helps from them.

The conference, titled “Interest rate policy and capital access for enterprises in the Central Region and the Cenral Highlands,” therefore heard monologues from banks and officials.

Le Thi Thanh Toan, deputy director of the Ngu Hanh Son District branch of Bank for Industry and Trade (VietinBank), said there are credit packages at her bank with an annual interest rate of only 8.95%. But her assurance was swiftly rejected by vice chairman Phung Tan Viet.

“That soft rate is valid for only the first month, and will sky-rocket from the second month,” Viet said. “Loans of one-month term are only used for situational remedies, and are of no meaning in assisting enterprises to maintain production,” Viet raised his sharp tongue, adding preferential loans should have terms of between one and three years.

The city’s vice chairman observed that the number of enterprises on the verge of bankruptcy is on the rise, thus capital support from banks is among the important resources to help them survive the tough times.

Over the past several months, the Government and the central bank have made drastic moves to pull down the interest rate, but only the deposit rate has been lowered while the lending rate remains high, he continued.

Furthermore, many enterprises have become ailing after a long time grappling with economic difficulties, so they are no longer qualified to take out bank loans. As such, support from banks is deemed important.

Vo Van Minh, director of the central bank’s Danang Branch, said outstanding loans in Danang grew little between June 2011 and June 2012, at a mere 2.48%. The credit growth in this year’s first half was even negative, Minh said.

Vice chairman Phung Tan Viet announced that central bank governor Nguyen Van Binh and Danang City’s Party secretary Nguyen Ba Thanh would have a meeting early next month with the business community in Danang in order to find solutions for enterprises to better access capital.

VNPT told to redo restructuring plan this year

The Ministry of Information and Communications has asked Vietnam Posts and Telecommunications Group (VNPT) to submit to relevant authorities its own restructuring plan for final approval within this year, after rejecting the group’s previous plan.

According to the ministry, reforming enterprises in the industry must clarify the difference between business activity and public welfare activity.

For important telecom markets like fixed and mobile phone or broadband Internet, the restructuring needs to ensure the participation of at least three major enterprises in each sector. The purpose is to boost competition among industry players whilst restricting the overwhelming presence of State-owned firms from other sectors.

Besides, restructuring schemes of industry insiders also need to sustain growth of markets in line with the overall economic restructuring and to balance benefits of the State and businesses and citizens.

In order to ensure economic security in the telecom sector, the State will continue to hold majority stakes in a number of services suppliers whose infrastructure and public welfare services play an important role in the national telecom infrastructure’s operation.

Deputy Minister of Information and Communications Le Nam Thang told the Daily that in fact VNPT had previously submitted its restructuring project to related ministries and agencies for comments. However, the scheme was said to be unsuitable as it had been drafted before the ministry set up orientations on restructuring plans of companies in the industry, Thang added.

As such, only when VNPT builds up its restructuring scheme in accordance with the ministry’s rules may the group gain approval from competent authorities for restructuring.

Keangnam sued for fraud in apartment sales
 
A number of residents at Keangnam Hanoi Landmark Tower have filed a lawsuit against Keangnam Vina Ltd. Company because the areas of their apartments was smaller than what was written in the contracts.

Under the contracts signed between the company and sales representatives, the price should be around USD3,000 per square metre.

Le Xuan Hoa, one of the petitioners, said under the contract her apartment should have been 126.02 square metres. However, when she received the apartment, she suspected the area was too small. She suggested that her and Keangnam jointly hire an independent company to measure the area, but the company disagreed. Finally, she hired a firm on her own and found that her apartment was three square metres smaller than what she bought.

Mrs. Quyen who bought an apartment of 206.95 square metres, said that the real space she was given was just 197.6 square metres, including 16 square metres of reinforced concrete pillars and electrical boxes belonging to the building itself.

Ms. Le Minh Thao, whose apartment also lacks three square metres, said that the reinforced concrete pillars and electrical boxes were falsely included in the area of her apartment in the 48-storey building.

Attorney, Bui Quang Hung, of Bui Quang Hung and Associates Law Firm, said, “Clause 3 of the Ministry of Construction’s Circular 01/2009/TT-BXD on apartment trading, states clearly that contracts must clearly stipulate area owned by the buyer and that belonging to the common ownership of residents. Keangnam Vina Ltd. Company’s contracts have ignored this regulation, causing misunderstandings with their customers."

According to Hung, the company may have misrepresented the areas of the apartments intentionally, making their clients think that their apartments were larger than the actual size.

After receiving petitions on July 16, the People’s Court of Tu Liem District asked Keangnam to explain these misunderstandings, however the firm has continued to delay. Under current law, if the company fails to show any evidence, the case will be brought to the court based on residents’ complaints and evidence.

Previously Keangnam residents sued Keangnam Vina Ltd. Company for applying service charges higher than those allowed under regulation. Some have had these services discontinued.  
 
 Concerns over low economic growth

Since early this year, Vietnam has made significant achievements in curbing inflation and stabilising the macroeconomy.
    
However, there remain challenges preventing the nation from reaching the targeted growth rate.

Although the consumer price index (CPI) in August inched up 0.63 percent after two consecutive months of decline, it remains relatively low compared to the same period recorded over the last eight years.

Therefore, it appears likely that the CPI will sit at around 7-8 percent, conistent with the set target. To have inflation contained at a single-digit figure will be one of the most significant economic achievements for 2012.

However, there are several reasons why inflation is likely to raise its ugly head again. The recent low CPI increase is attributed to the falling price of food, which is determined by various factors such as the occurrence of natural disasters, the spread of epidemics and global prices.

Many sectors and businesses have considered the low inflation rate as a chance to increase the prices of their goods and services. In addition, as inflation tends to surge at the end of the year when demands for investment and consumption increase, credit growth is likely to be higher in the last four months of the year.

In order to avoid such a cycle, it is necessary to be careful about loosening monetary and fiscal policies because if interest rates continue to be slashed, commercial banks with poorer capacity will try to get around the rules, leading to a return of the race in mobilisation rates among commercial banks.

In addition, economic restructuring and the shift towards a new economic model should be accelerated to improve investment efficiency and productivity.

Macroeconomic stabilisation is largely considered in terms of trade deficits and over-expenditure in the State Budget.

After two consecutive months enjoying import surpluses (US$361 million in June and US$559 million in July) Vietnam experienced a US$150 million trade deficit in August, but it was far lower compared to the same period last year. The result is due to the high export earnings in the first eight months of the year, which hit an average of US$9,169 million per month, and the slowdown of import growth to just 6.7 percent.

It is expected that Vietnam’s trade deficit will reach just US$4 billion, the lowest figure recorded since 2003.

Balancing the State Budget will be no easy task in 2012. In the first eight months of 2012, budget revenue was much lower than forecast, while budget expenditure was higher than the same period last year. If no timely measures are taken, budget over-expenditure in 2012 will exceed the 4.8 percent of GDP set target.

International organisations, economists, and policy-making agencies forecast a 5.32-5.7 percent growth rate for Vietnam in 2012. If economic growth reaches the lower end of this scale, it will be the lowest rate since 2000.

Despite the low estimated growth rate, it is considered to be reasonable in the context of the global economic crisis, which is causing more serious impacts on the country than was seen in 2009, when local business enjoyed high credit growth, low bank rates and substantial government support though a stimulus package.

Since early 2011, businesses have been confronted with various difficulties including the exhaustion of resources, high inflation and interest rates, low credit growth, and high inventory levels.

In addition, most economies worldwide are predicted to see low economic growth in 2012.

In these early stages of economic restructuring, it is crucial to persist with the containment of inflation and stabilisation of the macroeconomy while loosening fiscal and monetary policies.

 US companies upbeat about Vietnamese market

Vietnam is still a prime market in US companies’ Southeast Asian investment expansion strategies, according to a recent US survey.    

The survey was conducted by the American Chamber of Commerce in Singapore (AmCham Singapore) and the US Chamber of Commerce.

The Wall Street Journal on August 31 described the conclusions of a survey as surprising, given the fact that Vietnam is struggling to recapture the supercharged growth rates it once enjoyed and other regional countries like Indonesia and the Philippines are emerging as increasingly attractive investment destinations.

The survey that polled more than 350 leaders of US companies operating in Asia showed that increasing numbers of US employees want to work in Southeast Asia – a surprise to analysts who have long assumed China and India were the hotspots.

Even more unexpectedly, the survey also found that 57 percent of the respondents intended to expand their operations in Vietnam compared to 11 percent in Thailand and just six percent in Indonesia.

Of those operating in Vietnam, 82 percent of respondents expect an increase in profits next year, and more than half are planning to increase their workforce.

The analysts attributed those positive signs to the country’s political stability, improved relations between Vietnam and the US, and high levels of personal security. Vietnam is also a potential market of 91 million consumers and its low labour cost is an advantage for many foreign companies.

Some economists are optimistic that the Vietnamese government’s measures to tighten credit and rein in inflation will fuel the country’s economy in the coming years if the world economy manages to recover from its recent downturn.  

However, they suggested that Vietnam accelerate economic reforms, including privatising State businesses, if it wants to attract new inflows of foreign investment.

Vietnam still attractive for software outsourcing

Vietnam ranked eighth among the 50 countries which were most attractive for their software outsourcing in 2011, according to the US-based AT Kearney consulting group.  

AT Kearney’s research showed that Vietnam remained in the global top ten for software outsourcing despite a decline in some key indicators.

Nguyen Trong Duong, head of the Information Technology (IT) Department under the Ministry of Information and Communications, said that important indicators like e-government and internet development have improved in 2012.

AT Kearney said Vietnam rose two notches to 8th from 10th place in 2009 but 11 notches from 2007.

The ranking list was based on consideration of the following criteria in 50 countries: services and IT support, customer service and IT application support. The three major standards were financial attractiveness, human resources and business environment. Vietnam took the lead in the financial index.

Moon cake market heating up

Although the Full-moon Festival for children is a month away, the moon cake market is beginning to heat up with new eye-catching designs and a steady consumer purchasing power.

A festival atmosphere is prevailing across Ho Chi Minh City, from Districts 5 & 6 to Binh Thanh and Phu Nhuan. Street shops decorated with colourful posters are selling moon cakes by big name producers such as Kinh Do, Dong Khanh, Nhu Lan and Thang Long.

Nguyen Xuan Luan, deputy general director of the Kinh Do Bakery JSC, says all his agents have been placing bulk orders with the company since early August. Decreasing inflation has had a positive impact on consumer income and spending power, which has, in turn, helped fuel market demand.

As the moon cake market is seasonal and the products are often used as gifts, the orders and product volume are forecast to remain steady or even increase. Kinh Do Bakery expects to put 2,100 tonnes of moon cakes on the market, while the Bien Hoa Confectionery Corporation (Bibica) plans to churn out 500 tonnes this season.

This year’s cakes will cost 5-10 percent more than last year due to the high cost of ingredients such as sugar and eggs, as well as packaging. As a result, an average box of four moon cakes will sell for between VND100,000-400,000 while more upmarket cakes will go for between VND1-2.2 million per box.

Twenty new types of moon cakes will be introduced this year made from nutritious and healthy all natural and low-fat ingredients.

Many cake producers have also poured investment into new packaging designs to attract consumers. Bibica is offering lantern-shaped boxes that can be used by children after the cakes are eaten, while Kinh Do Bakery is introducing elegant wooden boxes with intricate decorations.

In addition to cakes made on closed production lines that meet food safety and hygiene regulations, the market is now flooded with low quality products of unknown origin. They can be found on display along HCM City’s gateways to western and eastern provinces, or at wholesale markets in Tan Binh district and Districts 5 & 6.

These cakes have no labels or “sell by” dates, and are offered at cheap prices. Baked and glutinous rice cakes with egg yolks cost between VND14,000-25,000 each, and those without egg yolks sell for VND8,000 apiece. Some cakes are even labelled in Chinese either with or without a manufacturing date.

Binh Tay market in District 6 also sells a variety of packaging materials, stamps, and moisture resistance sachets imported from Taiwan. Consumers should be on the lookout for traders that try to trick them by selling low-grade cakes in high-end boxes and claim they are from well-known brands such as Kinh Do and Dong Khanh.

Several moon cake websites have launched promotions since late July to grab consumer attention. However, the quality of the cakes on offer is not certified because these websites are not licensed. Their cakes are mostly home made and of unknown origin, but masked by Kinh Do, Nhu Lan and Dong Khanh labels.

Nguyen Xuan Luan, deputy director of Kinh Do Bakery, says his company has never sold any product online, and websites claiming to sell Kinh Do cakes are not distributors or direct agents of the company.

He recommends that consumers purchase moon cakes at the company’s agent chains and supermarkets across the country to ensure they buy the real product.

VOV/VNA/VIR/SGT/VNS/SGGP/ND/Dtinews