Banks target higher second-half earnings
 
Local commercial banks are hoping to earn higher profits in the next two quarters of the year so that they can meet their annual pretax targets, but current market conditions make this a difficult task.

The first half of the fiscal year is almost over, but pretax profits at many banks only meet 20-30 per cent of the year's target.

The deputy chairman of a commercial bank said they'd set a profit target of VND550 billion (US$26.5 million) for the year, they'd managed only VND100 billion ($4.8 million) in the first five months.

However, he said he hoped to make up a lot of lost ground in the coming months. In previous years, earnings usually increased strongly in the two remaining quarters of the year, he said.

The Tien Phong Bank posted pretax profits of VND139 billion in the first five months, meeting 38.6 per cent of year-target, however, its general director Vu Tu was positive about its possibility of fulfilling year-target of VND360 billion ($17.1 million), the Dau tu newspaper reports.

Tu said monetary market will be likely to have positive changes later this month, especially when the interest rate in the interbank market has reduced, which will be a premise for interest rate in the market to fall.

"It may be rather early to say so, but policies to control inflation set by Government and the State Bank of Viet Nam have begun showing effective," he said.

Similarly, the Orient Joint Stock Commercial Bank (OCB) set a pretax profit for 2011 of VND500 billion ($23.8 million), but the bank just obtained a profit of VND115 billion ($5.5 million) in the first five months.

Trinh Van Tuan, OCB general director, said the bank had achieved only five per cent credit growth against the same period last year. He also said that the bank was gradually restructuring itself to cut back outstanding loans to the non-production sector to 22 per cent by the end of this month.

He hopes that the situation will be better in the remaining months of the year, creating favourable conditions for its operation.

However, with the government's credit growth cap of 20 per cent, and outstanding loan ratio to the non-production sector to be ut back to 22 per cent by the end of June and 16 per cent by the year-end, the banks' hands are tied.

The target restrictions would mke it difficult for banks to earn more in the next two quarters because their profit mainly comes from credit activities. At some small banks credit makes up to 80-90 per cent of the banks' total profits.

Dollar exchange to hold steady till year-end: ANZ

The US dollar-Vietnamese dong exchange rate is expected to hold steady to the end of this year, but ANZ bank anticipates a dong devaluation early next year.

According to the bank's report released today, Government efforts to stabilise the foreign exchange market and restore confidence in the dong were having a positive effect.

The dong onshore trading rate has stabilised in the VND20,550-VND20,650 per US dollar range in recent months.

In the offshore Non Deliverable Forward (NDF) market, the dong's implied 12-month discount has narrowed by 2.2 percentage points from its post-devaluation peak in February. The dong's one-month NDF discount has also stabilised around 1.0 per cent.

"The State Bank of Viet Nam (SBV)'s more aggressive stance on inflation and changes in its FX policy are behind the recent stabilisation," ANZ's report said.

However, ANZ expects the dong to be devalued by 3-4 per cent in 2012 as inflation remains in double-digits. The dong's real effective exchange rate (REER) – a measure of its cost competitiveness – has appreciated by 5.6 per cent since March, which will adversely impact on the trade deficit and exacerbate Viet Nam's already fragile balance of payments position.

Viet Nam's inflation climbed to 19.8 per cent year on year in May, marking a 29 month-high.

HN taxation bureau collects $11.3 million from tax evaders

The taxation office collected VND232 billion (US$11.3 million) in fines from tax evaders in the first half of this year.

Thai Dung Tien, deputy chief of the Ha Noi Taxation Bureau, said in the last six months tax receipts totalled VND54.6 trillion ($2.6.6 billion), an increase of 11.1 per cent compared to the same period last year.

He said in the second half of this year tax officials would focus their efforts on medium and large-sized enterprises, particularly those involved in real estate. –

Seafood sector sees strong growth
 
Viet Nam's seafood sector has made remarkable progress, especially in exporting tra and basa fish, in the past decade, according to a report from the Fisheries Directorate under Viet Nam's Ministry of Agriculture and Rural Development.

Chu Tien Vinh, deputy Director General of the Directorate of Fisheries, said the sector earned US$5 billion from exports per annum while contributing to poverty alleviation and safeguarding national sovereignty at sea.

Speaking at the ASEAN-SEAFDEC (Southeast Asian Fisheries Development Centre) conference held in Bangkok on June 17, Vinh said Viet Nam was willing to cooperate with other countries in the region to develop sustainable aquaculture in the country's East Sea to benefit future generations.

The conference theme was "œSustainable Fisheries for Food Security Towards 2020 – Fish for the People 2020: Adapting to a Changing Environment."

In 2010, the Vietnamese aqua product sector earned $5 billion from exports with tra exports exceeding $1 billion.

In the first six months of this year, Viet Nam earned more than $3 billion in export turnover, and the sector targeted a turnover of $5.5 – 6 billion for the year.

Currently, the US is Viet Nam's largest seafood export market, followed by Russia and Ukraine. Viet Nam also plans to enter the central African market in the future.

Viet Nam aims to diversify its aquaculture by applying new technologies for breeding clean tra and basa fish, ensuring food safety and hygiene and seeking new aquatic products.

Viet Nam has co-operated with many ASEAN nations in the field of aquaculture. It has signed agreements on exploiting seafood products with Indonesia and the Philippines and plans to enter similar deals with Myanmar and Malaysia in the future.

Viet Nam also aims to cooperate and exchange information with Thailand in this field.

A joint statement, released by ASEAN Ministers and the SEAFDEC at the closing of the conference, emphasised producing aquatic products for food security and poverty reduction, improving effective management of aquaculture and strengthening adaptation to climate change.

It also encouraged increasing the competitive edge of seafood products in the world market, more efficient use of energy and renewable energy promotion.

"The ministers recognise the importance of the fisheries sector in ASEAN and the major role it plays in the three ASEAN Communities – political security, economic and socio-cultural. They also recognised the sector's role in contributing to national development, food security, sustainable development and the improvement of livelihoods, as well as its important contribution towards the realisation of an integrated ASEAN Community and achieving the Millennium Development Goals," the statement said.

"The Ministers recognise the emerging challenges and changing environment facing the fisheries sector, particularly the degraded status of fisheries resources and their associated habitats, rapid changes in trade and market measures, and the potential adverse impacts of the changing environment brought about by climate change, among others."

"These challenges require closer cooperation and innovative interventions to enhance the adaptive capacity of the sector in the context of ASEAN Community Building and beyond," the statement said.

Farmers fret over high fertiliser prices during growing season
 
A strong increase in fertiliser prices during June has caused farmers, who need to spray their summer-autumn crops, much worry, according to the Ministry of Industry and Trade's Market Watch Team.

Le Quoc Phong, deputy chairman of the Viet Nam Fertiliser Association and general director of the Binh Dien Fertiliser JSC, confirmed that urea and DAP prices have increased since the beginning of June due to the rise of input costs and global demand.

Urea prices have increased to VND10,000 from VND9,200 per kilo, a rise of nearly VND1 million per tonne.

In order to stabilise fertiliser prices, the Binh Dien Corporation has not increased the price of NPK fertiliser.

Phong added that, although the Phu My fertiliser plant had assisted in stabilising domestic fertiliser prices, the plant had temporarily ceased operating in order to undergo maintenance, causing a domestic fertiliser price hike, approximately equivalent to the global price.

On June 15, the Phu My Fertiliser Company officially restarted operations with a production capacity of nearly 2,400 tonnes of urea fertiliser per day, easing tensions on the domestic market.

The wholesale price of urea fertiliser, produced at the Phu My factory, came to VND9,500 per kilo between June 16 and June 30 while urea fertiliser imported from China came to VND9,700 per kilo and DAP fertiliser, also imported from China, came to VND14,100 per kilo.

The Ministry of Industry and Trade reported that locally produced urea would reach 50,200 tonnes or 57.6 per cent of its total production plan only.

The ministry estimates that the fertiliser market would see considerable changes due to export tax reductions in the Chinese market while fertiliser prices continue rising in the world market in June.

Urea fertiliser demand currently ranges between 2 to 2.2 million tonnes per year. It is expected that Viet Nam would be able to produce 3.22 million tonnes of urea fertiliser a year by 2015.

The country has two urea fertiliser factories including Ha Bac Nitrogenous Fertilizer, with a production capacity of 180,000 tonnes per year, and the Phu My Fertiliser Company, with a capacity of 740,000 tonnes per year, which had been expanded to 800,000 tonnes since the fourth quarter of last year.

Fertiliser supply currently stands at between 920,000-980,000 tonnes a year in comparison with actual demands of 2-2.2 million tonnes per year.

According to the Viet Nam Chemistry Group (Vinachem), Nitrogenous Fertilizer, to be produced by the Ninh Binh Plant, will reach 560,000 tonnes per year by November.

The Ca Mau Fertiliser Plant, with a capacity of 800,000 tonnes per year, is set to be completed by the end of this year while the development of the 560,000-tonne Cong Thanh Fertiliser Plant will be kicked off later this year.

By building more plants between 2010-14, urea output will rise to over 3 million tonnes by 2015.

It is predicted that, by 2015, the domestic urea fertiliser market share will experience much competition between local manufacturers and importers .

In order to stabilise prices for the summer-autumn crop, fertiliser manufacturers should develop detailed production plans in order to reduce imports while still meeting domestic demands, said Nguyen Hac Thuy, vice chairman of the Fertiliser Association of Viet Nam. —

Rice deal inked with Sierra Leone
 
A Memorandum of Understanding (MoU) on rice trade was signed yesterday in Ha Noi between the ministries of industry and trade of Viet Nam and the Republic of Sierra Leone.

The MoU would serve as a legal framework for establishing a stable rice trade between Viet Nam and the Republic of Sierra Leone in a move to further accelerate bilateral food co-operation in the time ahead, the Vietnamese Ministry's Department of African, West Asian and South Asian Markets said in a press release.

Seeking more export opportunities to the Republic of Sierra Leone would also contribute to speeding up Viet Nam's rice exports to the African market, which currently made up one- fourth of the country's total annual rice export volume, the department said.

Sierra Leone imported 14,000 tonnes of Vietnamese rice last year worth US$8.04 million, accounting for 40 per cent of the country's total import value from Viet Nam.

Viet Nam and Sierra Leone previously signed an MoU on fostering co-operation in agriculture and salt production and agreements on economy, trade, culture and technology.

Two-way trade remained modest in the past five years, however, reaching over $22 million in 2010, the department said.

During the period, Viet Nam enjoyed an export surplus with main export items including food, tobacco raw materials, mazut oil and equipment.

Prices of essential goods to stabilise

The inflation rate is expected to rise by 1.2 to 1.4 per cent in June, with price increases slowing in most categories of agricultural commodities and other essential goods, the director of the price management department of the Ministry of Finance, Nguyen Tien Thoa, has said.

Rice prices were expected to stabilise or decline slightly due to an increasing domestic supply and low export demand compared to that enjoyed by competing rice-growing nations like Thailand, which was expected to see exports rise due to rising demand in Africa and the Middle East, the department reported.

Meat prices surged in the first half of June but were expected to stabilise, while the cost of fruits and vegetables were predicted to continue decreasing.

The price of sugar has risen sharply and is expected to continue to do so due to rising demand in the same region, while supplies have declined following a late sugar cane harvest in Brazil, a major world supplier.

Energy prices have also continued to be affected by the political turmoil in the Middle East and North Africa. Prices of liquified petroleum gas (LPG) have surged globally, although reduced European and North American demand in the summer months should help ease price pressures.

LPG prices in June fell by US$80 per tonne from the previous month. Last week, four out of five domestic LPG distributors announced that they would reduce prices by 4-7.7 per cent by the end of the month.

The department predicted that domestic demand for cooking gas would total 90,000 tonnes in June, with 37,500 tonnes coming from imports.

WTO commitments prevent tax hikes to curb imports

Two key economic indicators, inflation and trade deficit, have plagued Viet Nam's economic recovery for the last two years, and caused the Government to walk a policy tightrope.

In February, the Government proposed a five-prong approach to address the dual problems of inflation and trade deficit. The approach sought to foster domestic production, encourage exports, and limit imports.

The most worrisome strategy, however, is related to efforts by the Ministry of Industry and Trade (MoIT) to limit imports – worrisome because the nation's WTO commitments require the removal of obstacles to cross-border trade. Nevertheless, MoIT issued Decision No 1380/2011/QD-BCT on March 25, listing goods it deems at risk of over-importation (the "Discouraged List").

Goods on the list are grouped into 297 categories and include 3,724 separate taxable items. The list is dominated by consumer and household goods and automobiles.

The Discouraged List is just that, a list. There is no guidance to tell what is to be done with items on the list. And that has been the concern. Will there be administrative measures applied arbitrarily that act effectively as tariffs? Will the existence of such a list interfere with foreign-invested businesses that rely on the listed items for their operations? Will there be any restriction on the trading rights of foreign-invested companies?

The answer came from the Ministry of Finance (MoF) with its Official Letter No 4388/BTC-CST, issued on April 5. The letter took into account international treaties and commitments in determining the policy direction.

Under WTO commitments, specific import goods are given a maximum rate for import taxes, a ceiling or cap. This cap varies by classification of goods. After reviewing the Discouraged List, MoF found that 3,406 items on the List were already being taxed at their ceiling rate. Nothing could be done to further discourage their import, at least not by the use of taxes. MoF found that taxes on 149 items were set at 1-3 per cent below the ceiling and 169 items at 4 per cent below.

MOF stated that it would take no action on those items already taxed at the ceiling rate, nor on the 149 items taxed at 1-3 per cent less than the cap. Of the remaining 169 items, the MoF found only eleven that it intended to tax further.

This has been the extent of action so far to the proposal to limit over-importation. No administrative measures, such as prohibition or suspension of certain imports, has been or seems likely to be introduced.

Absent straight-up tax increases, the battle to reduce trade deficit will have to look to other measures, especially sound management of banking and monetary policy and improved domestic production. It's good news to see that the Government is actually playing by the international rules. Compliance with international agreements demonstrates a commitment to sustainable trade policy, something necessary for Viet Nam to balance the trade deficit and stabilise the value of its currency.

Ha Noi trade deficit hits $8.3b in first half

The capital's trade deficit hit roughly US$8.3 billion during the first half of the year, nearly double the number of its exports, despite efforts by relevant authorities to restrict the trade gap.

The Ha Noi Statistics Office (HSO) reported that the capital gained $4.26 billion from exports during the first half of the year, an increase of 17.2 per cent against the same period last year. It spent up to $12.5 billion on imports, an increase of 23 per cent.

As part of the total import value, materials and equipment accounted for $5.9 billion, an increase of 31.1 per cent. The capital disbursed a further $3.6 billion on the import of petrol and oil.

As for exports, computer parts and peripheral devices made up the largest part of the capital's export turnover of nearly $713 million, a 13.4 per cent increase compared to the same period last year. Textiles brought in $483 million, an increase of 17.1 per cent.

Exports by private firms were reported to have reached a growth rate of 28.1 per cent during the period while State-owned firms reached a rate of 16.7 per cent and foreign invested firms, 13.9 per cent.

In addition to maintaining its presence in traditional markets, the city also plans to boost its exports to Africa and Eastern Europe.

The HSO reported that the capital attracted 140 foreign-invested projects in the first half of the year, total registered capital reaching $875 million, a 6.7 times increase against the same period last year.

Of the total, $414.4 million came from 107 newly-licensed projects and $460.7 million from 33 existing projects.

Awards honour Dragon Capital

The British asset management firm Dragon Capital was nominated last week for the prestigious Financial Times/IFC Sustainable Finance Awards 2011 in the Sustainable Asset Manager of the Year category.

"This recognition is as much a testament to the commitment of Dragon Capital's management and employees as it is to our investee companies and all of the people of Viet Nam who share our values in pursing sustainable growth and management," said Dominic Scriven, CEO for Dragon Capital.

The FT/IFC Sustainable Finance Awards, the major global awards for environmentally and socially responsible banking and investment, evolved out of the FT Sustainable Banking Awards, which for over five years established themselves as the world's leading awards for banks and other institutions focused on sustainable development.

Food exports to Indonesia rise

Vietnamese food and beverage products exported to Indonesia surged by 43.14 per cent during the first six months of the year.

The Indonesian Food and Beverage Association (Gapmmi) on Sunday released a report revealing that the country had spent 5.51 million on VN imports.

The association confirmed that the country's imports from other ASEAN nations continued to increase during recent months thanks to tax exemptions, the regional free trade agreement (AFTA) and efforts by the Indonesian government and relevant agencies in fighting smuggling.

Truong Hai Auto opens new plant

The Truong Hai Auto JSC (Thaco) inaugurated a new bus manufacturing plant at the Chu Lai-Truong Hai Automobile Manufacturing and Assembly Complex situated in central Quang Nam Province.

The VND600 billion (US$28.6 million) Thaco bus plant, occupiying an area of 15ha, has a first phase capacity of roughly 1,500 units per year and has created around 600 local jobs.

Thaco expects to export its products to the ASEAN market by mid 2012.

PM requests new rubric for imports

The Prime Minister has called the Ministry of Industry and Trade to draft itineraries for the use of technical measures to replace current automatic import licensing procedures before September 30.

The ministry currently applies automatic import licences to several imported goods including steel and frozen meat, aimed at curbing the trade deficit.

While awaiting new measures, automatic import licensing procedures will be allowed to continue.

Exports to India take a dive

The export of tea to India has decreased sharply so far this year due to the decline of India's tea import for re-export, in turn due to price hikes.

India's imports of tea for re-export purposes declined by 25 per cent during the first four months of the year.

Viet Nam exported only 201 tonnes, worth US$332,000, of tea to India in the first quarter of 2011 compared with more than 1,900 tonnes, worth $2.32 million, during the same period last year.

Work begins on textile plant

The Tay Son Textile JSC started construction of a VND100 billion (US$4.8 million) factory in central Binh Dinh Province on Sunday.

Located in Phu Phong Town, the factory covers an area of nearly 12,500sq.m.

With the completion of the first phase construction during the first quarter of 2012, the plant will have an output of 400,000 suits, creating jobs for roughly 1,200 workers.

Hoa Binh attracts 31 new projects

The People's Committee of northern Hoa Binh Province has licensed 31 projects, with combined investment capital of nearly VND 1.1 trillion (US$53 million), during the first half of the year.

Among the total, 19 projects are foreign invested.

The latest licence was granted to a Slovakian group, allowing it to develop the Lac Thinh Industrial Zone in the Yen Thuy District with investment capital of 378 million euros ($543 million).

Japan to support small businesses

The Government of Japan has allotted US$2.44 million to help Viet Nam improve the public bodies that oversee its small- and medium-sized enterprises (SMEs).

The project for strengthening public function of supporting SMEs, as it is called, was signed yesterday by the Japan International Co-operation Agency (JICA) and the Agency for Enterprise Development (AED).

"We would like to help Viet Nam speed up and build stronger SMEs by integrating both financial and technical assistance," said JICA Viet Nam Chief Representative Tsuno Motonori at the signing ceremony.

He added that a comprehensive SME strategy would be "one of the keys in order for Viet Nam to become an industrialised country by 2020."

According to AED reports, SMEs constitute more than 97 per cent of all businesses in Viet Nam. However, with worldwide macroeconomic instability and the fierce competition of globalisation, SMEs in Viet Nam need to effectively utilise SME support measures to improve their business performance.

The JICA project is designed to help AED introduce these measures and ensure the active participation of authorities in its effort.

The 3-year project will be piloted in Ha Noi and Vinh Phuc.
 
Life insurer Manulife opens Vung Tau sales office  

Manulife Vietnam launched its Vung Tau City sales office Monday, strengthening the Canadian-invested life insurer’s presence in the southern province of Ba Ria-Vung Tau, Vietnam’s hub for oil and gas exploration.

“Vung Tau has become an essential market for Manulife with significant business growth recently,” Manulife Vietnam CEO Carl Gustini said during the office launch.

“In this market, we see the potential to grow even more by providing the Vung Tau population with Manulife’s quality and forward-thinking products and services.”

He said his firm has been expanding significantly in Vung Tau, with the number of agents in the area doubling as of the first quarter of 2011 over the same period in 2010. “With more agents and increased sales, a new sales office will provide a beneficial service to Manulife’s expanding customer base,” he said.

“We are glad to see our business expanding here. The growth indicates that our customer-centric approach works well and we will continue to work hard to raise the bar in terms of customer service and level of customer satisfaction.”

The new office is located in the city’s downtown, at the Petro Tower, 8 Hoang Dieu Street, Ward 1.

The beach city of Vung Tau is 130 kilometers by road east of Ho Chi Minh City. Its main industries include oil and gas, tourism, aqua-products and fishing. It is a hub of Ba Ria-Vung Tau Province.

Manulife Vietnam is this month celebrating its 12th anniversary. The life insurer says it has so far served more than 300,000 clients throughout the country. The current number of agents is 9,000.