Commercial banks buy gold above market price

 

A number of commercial banks have begun buying gold at above market prices to encourage gold depositors to convert gold holdings to Vietnamese dong savings.

 

"The move is being seen as a temporary measure to tackle difficulties in raising capital and helping banks maintain short-term liquidity," said a senior official of a HCM City-based commercial bank, who asked to remain anonymous.

 

Commercial banks have been struggling to attract deposits at a time when high inflation has made bank deposits unattractive to investors. Many banks have had to offer interest as high as 18-19 per cent per year on Vietnamese dong in order to entice depositors.

 

Eximbank announced last Wednesday that it would buy gold at a price of VND100,000 per tael, or 0.15 per cent, higher than market value for customers who agreed to deposit the proceeds for a term of one to three months.

 

VietA Bank has launched a programme under which it would buy at a price 0.4 per cent higher than the market quotation for existing customers and 0.35 per cent higher for new customers wanting to sell gold and deposit the proceeds with the bank. The bank continues to offer certificates of deposit for gold with interest ranging from 0.5-1 per cent per year.

 

Reports from Sacombank's business division showed that, last Wednesday and Thursday, the amount of gold bought from customers rose 20-30 per cent to reach a total 5,800 taels.

 

The State Bank of Viet Nam stopped accepting deposits of gold or lending against gold, effective May 1. "Since then, dong deposits have increased," said Ton Vinh Quyen, who works in the gold division at Sacombank.

 

The Government was expected to soon designate one major gold bullion trader on the market in place of the nine currently operating, including commercial banks and jewellery dealers.

 

"Allowing only one gold trader means the market will be pulled back to the monopoly of ten years ago," said Vu Minh Chau, general director of Bao Tin Minh Chau Gold and Jewelry Co, a leading Ha Noi gold bullion trader.

 

Only one trader might not be enough to meet market demand, Chau said.

 

Chau noted that, ten years ago, when there was only one gold trader on the market, the gap between buy/sell prices was 1-3 per cent. That has since narrowed to just 0.3-0.4 per cent now that the market has more competition.

 

"When many enterprises join the gold market, customers will benefit," he said.

 

While the final decision of the Government has not yet been made, the State Bank measure has had a strong impact on gold bullion trading, with trading at Bao Tin Minh Chau down as much as 60 per cent.

 

HSBC Vietnam to have new CEO

 

Thomas Tobin, CEO of HSBC Vietnam since May 2007, has just ended his term of office with Sumit Dutta expected to replace him.

 

Tobin on Saturday became the first foreign banker to receive the certificate of merit from the State Bank of Vietnam in recognition of his accomplishments and contributions to the banking industry in Vietnam from 2009 to 2010.

 

He has played a major role in the Banking Working Group to advise the central bank on affairs related to improving and fostering the growth of the banking industry.

 

During four years working in Vietnam, Tobin has helped HSBC set up the 100% foreign-owned bank in this market, increase its branch number from two to 16 in major cities in two years, and raised the bank’s staff from 400 to 1,600. In 2009 and 2010 operating as a local entity, HSBC Vietnam obtained pre-tax profits of VND1.02 trillion and VND1.4 trillion respectively.

 

Dutta was representative of HSBC Vietnam acting as executive board member of Techcombank, where HSBC owns a 20% stake, from 2009 to earlier this year.

 

No time for backward steps Macro

 

Local economists are warning inflation will continue to spiral unless the government sticks to its guns on tightened fiscal and monetary policies until the year’s end.

 

Nguyen Duc Thanh, director of the Vietnam Centre for Economic and Policy Research (VEPR) under the Hanoi-based University of Economics and Business, said inflation would possibly climb to 18 per cent this year if the government loosened its grip on fiscal and monetary policy.

 

“We have suggested that the government should be persistent with its tightening policies until late this year and should stand firm in the face of public and business pressure to be successful with its anti-inflation policy,” Thanh said.

 

“A strict implementation of the government’s Resolution 11 will keep inflation at 15 per cent this year,” added Thanh.

 

Resolution 11 introduced on February 24, aims to contend with an unstable macroeconomic situation where Vietnam was being negatively affected by global economic and political uncertainties.

 

The resolution provides measures to rein in inflation, stabilise the macroeconomy and ensure social stability.

 

Included in the resolution are moves to tighten monetary and fiscal policies, cut public investment and reduce budget and trade deficit.

 

State-run economic groups and enterprises are a particular target of the resolution. “Vietnam’s current economic development model focuses on extensive investment with state-run economic groups [acting as] the steering role in the economy. These groups are, however, operating ineffectively, resulting in a big waste of national resources,” Thanh said.

 

According to the Ministry of Planning and Investment (MPI), the public sector has slashed some VND97 trillion ($466 million) from the investment projected for this year. State-run economic groups and corporations alone have cut investment in 907 projects worth VND39.2 trillion ($188 million).

 

But the MPI reported that many localities and enterprises had not yet been ruthless enough.

 

Deputy director of Ho Chi Minh City’s Industry and Trade Department Ton Cong Tri stressed that now was not the time to report economic achievements.

 

“The majority of measures we have taken so far to deal with market problems are administrative instructions. We need more market solutions rather than those instructions and statistics,” Tri said. Inflation in April was up 9.64 per cent against December last year, far higher than the 7 per cent level set for 2011.

 

Gemadept to plant rubber trees in Cambodia

 

The General Forwarding & Agency Corp. (Gemadept) plans to invest $44.3 million in growing rubber trees in Cambodia , a company representative said on May 22.

 

The scheme was announced at the company’s 2011 Annual General Meeting of Shareholders, the representative said.

 

The company will also issue 3-5 year bonds totalling $30-70 million, with interest rates ranging between 0-6 per cent per annum. The issuance of bonds is expected to take place between the fourth quarter of 2011 and the first quarter of 2012.

 

Gemadept is one of Vietnam ’s leading companies operating in port operation, container liner service, ship and forwarding agency, logistics and financial investment.

 

Italian investors look for dolce vita in Vietnam

 

It is a case of forza Italia for Italian investment projects in Vietnam.

 

Italian ambassador to Vietnam Lorenzo Angeloni told VIR that the Italian government would financially fuel prospective Vietnamese-Italian joint ventures and the Vietnamese government projects.

 

Priorities would be given to joint ventures engaging in agriculture, breeding, fisheries, food-processing and craftsmanship. Energy, transportation, waste treatment, microfinance, fair-trade, sustainable tourism and cultural and environmental projects would be included, Angeloni said.

 

Under Article 7 of Italy’s Law 49/87 on development cooperation, Italian companies could demand soft loans to create joint ventures for projects in Vietnam.

 

The main goals are to mobilise financial resources and add capabilities through new public-private partnerships to promote an inclusive and sustainable development, giving priority to the creation of jobs and local added value as a synergy with the Italian cooperation activities.

 

General conditions for a new joint venture or capital increase, include a local partner controlling at least 25 per cent of capital, the soft loan only asked by the Italian partner and the company must have be active in the same sector of the joint venture for no less than three years. The soft loan can be up to 70 per cent of the Italian partner’s share, to a maximum value of €5 million. After a specific period of time, the Italian side would return its loans to the government without causing any bad influence to the joint venture.

 

“This is a very good opportunity for more Italian firms to do business in Vietnam and for more Vietnamese firms to cooperate with Italian partners,” said the embassy’s Development Cooperation Office head Carlo Cibo.

 

According to the Ministry of Planning and Investment’s Foreign Investment Agency, Vietnam was now home to 39 Italian projects with total registered capital of $187.7 million.

 

At present, the Italian government has provided financial support for an Italian firm in a joint venture in Ba Ria-Vung Tau province, engaged in aquatic product processing and exports.

 

Cibo said that Italian firms must be selected for being granted loans by the Italian government. Also, Vietnamese partners must introduce feasible business and investment plans and projects.

 

“Vietnamese partners need to seek information from Vietnam-based Italian Chamber of Commerce or from the embassy,” Angeloni said.

 

In a similar development, he said the Italian government would also offer Vietnam official development assistance (ODA) of €30 million in soft loans and €4.5 million in grants. Additionally, a further grant of €7.5 million has been made available as the result of a Debt Swap Agreement signed in 2010.

 

These funds would be destined to development cooperation activities to be implemented over the next three years, according to the Italian Ministry of Foreign Affairs.

 

These funds would be focused on health improvement, training and support to small- and medium-sized enterprises and environment/environmental protection, which would be all implemented in Vietnam’s central provinces of Quang Tri, Thua Thien-Hue and Quang Nam where are considered by the Italian government to be high number of invalids and poor households.

 

Vietnam currently houses 21 Italian operational ODA projects worth total 76 million euros, which would finish over the next two or three years.

 

Vietnamese auto industry addicted to imports

 

An increase in imports has compromised the “Made in Vietnam” strategy for the auto industry, which focused on domestic assembly and production.

 

Both producers and joint ventures have tended to import vehicles from other Southeast Asian countries rather than focusing domestic manufacturing.

 

Thailand has the largest auto factories in the region. Although there are plants for Toyota, Honda, Nissan and Mitsubishi in Vietnam, all have opted to import certain models from Thailand rather than produce or assemble them locally.

 

Ford has decided to invest additional $800 million into an upgrade of its production facilities in Thailand for the new Ranger and Focus models. Mitsubishi has also announced that it will invest $532 million into a third plant specialising in the production of i-MiEV electric cars in the neighboring country. General Motors has similar plans.

 

Under the commitment of ASEAN Free Trade Area (AFTA), since January 1 this year, import tariff on autos with less than nine seats produced in ASEAN countries has been reduced from 83 per cent to 70 per cent.

 

Despite being offered incentives, the local auto industry has not made any large strides. There is little difference between the prices of domestic and imported vehicles because Vietnamese plants must import components for manufacturing.

 

According to the AFTA’s roadmap, Vietnam will have to cut auto import tariffs from other ASEAN countries to 0 per cent by 2018 from the current 70 per cent. This will present a great challenge for the Vietnamese auto-making industry.

 

Jollibee Foods to buy 49 pct stake in Viet Thai

 

Jollibee Foods Corp., the Philippines ’ largest fast food chain operator, has decided to buy a 49-per cent stake worth $25 million in the Viet Thai International Joint Stock Company of Vietnam.

 

Furthermore, Viet Thai will also receive a loan advance of $35 million to be repaid in 2016 with an interest rate of 5 per cent per annum, sources said on May 22.

 

Viet Thai, the owner and operator of Highlands Coffee, plans to use part of Jollibee’s investment to fund its purchase of a restaurant chain.

 

Jollibee Foods, known for its fired chicken and hamburgers and also owns bake shops and pizza and pasta restaurant, outsells McDonald’s and KFC in the Philippines .

 

The company operates a total of 1,931 stores in the country, and 407 outlets abroad.

 

Trade deficit with China heads north northwards

 

Vietnam’s trade deficit with China hit a record high in the first four months of this year.

 

It made up more than 80 per cent of the country’s total deficit during the period, according to the Ministry of Industry and Trade.

 

The latest figures show Vietnam incurred nearly $4 billion trade deficit with China from January to April this year. Vietnam’s overall trade deficit in the same period was $4.9 billion.

 

In April alone, Vietnam’s trade deficit with China stood at $1.37 billion, one and a half times up on March’s figure.

 

A study carried out by the Vietnam Centre for Economic and Policy Research (VEPR), found that level of Chinese penetration in Vietnam was increasing for a majority of products, from machinery to consumer goods.

 

“Industries with the highest penetration rates are concentrated in important sectors including power, petroleum, engineering, metallurgy, mining and chemicals,” according to the VEPR study released last week.

 

“These are upstream industries with many large-scale engineering-procurement-construction contracts where contractors are Chinese and counterpart investors are important economic groups of Vietnam.”

 

Pham Hong Son, rector of the University of Economic and Business in Hanoi, to which VEPR belongs, said that Vietnam’s deficit with China reflected a south-north trade relationship, in which Vietnam usually exported raw goods, materials and natural resources to China while importing a great deal of input materials, equipment and machinery for local production.

 

Son predicted Vietnam would continue to have a large trade deficit with its northern neighbour as this country developed.

 

“The problem is that the imports of equipment and machinery into Vietnam must be high-tech. Otherwise, they would cause many environmental problems and not support Vietnam’s long-term economic development,” he said.

 

According to the VEPR study, despite the idea that imported technology and equipment were needed to increase the added value of Vietnamese products, the spillover effect of importing from China was not as high as expected in both technological and sociological terms.

 

Vietnam’s trade deficit with China has been the largest with a single country for a number of years.

 

The ASEAN region ranked second after China in having trade surplus with Vietnam during January-April period this year with a figure reported at $2.6 billion.

 

Vietnam, however, had a trade surplus of $2.5 billion with European markets in the first four months of this year, while the surplus with American markets in this period was $3.58 billion. These partly offset the country’s large deficits with both China and ASEAN bloc.

ANZ opens Signature Priority Banking branch in Hanoi

 

ANZ today opened a Signature Priority Banking branch in Hanoi, providing greater convenience to its affluent retail banking customers in Vietnam.

 

The new branch complements ANZ’s first Signature Priority Banking branch in Ho Chi Minh City, which was opened in September 2010.

 

Joe Farrugia, head of Retail Banking & Wealth Management ANZ Vietnam, said: “Vietnam is a fast growing economy. ANZ is committed to supporting its customers to grow their wealth and enjoy convenient banking, and our new ANZ Signature Priority Banking branch in Hanoi is the latest milestone in delivering uncomplicated, personalised banking service.”

 

“At the core of Signature Priority Banking is the ANZ relationship manager who is dedicated to providing solutions to meet each customer’s personal financial goals including saving, investment, protection, and borrowing. Each relationship manager is supported by a team of specialists who can provide advice on insurance and wealth management products and mortgages,” said Farrugia.

 

Features of ANZ Signature Priority Banking include full banking and wealth management services including savings, current accounts, structured products (VND and AUD Gold Tower; Dual Currency Investment) and insurance;Signature Priority Banking debit card with access to more than 1 million locations worldwide; 24-hour phone and internet banking; preferential rates and pricing on banking transactions, deposits and mortgages;access to investment specialists, regular seminars on investment outlook; and invitations to lifestyle events.

 

Launched in 2010, ANZ Signature Priority Banking has been introduced in eight markets in Asia Pacific, including Vietnam, China, Hong Kong, Taiwan, Singapore, Indonesia, Fiji and Papua New Guinea.

 

ANZ was among the first foreign banks to operate in Vietnam after establishing its first office in 1993. ANZ has nine outlets in Vietnam and offers a full range of international banking services across Institutional and Corporate Banking, Financial Markets, Trade Finance, Corporate Banking and Retail Banking.

 

Industrial zones yet to take off

 

Many industrial zones nationwide report low occupancy rate, causing huge wastes of land.

 

The occupancy rate at industrial zones (IZs) in northern Ha Nam province is less than 70 per cent though the province has many advantages in luring investors.

 

Until 2011’s first quarter, 265.7ha of IZ land was given to investors, of which businesses used up 177.8ha, according to Ha Nam Industrial Zones Management Authority deputy head Pham Ba Tung.

 

Some provincial IZs report low occupancy rate such as Hoa Mac 4.8ha out of 131ha, Dong Van II 65.8ha out of 320ha and Chau Son 36.2ha out of 115ha.

 

Another northern location, Hung Yen, is in the same position. Accordingly, of four on-going IZs out of a total 13 IZs, the occupancy rate of Pho Noi A IZ is over 56 per cent (220ha out of 392ha) while that of three remaining IZs was very low. For instance, it is 16 per cent at Pho Noi Textile Garment IZ and 20 per cent at Minh Duc IZ.

 

The Mekong Delta houses 20 IZs covering 3,645ha. However, merely 810ha were leased out, around 22 per cent of total. Besides, the region also accommodates 177 industrial clusters covering 15,457ha but businesses only occupy 15 clusters with 700ha leased, just 4.5 per cent of the total.

 

Head of Region 1 Academy of Politics and Public Administration’s Economics and Development Faculty Dr. Nguyen Van Su attributed the poor figures to localities vying for IZ licencing, while thinking little of their future development orientations.

 

Economist Le Dang Doanh attributed the situation to lax foreign direct investment management and poor forecasts. In his mind, it is now high time for checking up IZs nationwide, whereas more prudent policies on IZ development must be created.

 

Doanh also suggests taking back deserted IZs for development of residential blocks, hospitals, schools or simply returning land to farmers.

 

From the part of Ho Chi Minh City Industrial Zone and Export Processing Zone Authority head Vu Van Hoa, the core reason was poor investment promotion.

 

Localities needed to invite investors, local and international investment promotion organisations to partake in meetings where local advantages and potential were showcased alongside investment incentive policies to woo investors, Hoa said.

 

According to the Ministry of Planning and Investment, Vietnam is currently home to 260 IZs covering 71,394ha in total area. Of which 173 IZs are operational with a total area of 43,718ha.

 

Industrial zones are seen in 57 provinces and municipalities nationwide. Southern key economic zone hosts 124 IZs making up 48 per cent in total. 52 IZs are positioned in northern key economic zone, accounting for 20 per cent and 23 IZs are in central region key economic zone, around 10 per cent of the total.

 

Vinacomin to build coal entrepot for thermo-power centers

 

Vietnam National Coal and Mineral Industries Group (Vinacomin) is in the process of selecting a location for a huge coal entrepot which will be used for transporting imported coal to thermoelectricity centers in the southern region.

 

Vu Van Long, head of the Investment Office of Vinacomin, told the Daily that given a recent instruction by the Government, Vinacomin is accelerating research and making plans for construction of the entrepot within this year.

 

The group will build the facility in accordance with the national master plan for power development in the future, Long said.

 

According to the Ministry of Industry and Trade, the country will likely import large amounts of coal of up to 40 million tons each year by 2015 and up to nearly 200 million tons each year by 2020 to satisfy the coal demand for industrial production and thermo-power stations.

 

In the future, the thermoelectricity centers in the Mekong Delta will also need 15 million tons a year and others such as Van Phong of Khanh Hoa Province, and Binh Thuan Province’s Vinh Tan and Son My will require between 6 and 13 million tons of coal a year.

 

Meanwhile, the ports system in the southern region is facing an overload while the region still lacks specialized ports, particularly for coal import and transport.

 

Talking about construction of Ke Ga Port in Binh Thuan Province, Long said it has been delayed because of slow site clearance in other resort projects in the province. 

 

He said Vinacomin and the government of Binh Thuan Province are speeding up site clearance so the group can start work on the deep-water seaport soon.

 

Seafood association to increase Tra fish export price floor

 

The Vietnam Association of Seafood Exporters and Producers (VASEP) said it plans to increase the Tra fish export price floor by adding another US$0.2 per kilo in the next quarter of the year given a possible shortage of fish after the harvest season.

 

Duong Ngoc Minh, vice president of VASEP, told the Daily that the new floor export price would apply to key markets including the U.S. and Europe.

 

“The association will increase the lowest export price for the U.S. market to US$4.4 per kilo from the current US$ 4.2 per kilo and to US$ 3.6 per kilo from the current US$ 3.4 per kilo with exports to European countries,” Minh said.

 

The price of unprocessed Tra fish in An Giang Province last week dropped slightly from the previous week, to VND 28,000 or VND 28,500 per kilo.

 

According to Nguyen Van Ky, general director of An Giang Fisheries Import and Export Joint Stock Company (Agifish), a large Tra fish exporter in the southern province, Tra fish export price averages at US$3.4 per kilo or US$0.2 higher than the price floor announced by VASEP in its first quarter meeting held in April 27 in HCMC and that exporters can still pin hopes that the price would continue rising.

 

“Importers are accepting the fact that we are dealing with high input costs and rising materials prices, getting the deal done easier for us,” he said.

 

Agifish is an exception among listed Tra fish exporting companies that had positive earnings in the first quarter of the year for having stockpiled a few thousand tons of Tra fish at the end of last year, when raw fish price was only VND22,000 per kilo.

 

The price of raw fish has hit VND29,000 per kilo in April and backed down slightly last week.

 

Other exporters, like Navico, another listed firm also based in An Giang Province, have been hit by the materials shortage and high prices. Navico has announced a decrease by 30% in net sales from the same period last year to VND 255 billion, due to the huge drop in export volume at 50% over last year.

 

Materials shortage has pulled down the estimated Tra fish export volume this year to around 360,000 tons from last year’s more than 600,000 tons, according to VASEP.

 

According to Vietnam Customs, the country had exported a total of 159,000 tons of Tra in the year to April 15, earning US$440 million, up 6.2% in volume and 23% in value from the same period last year.

 

SGI supports hard-up people in District 2

 

The Saigon Invest Group (SGI), developer of over 20 industrial zones nationwide and real estate projects, last week donated VND200 million to poor households and 30 scholarships to students in District 2.

 

The donation was conducted by the group in conjunction with the People’s Committee of District 2 and was part of the program ‘To accompany with the poor’.

 

In March, SGI donated VND3 billion for the social security program of Phu Nhuan District. Navibank, a member of SGI, also ran the program to offer support for poor households in Phu Nhuan District.

 

Hung Vuong University, under the management of SGI, in March joined hands with high-schools in Phu Nhuan District to grant scholarships to studious students and offer vocational training for poor people in the locality.

 

Dutch Lady starts ‘dream’ playground construction

 

Dutch Lady of FrieslandCampina Vietnam in co-ordination with the Department of Primary Education–Ministry of Education and Training on Friday celebrated the start of the construction of a VND400  million playground at Tran Van On Primary School in District 12.

 

In the past two months since launching the ‘Together with Dutch Lady, create your own amazing playground’ the organizers received the entries from more than 2,000 primary schools in 36 provinces in the country. More than 20,000 colorful, vivid paintings were sent to the program.

 

From the pictures submitted, the Board of Judges ruled that six primary playgrounds, valued at VND400 million, would be built from drawings of their own school’s pupils.

 

The six schools are: Phu Minh Primary School (Hanoi); Nguyen Van Troi Primary School (Haiphong); Thai Thi Boi Primary School (Danang); Truong Son Primary School (Ba Ria-Vung Tau); Tran Van On Primary School (HCMC) and Chu Van An Primary School (Vinh Long).        

 

Also 100 other primary schools received 100 boxes of Dutch Lady yoghurt drinks for their enthusiastic participation. The contest asked the kids to paint their perfect playground.