Shares close in green in year-end session

Viet Nam's stocks closed the year-end session in the green on both stock exchanges, with more than 50 per cent of codes posting gains in value this morning.

On the HCM Stock Exchange, the VN-Index ended today higher at 351.55 points, a gain of 0.3 per cent over yesterday's close.

Investors hunting bargains, pushed the value of trades up 45 per cent, to VND808.9 billion (US$38.5 million), with more than 56 million shares exchanged.

Advancers overwhelmed decliners by 184-57, led by blue chips. Eight of the 10 leading shares by capitalisation increased from 0.4-2.9 per cent.

Only insurer Bao Viet Holdings (BVH) and dairy giant Vinamilk (VNM) bucked the trend to post losses. VNM declined 2.8 per cent while BVH tumbled 1.2 per cent.

Sacombank (STB) was again the most active stock in HCM City with more than 3.6 million shares changing hands. STB closed unchanged at VND15,100.

On the Ha Noi Stock Exchange, the HNX-Index regained 1.96 per cent to close at 58.74 points, with gainers outnumbering losers by 179-74.

Market volume rose 27 per cent to nearly 34.9 million shares, while the value of the day's trades grew 19 per cent to VND283.7 billion ($13.5 million).

About 3 million PetroVietnam Construction Co (PVX) shares changed hands – the most heavily-traded code today in Ha Noi. Shares closed up 3.1 per cent to VND6,700.

Airports expected to handle 600,000 tons of cargo this year

The Civil Aviation Administration of Vietnam (CAAV) has projected that approximately 600,000 tons of cargo will have been cleared at the country’s all airports by the end of this year compared to 460,000 tons last year.

Vo Huy Cuong, director of CAAV’s Air Transport Department, told the Daily on the phone on Tuesday that 600,000 tons was the preliminary calculation for the combined cargo volume at all airports this year and the actual figure would likely change when the figure for December was available.

The 600,000 tons of cargo transported by nearly 50 local and foreign airlines is lower than 690,000 tons of cargo that CAAV aimed for this year. This lower-than-expected volume is attributable to economic difficulties in Vietnam and global uncertainties that have impacted on the civil aviation industry.

However, Cuong said it was notable that the value of goods transported by air had increased this year as foreign-invested companies including electronics companies were exporting more high-tech items and components and also importing parts for assembly in the country.

Cargo shipments by airlines have posted steady double-digit growth in recent years and CAAV said this market segment still had much room for expansion.

Last week, Vietnam News Agency quoted a Korea Development Institute report as forecasting that the goods volume carried by airlines to and from Vietnam would rise from 460,000 tons last year to 850,000-930,000 tons by 2015, with annual average growth of 13-16%.

According to the report released at a recent seminar in Hanoi, Vietnam’s overall aviation market will reach some 36 million passengers by 2015. To meet the demand for passenger and good transport by that year, the Korean institute suggested the Government invest more into the country’s major airports in HCMC, Hanoi and Danang to connect local and international air routes and to support regional and national economic development.

CAAV said more than 21 million passengers went through the country’s airports last year, up around 20% from a year earlier. This aviation authority estimated the number this year would stand at 23.6 million, with equal shares for domestic and international flights.  

The increase in the number of passengers at the country’s airports reflected a strong rise in the number of international visitors to Vietnam this year. The Vietnam National Administration of Tourism forecast the figure would surpass six million, up by around 1.2 million over 2010.

Firms must ‘undertake initiative to boost exports to China'

Vietnamese enterprises need to look at changes in China's import policies to effectively accelerate their exports to the market during a business conference on December 28 in Hanoi.

Speaking at the conference, Commercial and Economic Counsellor at the Chinese Embassy Hu Suo Jin suggested that local enterprises should take the initiative by participating in international trade fairs and exhibitions held annually in China.

These events could offer good opportunities for Vietnamese firms to meet with Chinese importers and advertise their merchandise, he said.

The counsellor also called on Vietnamese companies to take full advantage of business opportunities in China's central and western regions which had increasing demands for Vietnamese seafood and industrial goods.

Improving processing and packaging to sharpen competitive capacity was also necessary, he said.

The Vietnamese and Chinese economies complemented each other with bilateral relations in trade and investment developing significantly over the past few years, the counsellor noted.

Two-way trade reached US$35.7 billion in the past 11 months of this year, of which over US$9.7 billion came from Vietnamese exports, an increase of 61 percent against the same period last year. Trade is forecast to hit approximately US$40 billion for the entire year, up 30 percent.

In terms of investment, China has so far invested US$4 billion in 800 projects in Vietnam. The scale and quality of these projects have gradually improved. 

Made-in-Vietnam confectionary gaining popularity  

Vietnamese-made confectionary goodies are increasingly becoming more and more popular with Tet shoppers and giving a tougher competition to foreign made imported products at all local markets across the country.

Locally-made sweets and candy are gaining more popularity by the day, especially with Tet shoppers. At most of the traditional markets in Ho Chi Minh City, such as Binh Tay in District 6, Kim Bien  in District 5 and Ben Thanh in District 1, which once were full of Chinese and Malaysian made goodies, now are stocked with a variety of inexpensive local made commodities, thanks to an improved quality of many bakeries across the country.   

Moreover, packaging designs of confectionary products manufactured by small-scale companies like My Ngoc, Hai Au, Duc Hanh and Tan Huong are very eye-catching and appealing on store shelves.

Nguyen Thi Tam, an owner of a sweet shop in Tan Binh District, said sales of Vietnamese made candy products have increased of late showing that customers are buying up domestic made goods more than in the past, thanks to cheaper pricing, improved quality, a wider selection, attractive packaging and appealing advertisements.

Also local made sweets are at least 10-20 percent cheaper than imported products, Tam said.

On Tam's shop shelves, many prime imported confectionary goods from Denmark, Thailand and the US can be seen in abundance, yet sales have slowed substantially with consumers preferring locally made products.

On the other hand, Chinese-made products now have no takers, as people fear for their health, after a multitude of negative reports and incidents, Tam said.

Majority of goods available in supermarkets for Tet Lunar New Year, are domestically made. Prices of home-made goods fluctuate from tens of thousands to hundreds of thousands.

In addition, bigger supermarkets like Co-op Mart, Big C and Citimart offer pre-packed gift hampers with an assortment of candy, wine and various snacks manufactured in the country. Though some are priced too high, yet people are choosing to buy them as they feel assured of the quality.

Phan Van Thien, deputy general director of Bibica Corporation, said the company plans to launch around 5,000 tons of confectionary products and chocolate sweets, an increase of 15 percent compared to last year.

The company is also geared to launch its own line of   deluxe candy called Goody, to compete with imported brands. However, to beat competition the company will keep prices 20-30 percent lower than other domestic products.

Kinh Do Corporation will supply approximately 3,200 tons of food commodities to markets and will launch a deluxe spring gift Huong Xuan, Korento and Story based on European recipes, said Le Van Thinh, deputy manager of Kinh Do.

Hoang Thi Tam Ai, director of Tri Duc Company, said some products of the company will be priced higher as overheads like electricity, workers’ salary and packaging costs have increased.

Though locally made products are gaining popularity, customers must exercise caution before buying as often some small production units resort to using cheap ingredients and then having their items repackaged to give a deceptive appearance of being imported or of well-known brands, to sell at higher profits.

Vietnam has many opportunities to expand exports to Europe  

Vietnamese businesses have now many opportunities to export various commodities to Germany, said experts at a seminar on “The Federal Republic of Germany- Vietnamese businesses gateway to European market” in Ho Chi Minh City on December 27.  

Germany now ranks at 6th place amongst the largest export markets in the world including the US, Japan, China, Australia and Singapore and is a member of the “billion dollar club”.

The country is also the second largest importer in the world. Major import commodities are machinery, transportation, chemicals, tobacco, foods, beverages, metal and petroleum products. It is a potential market for Vietnam that has strong points in textile-garments, leather footwear and aqua products.

Germany has been one of Vietnam’s key partners in Europe since 2007. The country has also appreciated Vietnam’s development and position in Southeast Asia.  The friendly relations and multifaceted co-operation between the two countries have been strengthened, said Mr. Do Thang Hai, Head of the Trade Promotion Department under the Trade and Industry Ministry.

Germany has also committed to end the anti-dumping tax levied on Vietnamese leather footwear and is interested in kicking off negotiations for the Vietnam-EU Free Trade Agreement (FTA).

Major Vietnamese export goods to Germany include footwear, garments, coffee, furniture, aqua products, bags, wallets, back packs, suitcases, handicraft products, embroidered goods and agricultural products. However, the export turnover of Vietnam’s key commodities is lower than other countries such as China, Thailand and India.

Vietnamese enterprises should survey consumer habits of native customers much more carefully before shipping their products. They should focus on the quality and create skilful and diversified products, especially in handicrafts, to strengthen exports. On the other hand, they have to have a concentrated business strategy and create a larger production base, Mr. Thang added.

Thomas Hundt, Germany’s Trade & Investment chief representative in Vietnam, pointed out that businesses must meet both EU and German standards to enter this market. German regulations are stricter than in other countries. Top criteria are product quality, food safety and social responsibility, not using materials that may be inflammable or toxic. Vietnamese enterprises should also gather more information on requirements of their partners before signing contracts.
 
Banks still charging high lending rates

While businesses have repeatedly complained about high lending interest rates, banks said the exorbitant interbank lending rates, the shortfall of mobilized capital, and the fact that certain banks are breaching the deposit interest rate caps have prevented them from cutting rates.

The director of a glass manufacturer in Ho Chi Minh City’s Tan Binh District said she had to delay her plan to borrow bank loans worth VND20 billion (US$960,000) to be used to expand the company’s production  facility next year since the business still has to pay off loans for this year, at an interest rate of 23 percent a year.

“Moreover, banks no longer accept collaterals such as machinery, equipment, or properties for offering loans,” she said.

The director of stationery producer Quyky said he has to find ways to clear the company’s debt before the due date, since the interest rate rose to 22 percent a year.

He said most businesses cannot even suffer a lower rate of 19 percent a year.

This opinion is shared by Lam Trong Son, CEO of Gosago Co, who said businesses can only maintain production at lending rates of around 15 to 16 percent a year.

An executive of a bank based in District 1 attributed the high lending rates to the fact that banks themselves are also suffering from the exorbitant interbank lending rates.

“Moreover, capital mobilized from deposits also fell sharply,” he added.

However, insiders said another factor that has prevented lending rates from falling is the phenomenon of offering deposit interest rates exceeding the cap of 14 percent a year set by the State Bank of Vietnam.

For example, the director of an unnamed company said she has found that many banks are still offering deposit rates that are 3 to 4 percentage points higher than the ceiling.

“If the central bank does not strengthen sanctions on the banks which violate the deposit rate cap, lending rates will not go down,” she said.

A deputy CEO of a bank in District 1 also admitted the existence of the ceiling-breaching phenomenon.

“The illegal deposit rate offered on the market sometimes peaks to 18 percent a year for some short-term savings,” he said.

Another executive of a bank said the government should not pull the deposit rate cap down to 10 percent as quickly as it has planned, since this will make savings in VND less attractive, and thus will drive depositors  
to open savings in US dollars instead.

According to former central bank governor Cao Sy Kiem, the fact that many banks have faced difficulties in mobilizing capital is the main factor that has prevented them from cutting lending rates.

Many banks currently have to offer promotions to attract deposits to ease the liquidity problem.

The chairman of a small bank admitted that it is difficult to attract deposits in VND.

“Whether lending interest rates can be reduced next year depends on whether banks can mobilize adequate capital or not,” he said.

Three banks merge into one beginning January 1

The State Bank of Vietnam (SBV)'s governor granted an operation and establishment license for the newly-merged Saigon Commercial Joint Stock Bank (SCB) which will start operation from January 1, 2012.

On December 6, First Commercial Joint Stock Bank (Ficombank), Vietnam Tin Nghia Commercial Joint Stock Bank (Vietnam Tin Nghia Bank), and Saigon Commercial Bank (SCB), became the country’s first three banks to be merged. SBV subsequently announced on December 16 that the newly-merged bank will be retain the name of the latter.

The new SCB, with chartered capital of over VND10.58 trillion, will be headquartered at No 927 Tran Hung Dao, ward 1, district 5, HCM City and has a license to operate for a period of 99 years.

It will be allowed to conduct operations such as receiving deposits, issuing certificate of deposits (C/Ds), promissory notes, bonds, bills of exchange, credit, opening payment account, providing payment measures and services and other operations such as borrowing capital from the central bank and local and foreign credit institutions, opening saving account and payment account at these institutions, contributing capital to buy stakes and joining the monetary market, foreign exchange trading activities and derivative operations as well as receiving mandated services in banking operations.

The consolidated bank is responsible for all the assets, rights, obligations and legal interests of the three banks. Within 15 days since it began operating the newly merged bank must complete all procedures for business registration in accordance with the law.

In addition, all three banks are also responsible for repaying the original operating license for the central bank as well as reimbursement of establishment license for HCM City People's Committee.

On December 23, at the shareholders' meeting, they agreed upon management structure, as well as a development plan for the future. Nguyen Thi Thu Suong, former chairwoman of Ficombank was appointed as new SCB’s chairman while Vu Van Thanh, former chairman of Vietnam Tin Nghia Bank, as deputy chairman and Uong Van Ngoc An, former deputy chairman of Ficombank, as CEO.

Milk products of dubious origin rampant in Vietnam

The news that a cancer-related substance has been found in Chinese milk has set off alarm bells for local industry insiders, since a large amount of milk products allegedly imported from China are being circulated in the Vietnamese market.

Recently, China’s General Administration of Quality Supervision, Inspection and Quarantine announced that a batch of Mengniu milk was found to contain flavacin M1 levels of 1.2 micrograms per kilogram - 140 times higher than the country's permitted level. Flavacin M1 is a substance linked to liver cancer.

Meanwhile, the amount of milk products imported from China to Vietnam this year rose by nearly 30 percent year on year, and there are still numerous products with unclear origins being sold on the market, Saigon Tiep Thi newspaper reported.

At Kim Bien market in Ho Chi Minh City, four different kinds of milk powder are on sale at prices between VND50,000 and VND70,000 (US$32) a kilogram.

V, a small trader in the market, says products with higher prices have a higher fat content than others.

“You do not need to mix it with fat powder,” he said.

However, when asked about the products’ origins, traders gave varying answers.

V said his products are imported from Australia, while T, and H, two other traders who also sell the same products, said they import them from New Zealand and the Netherlands, respectively.

Most traders usually store the powders in 10 or 20-kilogram plastic bags, or cartons, with a few labels proclaiming “Australian fat milk,” or “Powder Milk Special Class,” without any information on the products’ origins  
or expiry dates.

“These products yield little profit, so we only provide their origin certificates for customers who buy in large quantities,” a trader revealed.

In some milk stores on Nguyen Thong and Cach Mang Thang 8 Streets in District 3, milk products with no packaging and labels can also be found.

The owner of a store on Nguyen Thong Street admitted that she has no idea what the origins of the products she is selling are.

“I bought them from wholesalers in 20-kg plastic bags, without labels and origins,” she said.

Meanwhile, in Hanoi-based Dong Xuan market, milk powders stored in plastic bags without labels are also available in large quantities.

Lien, a small trader, claimed that her products are imported from Australia, New Zealand, and the Netherlands.

“You cannot find any Chinese milk in my store,” she said, adding that her products are favored by many bakeries and yoghurt and ice cream producers.

However, there are no labels or expiry dates on the products’ bags to prove what she claims.

Pham Ngoc Chau, deputy CEO of Hancofood, said many strange milk brand names such as Dinamilk, Growthmilk, and Goodmilk have been found being marketed in the provinces’ rural areas at low prices of only  
VND150,000-170,000 per 900-gram can.

Chau said such prices are 30 percent lower than those for European-imported products.
“Under the pressure of competition, many local milk producers have imported Chinese milk powder to reduce cost prices,” Chau said.

“But they do not reveal that fact for fear of being boycotted by consumers.”

According to the General Customs Department, milk imports from China in November surged 79.1 percent against October, to top $120,000 in turnover.

By the end of last month, Vietnam had imported $513,700 worth of milk products from China, a 29.81-percent rise compared to the same period last year, the department said.

However, industry insiders said the figures could be even higher, since many products are unofficially imported into the country at low prices.

Currently, milk products imported from the EU have prices between $3,600 and $3,800 a ton, while Chinese products fetch only $2,300-2,800 a ton.

“Only products bought from small Chinese producers can have such low prices,” Nguyen Huy Duc, director of public relation of Nutifood, said.

PetroVietnam produces 30 per cent above target

The Vietnam National Oil and Gas Group (PetroVietnam) produced 15 million tones of crude oil this year, 30 per cent higher than production targets set earlier this year.

The group exceeded the target despite lower output from some oil fields, which was compensated by technical innovations, which raised the extraction ratio up to 52 per cent.

In second half of the year, PetroVietnam has also begun tapping into two new oil fields and has increased oil production abroad.

Higher production has also helped the group realise its financial plan for the whole year, with total revenue of VND672 trillion (US$32 billion), of which VND170 trillion ($2.8 billion) went into the State budget.

These figures indicate the group's income will account for half of the country's total income.

In terms of payment to the State, the group will constitute around 70 per cent of corporate and group contributions.

PetroVietnam labour union vice president Nghiem Thuy Lan awarded a certificate of merit and a bonus to the oil and gas exploration department for its efforts in exceeding production targets.

PetroVietnam General Director Do Van Hau said the Government had assigned the group to produce 15.8 million tons of oil and 9 billion cu.m of gas in 2012.

Businesses urged to develop green energy plan
 
Businesses must save energy, protect the ecosystem and take steps to deal with climate change while maintaining development, experts told attendees at a forum held yesterday in HCM City.

"This forum will discuss initiatives and plans to develop green businesses, a friendly environment, energy-savings, and carbon-emissions reductions," said Professor Nguyen Ngoc Tran, head of the Cuu Long (Mekong)  Delta Development Research Centre.

Discussions centred on the participation of corporations in communication activities to raise awareness of green energy. Other topics included support of local communities affected by climate change in the Cuu Long  (Mekong) Delta and building of long-term operational mechanisms to respond to climate change in the Cuu Long (Mekong) Delta.

"The green race has started between countries to transform to low-carbon economies and to become the leading supplier of resource-efficient technologies and solutions. Viet Nam must not stand outside of this trend,"  said Nguyen Quang Vinh, the general secretary of the Viet Nam Business Council for Sustainable Development.

China has invested 21 per cent of their US$162 billion global investments in clean energy, while Korea has the largest share (80 per cent) of economic stimulus devoted to the green sector.

Energy-saving methods can help enterprises reduce expenditures and protect the environment at the same time.

The International Finance Corporation (IFC), a member of the World Bank, released figures on Tuesday on current energy usage and the potential to save energy in the cement, iron and textile sectors.

"Between 1998 and 2006, energy spending increased three times, with 45 per cent belonging to industry. However, efficiency in using energy in heavy industry is very low, with 75 per cent of plants wasting energy," said Phuong Hoang Kim, head of the Energy General Department's science, technology and energy-efficiency department.

To improve the situation, the IFC promotes greater energy efficiency, renewable energy, and cleaner production methods and awareness through the Viet Nam Energy Efficiency and Cleaner Production (EECP).

The programme aims to reduce emissions and improve the use of natural resources by increasing available financing for sustainable energy investments.

The project works with selected banks to build their sustainable energy portfolios and tailored financing products.

EECP targets enterprises that are looking to upgrade inefficient production systems and introduce new and clean technologies that will help them reduce costs and raise productivity and environmental performance through increased energy efficiencies.

The project also seeks to establish and expand Viet Nam's current network of technical service providers able to deliver training and services to banks and enterprises nationwide.

Viglacera Tien Son stalls factory output

The Viglacera Tien Son Joint Stock company has released a resolution approved by the management board to halt production in its two factories for maintenance to be undertaken in 2012.

The Tien Son factory ceased production last week and the Thai Binh factory will stop production from January 3, 2012. The two factories will resume production from February 15, 2012.

Mobile phone exports to reach $12 billion

The value of mobile phone exports is forecast to reach US$12 billion next year, the equivalent of a 60 per cent increase from last year, according to the Ministry of Industry and Trade.

Mobile phones have recorded the fastest growth among exports in recent years, with total values of trade rising from US$2.1 billion last year to US$7.5 billion this year.

Viet Nam's mobile phone exports have largely come from Samsung Electronics Viet Nam Co Ltd.

Export of forestry products on the rise

Viet Nam earned US$4.1 billion from exporting forest products and wood furniture in 2011, representing a year-on-year increase of 14.7 per cent.

Importers of traditional Vietnamese wood products include the US, China, Japan, the Republic of Korea, and the UK, according to the General Department of Forestry.

High interest rates continue to roil enterprises

Companies, especially smaller ones, are continuing to struggle with liquidity since lending rates remain very high at over 20 per cent.

Analysts said many banks have delayed cutting their interest rates despite the favourable market conditions.

The consumer price index rose by less than 1 per cent in recent months while deposit interest rates are capped at 14 per cent.

A director of a joint stock company that makes glass products in HCM City's Tan Binh District said her company still had to suffer a 23 per cent rate.

At this level profits were not enough to pay the bank interest, she said, with revenues already down since several construction works had stalled.

Tran Nganh, director of the Quyky Company Ltd, told Tuoi Tre (Youth) newspaper that his company has to pay 22 per cent on bank loans but just 19 per cent on loans from non-banking sources.

It is struggling to repay the loans and has to unduly hasten collections to meet the schedule, he said.

The company plans to minimise bank loans next year, except in cases of emergency, he said.

Lam Trong Son, director of the GosacoWood Company Ltd, said his firm is struggling with the bank loan interest rate of 19 per cent since it faces problems selling in the domestic market which account for 70 per cent  
of sales.

Many companies need working capital and funds for expansion but the interest rates are too high to afford, he said, adding 15 and 16 per cent is the maximum they can afford.

The director of a joint stock bank in the city's District 1 said loan interest rates remain high because the interest rate is high and liquidity low on the inter-bank market while lenders always demand collateral.

Market watchdogs said there are still signs that some banks breach the deposit interest rate cap.

Many businesses require cash soon to pay employees Tet bonus, so banks need to raise more money from the public to meet this demand, they said.

The analysts said the high lending interest rates were contrary to the Government and the central bank's policy of lowering the rates.

According to a State Bank of Viet Nam report released on December 22, interest rates on agricultural, rural, and export loans now stand at 15-17 per cent.

Rates on loans given to other industries for production and trading are 18 to 21 per cent.

For non-production sectors, it is between 22 and 25 per cent.

Firms must ‘use initiative to boost exports to China'
 
Vietnamese enterprises were urged to look at changes to China's import policies to effectively accelerate their exports to the market during a business conference yesterday in Ha Noi.

Speaking at the conference, Commercial and Economic Counsellor at the Chinese Embassy Hu Suo Jin suggested that local enterprises should take the initiative by participating in international trade fairs and exhibitions held annually in China.

These events could create good opportunities for Vietnamese firms to meet with Chinese importers and advertise their merchandise, he said.

The counsellor also called on Vietnamese companies to further exploit business opportunities in China's central and western regions which had increasing demands for Vietnamese seafood and industrial goods.

Improving processing and packaging to sharpen competitiveness was also necessary, he said.

The Vietnamese and Chinese economies complemented each other with bilateral relations in trade and investment developing significantly over the past few years, the counsellor noted.

Two-way trade reached US$35.7 billion in the first 11 months of this year. Of the total, over $9.7 billion came from Vietnamese exports, an increase of 61 per cent over the same period last year. Trade is forecast to hit approximately $40 billion for the entire year, up 30 per cent year-on-year.

In terms of investment, China has to date invested $4 billion in 800 projects in Viet Nam. The scale and quality of these projects have gradually improved.

Viet Nam was speeding up the process of industrialisation and modernisation. This resulted in growing demand for industrial machinery and equipment, said Doan Duy Khuong, vice chairman of the Viet Nam Chamber of Commerce and Industry (VCCI).

It was a good time for businesses from the two countries to further co-operate, Khuong said, emphasising the importance of helping Vietnamese businesses take full advantage of trade and investment co-operation opportunities with their Chinese counterparts.

Earlier this year, a strategic co-operation agreement was inked between the VCCI and the China External Trade Centre in a move to give businesses from the two countries access to useful information.

The agreement would help businesses find partners and expand investment and operations in each other's countries.

During yesterday's event, Vietnamese firms expressed concern over Chinese taxes on rice imports and confusion over preferential loans for green energy projects.