Shares decline last week on sour earnings reports
 
On the HCM City Stock Exchange last week, the VN-Index concluded at 413.16 points, dropping 8.83 per cent over the preceding week.

Trading value averaged VND637.16 billion (US$30.3 million) per session, reaching only 71.7 per cent of the previous week's average. The VN30 tracking the southern bourse's top shares closed last Friday at 489.61 points, losing nearly 1.6 per cent compared to the previous Friday's session.

The Ha Noi Stock Exchange saw a daily turnover of around VND413 billion ($19.6 million) worth of shares, declining just 5 per cent. The HNX-Index reached 69.35 points, falling 2.1per cent, while the HNX30 tumbled 5.1 per cent to 131.56 points compared to the previous Friday.

Over 600 listed companies out of the total 702 have published their financial report for the second quarter of this year.

Leading the market in net revenue and profit were PetroVietnam Gas (GAS), Vinamilk (VNM), Vietinbank (CTG), Phu My Fertiliser (DPM) and food processor Masan (MSN).

However, more than 60 businesses reported losses in the second quarter. Marine transportation and construction firms suffered badly.

Notably, liabilities accounted for a large proportion in the capital structure of companies such as Gentraco Feed Co (GFC), Long An Food Processing Export Co (LAF), steelmaker Huu Lien Asia (HLA) and Petroleum Sai Gon Construction and Investment (PSG).

"There's various information out there affecting investors," said FPT Securities Co analyst Le Thi Bich Hang. "Although monetary policies have been loosened and interest rates may decline further, increasing corporate bankruptcy and bank bad debts are a hard nut to crack for policy makers."

The market was truly reflecting economic conditions, she added. Investors turned their backs on the stock market, reflected by significantly reduced liquidity.

It needed a strong push from the economy to improve liquidity, she said.

According to the Ha Noi Department of Industry and Trade, prices of essential consumer goods would remain stable for the time being. The department predicted the city's consumer price index next month would increase 0.03 per cent compared to this month. The recent increase in petrol prices would be the main factor affecting the index.

Monthly CPI in July fell 0.29 per cent over June's figure.

"This is the second month in a row CPI has slowed down," Minister of Industry and Trade Vu Huy Hoang said late last week. "This suggests enterprises are facing more business difficulties."

However, Hoang advised to thoroughly consider the balance between consumption and macro-economic issues to avoid high inflation. The Government had requested ministries to focus on reducing inventories, he said.

"We have also offered solutions to boost both domestic consumption and exports. We need to come up with campaigns to convince the public to use Vietnamese products rather than imports," he added. 

Interest rates to fall to 7 percent: State Bank Governor

Mobilization interest rates may fall to 7 percent in mid-2013, said governor of the State Bank of Vietnam (SBV), Nguyen Van Binh, at a meeting with businesses in Ho Chi Minh City on July 28.

In response to businesses’ requests to reduce loan interest rates to 10 percent per year, Binh said the current interest rates of 15 percent remain high.

If inflation is kept at 7 percent, mobilization rates for Vietnamese dong will fall to 8 percent by the end of 2012 and 7 percent in mid-2013, he said, adding that this will help cut loan interest rates to 10 percent.

In the current context of low inflation (2.22 percent) over the past seven months, many international organisations have predicted that Vietnam will continue cutting interest rates until the end of 2012.

Shares rise in HCM City but slide in Ha Noi

Viet Nam's markets opened a new trading week with mixed signals on the two national stock exchanges this morning.

On the HCM City Stock Exchange, the benchmark VN-Index closed up 0.43 per cent at 414.95 points, but trading value was sluggish at nearly VND310 billion (US$14.8 million) with just 17.4 million shares exchanged.

Advancers outnumbered decliners by 94-81.

Blue chips gained with the VN30 Index tracking the top 30 shares by market capitalisation and liquidity also up 0.6 per cent at 492.55 points.

The fourth largest listed lender Sacombank (STB) was the most active stock with 3.23 million shares changing hands, rising 0.9 per cent to end this morning at VND23,100 ($1.10).

Meanwhile, the HNX-Index closed in the red on the Ha Noi Stock Exchange, down 0.07 per cent at 69.3 points on a modest turnover of nearly VND165 billion ($7.9 million).

Market conditions were negative with 64 codes rising, 85 declining and 246 closing unchanged.

Large-cap shares on the Ha Noi bourse increased slightly however, with the HNX30 gaining 0.02 per cent to close at 131.59 points.

VNDirect Securities (VND) was the most active code this morning on total trading of 2.45 million shares, closing unchanged at VND10,900 ($0.52).

Trading will resume at 1pm.

Industrial index increases 4.8% in first seven months
 
The nation's Index of Industrial Production (IIP) increased 4.8 per cent in the first seven months of this year over the same period last year, the General Statistics Office reported.

This was the lowest increase of the industrial index over the last three years but the highest since the beginning of this year, following a year-on-year increase of 6.1 per cent in July alone.

GSO economic specialists said industrial production had shown signs of recovery after a prolonged downturn and this proved the Government's financial measures – including interest rate cuts and a VND29 trillion (US$1.4 billion) support package – to stimulate production had taken effects.

The manufacturing and processing area, which represents up to 70 per cent of all industrial production values, posted the highest consumption index growth at 5.9 per cent in seven months, while it was only around 3.5 per cent in April and May, and 0.2 per cent in the first two months.

Consumption of engined-vehicles expanded significantly at 70.3 per cent, followed by garments at 41.7 per cent and electronic products at 40.5 per cent.

Several areas posted significant declines, however, such as electrical cables and wires at 59.8 per cent, fertilisers at 34 per cent and footwear at 12.6 per cent.

On July 1, the inventory index grew 20.2 per cent, remaining a worrying level according to GSO specialists, although this index had fallen significantly compared to a peak of 34.9 per cent in March.

Areas witnessed high inventory increases, including iron and steel at 48.7 per cent, cement at 34.4 per cent, and animal feed and seafood at 32.1 per cent.

Agricultural export value rises 12.4%
 
Agricultural export value reached US$15.9 billion in the first seven months of this year, an increase of 12.4 per cent over the same period last year, the Ministry of Agriculture and Rural Development announced yesterday.

Wood products and other forestry products saw the highest increase of 21.6 per cent, climbing to a total of $2.7 billion during the period. The export value of cash crops rose just 9.1 per cent to $8.9 billion, while seafood saw an increase of 6.5 per cent to a value of $3.4 billion.

Surging export volumes drove the increases, since the prices of many products have fallen from the same period a year ago, noted the director of the ministry's information and statistics centre, Nguyen Viet Chien.

In the first seven months, rubber exports shot up by 26.7 per cent in volume to 468,000 tonnes, even as export value fell 12.5 per cent to $1.4 million, he said.

During the period, rubber export volumes to China rose 21 per cent, while rubber exports to Taiwan rose 51.4 per cent. Exports to Malaysia tripled in volume, while volumes shipped to India increased by six times.

Wood products exports managed to increase by 22.4 per cent in value in the first seven months to $2.6 billion despite technical barriers in export markets, high input cost and low competitiveness, said Chien.

Among cash crops, pepper saw a hike in export value but a decline in volume since the average export price for pepper rose 26.4 per cent, reaching $6,814 per tonne. Pepper exports therefore rose by 20.3 per cent in value to $546 million but dropped by 3.2 per cent in volume to 80,000 tonnes. The major export market for Vietnamese pepper continued to be the US, accounting for 13.3 per cent of total export volume, followed by Germany and the United Arab Emirates.

Cashews, coffee and tea all posted increase in both volume and value. Cashew exports jumped by 36.5 per cent in volume to 120,000 tonnes and by 19.2 per cent in value to $828 million.

The average price for Vietnamese coffee in the first seven months rose 4.4 per cent to $2,100 per tonne. Coffee exports increased by 31.6 per cent in volume during the period to 1.2 million tonnes and by 25.4 per cent in value to $2.5 billion. Coffee exporters were expecting to achieve a record export value of $4 billion this year against $2.7 billion last year, Chien said.

Germany provided the largest market for Vietnamese coffee, accounting for 12.9 per cent of export value, followed closely by the US, with 12.4 per cent.

During the first seven months, tea exports rose by 5.9 per cent in volume to 73,000 tonnes and by 4.2 per cent in value to $108 million.

Rice exports fell by both volume and export value, seeing a year-on-year decline of 2 per cent in volume to 4.6 million tonnes and a decline of 8.7 per cent in value to $2.1 billion. The average export price also dropped by 6.6 per cent to $458 per tonne.

Tax deferrals help lift steel demand
 
The Ministry of Industry and Trade forecast steel consumption would surge during the remaining months of the year thanks to the effectiveness of the Government's Resolution 13 on boosting production and supporting the market.

Resolution 13, which was issued in May, has granted some enterprises a deferral on paying value added tax, corporate income tax and land use fees along with a 50 per cent cut on land rental this year.

However, steel prices would not surge and were even likely to inch down as steel producers aimed to clear their inventories, the ministry said.

Chairman of the Viet Nam Steel Association Pham Chi Cuong said that after a long period of stagnation since early this year, the steel market could rebound with higher consumption from September.

Besides the effectiveness of the Government's ongoing policies, steel consumption would also surge in the fourth quarter, a time when investors often spur construction to finish projects before the year's end, Cuong said.

However, the VSA recommended the Government to reduce the value added tax from the current 10 per cent to 5 per cent to encourage consumption as purchasing power remained low.

According to the VSA, the country consumed 2.6 million tonnes of steel in the first seven months of the year, down 10.6 per cent over the same period last year.

As steel producers cut their production due to low demand, unsold inventory of steel and steel ingot until the end of June was at 350,000 tonnes and 500,000 tonnes.

As the real estate market hasn't rebounded, this year's steel consumption would reduce by roughly 10 per cent over last year, according to VSA forecasts.

Trans-Asia fair draws 280 from ‘corridor'

The Trans-Asia Industry and Trade Fair opened in central Quang Tri Province's Dong Ha city on Wednesday with 280 com-panies displaying consumer and other goods.

They are from the Central Highlands and coastal regions of Viet Nam; the Lao province of Savannakhet; the Thai provinces of Mucdakhan, Khonken, and Nakhon-phanom; and Myanmar.

Nguyen Huu Dung, deputy chairman of the Quang Tri People's Committee, said the week-long event was part of a national business promotion programme.

Deputy Minister of Industry and Trade Nguyen Thanh Bien said the fair was also expected to boost commercial and cultural exchanges between areas along the Trans-Asia Corridor which runs from central Viet Nam through Laos and Thailand to Myanmar.

The fair also marks the opening of the third Trans-Asia Bridge Festival in Quang Tri Province which will also last until July 31.

Nestle to assist coffee farmers

Nestle Vietnam inked on Thursday a memorandum of understanding with the Ministry of Agriculture and Rural Development to assist coffee farmers.

The company will help 24,000 farming households over the next five years to increase productivity by providing effective farming practices and seedlings capable of high yield and disease-resistance.

The memorandum of understanding marked the 100th anniversary of Nestle's presence in Viet Nam, with its first office set up in the former Sai Gon in 1912.

In 1992, the company officially returned, entering a mineral water joint venture, La Vie, with a local partner.

To date, it has invested US$400 million in six factories making coffee, tea, cocoa, soya bean sauce and cooking oil products, with the sixth representing $270 million to open in November.

The factory in southern Dong Nai Province will be capable of turning out 30,000 tonnes of coffee products per year.

EVN improves customer services

Twenty nine electricity companies directly managed by Ha Noi Electricity Corporation have agreed to improve services.

The aim is to provide better quality and services and minimise electricity cuts as well as control the power grid automatically.-

Ha Noi CEO summit to discuss restructuring

Vietnamese and foreign economists as well as CEOs of Vietnamese enterprises will discuss good corporate restructuring practices at the Viet Nam CEO Summit 2012 in Ha Noi on August 2.

The meeting, organised by the VietnamNet news website and the Viet Nam Report Joint Stock Company, will help local businesses research appropriate solutions and take proper decisions on corporate restructuring. This conference will have Prof. Douglas Coulter, a business management expert, as the key speaker.

Vietnam Airlines discounts fares

The national flag carrier, Vietnam Airlines, will launch a three-day promotional programme in August, offering special discounts of 50 to 70 per cent of the airfare on international flights.

Tickets bought during the three-day period will be valid between mid-September and December. The airline will also implement a regular promotional campaign with discounts of 20 to 30 per cent for flights to Taiwan, mainland China, Japan and South-east Asian countries. This programme will last until December 31.

Tokyo Keiki goes hi-tech in Da Nang

Tokyo Keiki Inc will invest US$40 million in a plant in Hi-Tech Park in central Da Nang City next year – and plans to begin producing electro-magnetic and hydraulic equipment next year.

It will be the first Keiki plant outside Japan.

The city currently has 54 investment projects from Japan worth $252 million.

Global CyberSoft opens centre

The HCM City-based Global CyberSoft Viet Nam joint-stock company has developed a software production centre in the central city of Da Nang.

The company's second centre is aimed at providing information technology and human training for the central region of Viet Nam.

Savills markets boutique resorts

Banyan Tree Group, a leading international operator in boutique resorts, residences and spas has appointed Savills Viet Nam as its sales agent for Laguna Lang Co who run holiday hotels and resorts.-

Vincom Centre hits 90% occupancy

Vincom Centre A, a shopping mall and luxury hotel complex run by Vingroup, has rented out more than 90 per cent of its space.

It is expected to open in October.

577 Company sells shopping centre

Nam Bay Bay JSC (NBB) has sold its Hung Vuong 1 trade centre in the central coastal province of Binh Thuan to Lotte Viet Nam.

The centre covers 7,453 square metres in Phan Thiet City. Lotte expects to open the project in the third quarter of next year.

Building-material traders cut prices

Most construction material traders in HCM City say they are willing to cut prices and suffer losses in order to stimulate consumption and clear their inventory.

Under pressure caused by frozen real estate market, high inventory and capital shortage, they have endured the "worst situation in a long time." they said.

Many traders are unable to pay wages, rents as well as utility bills.

A trader from District 3 estimates that consumption of steel and cement in the last few months has declined by 50 per cent over the same time last year.

Sales of other materials like brick and tiles has gone down by 40 per cent over last year, he said, adding most traders were ready to cut prices and even accept losses to stimulate sales.

The owner of the Nam Thanh Vinh steel store in District 3 said they had reduced prices by around VND2 million (US$95) per one tonne.

Another shop in District 10 said they were organising frequent promotion programmes to attract customers. For instance, customers buying enameled tiles in large volumes could get 10-12 per cent discounts.

However, these promotions have not improved sales.

Tran Van Huynh, chairman of the Viet Nam Construction Materials Association, said the current economic condition had badly affected member firms.

Construction material manufacturers had to reduce or stop production because input costs have risen 20-30 per cent over last year, he said.

He added the association has asked the Government to expedite construction projects and reduce value added tax on construction materials in order to help the industry survive.

In the first half of 2012, cement inventory volumes reached 2.8 million tonnes, while the steel industry had stockpiled 370,000 tonnes.

Tin Nghia boosts agricultural investments in Laos

Tin Nghia Corporation based in Dong Nai Province has planned to boost investments in Laos, especially in the agricultural sector, to serve projects it has invested in the neighboring country over the past time.

Quach Van Duc, general director of Tin Nghia, said that the potential project the firm might invest in Laos was to produce micro-organic fertilizers from peat in Sekong Province. This project will meet the fertilizer demand of the firm’s agricultural projects and of local people.

Besides, Tin Nghia will develop a 500-hectare material area for animal feed production, a coffee purchasing station and a fresh coffee processing plant in Champasak Province.

Tin Nghia has penetrated the Lao market since 2007 with agricultural projects, industrial park and tourism projects. On Laos’ Bolaven Plateau, the firm has developed two Catimor and Arabica coffee farms, one covering 400 hectares and one covering some 170 hectares.

The firm has also invested in the Oriental Champa Resort scheduled for operation next year and a 463-hectare industrial park, the first industrial park in Champasak Province.

Review conference for 25-year FDI attraction set for Oct

The Ministry of Planning and Investment will hold a conference in the middle of October to review foreign direct investment (FDI) attraction in Vietnam over the last 25 years.

Prime Minister Nguyen Tan Dung has approved a proposal on convening this conference, assigning the planning ministry to coordinate with relevant agencies and localities to prepare for the event, according to the Government web portal.

A report of the planning ministry shows that from 1988 to 2011, the total registered capital of more than 13,400 valid FDI projects was US$195.9 billion, in which VND88.2 billion, or 43.2%, had been realized.

FDI has a positive impact on the socio-economic development of Vietnam. The contribution of FDI projects accounts for more than 50% of the total export turnover every year.

The FDI sector has created direct jobs for two million people and indirect ones for hundreds of thousands of others. According to the Foreign Investment Agency, in 2012, Vietnam focuses on luring FDI into the fields of infrastructure, green industry and joining the global production network and value chain.

* Dak Nong’s government on Wednesday organized an investment promotion conference with the participation of 200 local and foreign investors and leaders of 20 cities and provinces, says a Vietnam News Agency report.

At the event, leaders of Dak Nong introduced the potentials of the province and its preferential policy for investors. In addition, the province offered investors 92 projects to choose from, with a total capital demand of nearly VND10 trillion.

Participating enterprises suggested the provincial government should provide investors with more attractive incentives, such as assisting them in site clearance, borrowing capital and training laborers. Moreover, investors require simplified administrative procedures and sufficient and accurate information so that they can save time and money.

Dak Nong vice chairman Nguyen Bon told the conference that the province now focuses on traffic infrastructure development, from national highways to inter-village roads, and considers this the top priority in its strategy for socio-economic development.

The province government committed to create favorable conditions for investors to carry out their projects.

At the event on Wednesday, Dak Nong’s government also granted investment certificates to local and foreign investors and signed investment deals with businesses.

Shoe export contracts dry up
 
While footwear was the nation's third leading export earner in the first half of the year, exporters remain concerned about the lack of new export orders beyond the third quarter, according to Viet Nam Leather and Footwear Association (Lefaso) chairman Nguyen Duc Thuan.

Exports of footwear products in the first six months of the year surged to US$3.4 billion, 25 per cent over the same period a year ago, with EU markets accounting for US$1.55 billion of the total and exports to the $806 million, the Kinh te & Do thi (Economy and Urban Affairs) reports.

However, Thuan said, only a few producers, including the Dong Hung, An Lac, Binh Tien, Truong Loi and Lien Phat companies, have sufficient contracts in place and have not had to cut production.

Representatives from footwear exporter Thuong Dinh said negotiations for export prices were problematic as customers, particularly in the EU, were seeking lower prices due to sagging consumer demand.

The EU, US and Japan were also imposing stricter requirements pertaining to quality and environmental and social responsibilities which have been difficult for domestic exporters to meet, Thuan said. Local producers, he noted, have also been slow in responding to changing export markets.

While continuing to enjoy the advantage of cheap labour costs, Viet Nam's producers still had to import up to two-thirds of raw materials, reducing their competitiveness, Thuan said.

To meet the sector's export target of $7.3 billion for the year, an increase of 12 per cent over last year, producers would need to maintain traditional customers and boost trade promotion efforts to find new customers in markets such as Latin America, he added.

He also urged producers to update the trademark image of Vietnamese footwear products, as well as rush to meet importers' regulations on quality and environmental and social responsibilities. He suggested the Government help exporters access to updated market information in order to deal with changing markets in a timely manner.

Lefaso has also recommended the Government restore the 275-day tax deferment on imported materials that was previously in place. The Government has recently required importers of raw materials to pay the import tax immediately upon customs clearance. Domestic exporters were also pushing the Government to do more for Viet Nam to enjoy the Generalised System of Preferences (GSP) so that it would be easier for them to access the US market.

Forum discusses food security

Food security was a global challenge that could only be overcome if all nations joined in to find solutions, a forum on food security heard here today.

Experts at the one-day forum agreed that ASEAN countries should do more to ensure food security in a bid to feed the region's growing population, which is expected to hit 650 million by 2050.

Organised by the US-based DuPont company, the forum attracted representatives from world food-related organisations.

"As part of our effort to help feed the world, we commissioned the Economist Intelligence Unit (EIU) to develop a global food security index," said DuPont East Asia president Carl Lukach.

He said this would be based on food security at the local level, country by country and globally.

"Using the index, governments, academics, NGOs, researchers, and farmer organisations can share a common language and chart a comprehensive food security programme," he added.

"We are trying our best to make the index more comprehensive as it will take all of us working together to feed a growing world" said Pratibha Thaker, EIU's regional director.

Viet Nam, one of the world's leading rice exporters, will need 50.3 million tonnes of food including 32.1 million tonnes of rice in 2015 to ensure its food security.

The country, which ranks third in ASEAN and 55th globally on the food-security index, will need a minimum of 3.8 million hectares of land for rice cultivation in 2020, according to DuPont's local managing director Farra Sirrgar.

According to the National Institute of Nutrition, more than 32 per cent of children in Viet Nam are malnourished, stunted or underweight and milk consumption per capita is low compared to other countries in the region.

Ministry eyes ways to stimulate production

A Ministry of Industry and Trade official yesterday suggested the Government force commercial banks to lower lending interest rates to below 12 per cent a year in order to help struggling enterprises through difficulties.

The proposal was made at a conference held by the ministry in Ha Noi yesterday to collect input on ways to help businesses resolve the current stagnancy in production. The Government has assigned the ministry to develop a plan to reduce inventories and support businesses in accessing credit.

The head of the ministry's planning department, Nguyen Tien Vy, said the ministry has already asked the State Bank of Viet Nam to further reduce interest rates to a level commensurate with declining inflation rates. The initial plan has also proposed preferential credits to businesses operating in agriculture, exports, and support industries, as well as small-and medium-sized enterprises.

Vy said several businesses wanted capital to invest in expanding production, but banks were only offering interest rate reductions on short-term loans.

The ministry was also suggesting that firms in support industries receive preferential interest rates and more favourable conditions for mortgaging assets to secure loans. The State Bank of Viet Nam, Vy said, should also support lower interest rates for businesses in the agricultural sector, particularly in financing equipment purchases by farmers.

Viet Nam Chamber of Commerce and Industry general secretary Pham Thi Thu Hang complained that lending has historically only been available of large companies, while small businesses had to struggle to find capital.

Among other ideas discussed at the conference to stimulate production, Nguyen Quang Dung, head of the strategy department for petrol distributor Petrolimex, said the Government needed to concentrate on restructuring State-owned enterprises as well as maintaining a stable foreign exchange rate.

"The most important thing is to restructure State-owned enterprises and adjust industrial development strategy with an eye to better attracting FDI and developing a domestic market," agreed Viet Nam Association of Foreign Invested Enterprises chairman Nguyen Mai.

Businesses have also not taken advantages of free trade agreements with big markets, Mai said.

Minister of Industry and Trade Vu Huy Hoang said that business difficulties were due to both the global economic downturn and shortcomings on the domestic market.

"Many business have also failed to focus on their core lines of business, and have ended up suffering losses in non-core investments," Hoang said.

He said the ministry would push to accelerate projects using State budget funds as well as try to stimulate demand for some items of which there were high inventories.

"We do not have time to wait for solutions," he said. "Measures will be taken to provide for all businesses both domestic and foreign-invested, big or small, in production or trade.

"Businesses are also encouraged to be more proactive in finding their own solutions rather than waiting on support from the Government."

In HCM City, executives from 200 companies and trade groups and provincial industry officials also gathered at a similar meeting on Wednesday.

Most agreed that a funds shortage and high interest rates were the biggest problems.

Quach To Dung, deputy director of the HCM City Department of Industry and Trade, said most companies were unable to borrow from banks because they cannot meet their conditions.

To resolve the problem, attendees suggested setting up a team to go into issues related to loans and interest rates.

They also proposed that the Government cut the rates from the current 15 per cent to 5-7 per cent.

In an action plan that the ministry was drafting to help industry clear inventories and revive production, they wanted it to incorporate measures to provide businesses short – and medium-term loans for buying machinery and technologies.

The business executives listed several problems they faced – like tax refunds, high import-export tariffs, and counterfeits – and possible solutions for them.

Admitting the problems had to be addressed urgently, Minister of Industry and Trade Vu Huy Hoang promised that the solution would be incorporated in the action plan.

"The action plan aims to reduce inventories, help companies get loans, and reduce bankruptcies," Hoang said, adding that it would help companies achieve stability and the year's targets.

Foreign currency loan restrictions delayed

The State Bank of Viet Nam's proposed tightening of lending in foreign currency is likely to be delayed until next year.

The central bank on March 8 issued a circular on lending by credit institutions which said they would provide foreign currency loans to import goods and services only if borrowers demonstrate they would have sufficient foreign currency to repay the loans.

But it is not clear how local businesses can establish that, Dau Tu newspaper reported.

Lenders can provide short term loans to pay for imported fuel and for manufacturing projects in prioritised sectors if it is expressly approved by the central bank.

Analysts said the new regulations would significantly reduce the number of people who can get foreign currency loans.

Many enterprises that require foreign currency would have to buy it from banks instead of borrowing like they do at present.

The new regulations are likely to affect trade at a time when exports are leading economic growth, they said.

Truong Van Phuoc, general director of Eximbank, said that the interest rate on foreign currency loans average 4.5 per cent per annum compared to an average of 15 per cent for dong.

Besides, exchange rates have been stable for a long time and the central bank has promised to contain their movement to not more than 3 per cent this year.

This means borrowing in dollars would help borrowers avoid risks, Phuoc said.

This also explained why many banks' foreign currency lending grew rapidly in the last six months, he added.

Borrowers included exporters and all sorts of companies, who all borrowed in dollars because of the very low interest rates.

Nguyen Tuan Anh, general director of the Ut Xi Seafood Processing Joint Stock Company, said the new foreign currency lending regulation forced exporters like his company to borrow in dong.

"Now, we have to borrow dong at high interest rates. This will raise our production costs to a much higher level, thus affecting our competitiveness with similar products from Thailand, India, and Bangladesh," he said.

A spokesperson for a seafood export company in the southern province of An Giang also admitted that in 2011 his company was able to make profit mainly because of borrowing in dollars.

The new regulation would encourage agricultural exporters to import raw materials from abroad to process, thus affecting the country's foreign currency situation, he warned.

But banks too benefit from lending in foreign currencies because the interest rate cap on foreign currency deposits now is 2 per cent.

With both borrowers and lenders benefiting, it is not surprising that they both want the central bank to delay application of the tightened regulations.

SBV Governor Nguyen Van Binh has promised that the circular would only take effect after the economy sees improvement, meaning it will not as long as the economy and export activities remain mired in difficulties.  

Hyundai announces sole VN distributor

Hyundai Nam Viet has been chosen by the parent company in South Korea to be sole distributor in Viet Nam for commercial cars, multi-purpose vehicles and competed-built unit (CBU) from Jeon-Ju Company in South Korea.

Speaking at a customer meeting yesterday in Ha Noi, Min Wang Sil, deputy general director of Hyundai Motors, said Viet Nam imported between 1,500-3,000 cars and buses a year, making it one of the most dynamic markets in the region.

At the meeting, Hyundai Nam Viet and BIDV signed a comprehensive business agreement for BIDV to supply comprehensive banking products for Hyundai Nam Viet to meet expanding business and investments.

FPT posts H1 profits of $546m

FPT, the country's giant software developer, posted VND11.5 trillion (US$546 million) in the first half of this year and a before-tax profit of VND1.2 trillion ($57 million), a slight increase over the same frame last year.

During this period, after-tax profit of the parent company rose 6 per cent to VND753 billion ($36 million) and the average earning per share was VND2,788 ($0.13).

Post, telecoms sector enjoys annual growth

Ha Noi's post and telecoms sector has so far this year earned nearly VND8 trillion ($381 million) in revenue, a 30 per cent year-on-year increase.

The number of landline telephone subscribers in Ha Noi in the reviewed period was 1.1 million, 3 per cent down on the corresponding period last year. Meanwhile, the number of mobile-phone subscribers climbed to 12 million.

PM agrees to mark 25th year of FDI

Prime Minister Nguyen Tan Dung has agreed for the Ministry of Planning and Investment to hold a conference to mark 25 years of FDI to the country in October.

In that period, FDI projects have made a significant contribution to Viet Nam's socio-economic development. About 50 per cent of Viet Nam's export turnover came from FDI projects. FDI projects also help create jobs.

Kinh Do spits out loss in Q2
 
Confectionery giant Kinh Do Corp (KDC) posted a surprise loss of over VND39.2 billion (US$1.9 million) in the second quarter of this year, a poor performance compared to a profit of VND318 billion ($15.1 million) in the first three months.

First-half profits totalled VND278.5 billion ($13.3 million).

The loss was attributed to damage caused by the sale of its stake in domestic dairy producer Nutifood during the period. The company announced it had sold its remaining 2.7 million shares, or 18 per cent stake, in Nutifood.

Specific figures have not been disclosed.

Kinh Do Corp said after five years of investment, development strategies between KDC and Nutifood were no longer going in the same direction, and the company had decided to withdraw its investment.

In 2007, KDC bought 3.7 million shares in Nutifood, equivalent to a 24.8 per cent of the company's total shares. However, in 2008, Nutifood posted a heavy loss of VND148 billion ($7 million) and total profit from 2009-11 reached just VND141 billion ($6.7 million). After that, KDC sold 1 million shares.

KDC's shares have fallen for the past two days following the announcement, but closed yesterday unchanged at VND38,500 ($1.83).

In the second quarter, KDC's revenue decreased 20.4 per cent from the first three months to VND408.3 billion ($19.4 million), lifting its first-half revenue to VND787 billion ($37.5 million), down 6.7 per cent year-on-year.

Revenue from financial operations rose 61 per cent to over VND32.1 billion ($1.5 million) from April-June, but financial costs also jumped to over VND66 billion ($3.1 million) during that period. At the end of June, KDC's short-term debts stood at VND273 billion ($13 million).

Sugar makers to invest $5m in cane plantations

Sugar factories from southwestern Tay Ninh Province have spent over VND110 billion (US$5 million) to plant sugar cane in Cambodia's Svay Rieng Province for the 201213 crop, said the Tay Ninh People's Committee.

The Bien Hoa – Tay Ninh and Bourbon-Tay Ninh sugar factories are in a joint venture with their Cambodian partners to plant 3,500 ha of sugar cane on plantations that will provide materials for these Vietnamese sugar factories.

Vietnamese sugar producers have planted the crops in Cambodia as sugar cane in Viet Nam has faced stiff competition for farmland from other crops such as cassava and rubber.

However, Vietnamese investors said poor infrastructure has made it difficult to transport sugar cane to Viet Nam.

Provincial authorities met last week to discuss measures to tackle these difficulties in a bid to promote trade and business ties between the two provinces in the time to come.

The sugar cane sector is a part of a co-operation agreement signed between the two provinces last September to create jobs and boost incomes for local people.

According to Viet Nam's customs department, bilateral trade between the two countries reached nearly $1.5 billion in the first five months of this year, an increase of 30 per cent against the same period last year.

Vietnamese businesses have more than 110 investment projects totaling more than $2.4 billion in registered capital in Cambodia.

Of this capital, 40.7 percents was in agriculture and forestry, 34 per cent in electricity production and 11 per cent in the finance and banking sector.

Cambodia has become the second biggest receiver of investment from Vietnamese businesses.

Shipping firms face bankruptcy
 
Many maritime enterprises, especially shipping lines, face bankruptcy because of the world economic slowdown. This had led to a decline in goods being shipped, said the Viet Nam Maritime Administration.

"The situation has pushed the administration into trying to provide policies to support enterprises, settle economic disputes and ensure maritime security," the administration's vice head Do Hong Thai said.

According to administration statistics, in the first half of the year, 46.8 million tonnes of goods was transported by sea. This was 5.77 per cent higher than for the same period last year – and 45.5 per cent of the year's target.

Meanwhile, more than 52,000 visits were made to Vietnamese ports by Vietnamese and foreign ships. They carried a total of 145 million tonnes of goods, accounting for 46.9 per cent of this year's target.

A shortage of capital was one of the main difficulties, interrupting the progress of some infrastructure projects, Thai said, adding that the administration was making efforts to ensure disbursement for approved projects.

He said the administration had taken action to adjust maritime fees and services to match reality and raise Viet Nam's competitiveness to attract goods by sea.

Moreover, the administration was developing projects to diversify freight services as well as strategies to develop Vietnamese cargo boats.

Deputy Transport Minister Nguyen Van Cong said the administration needed to work out detailed policies to support maritime enterprises having difficulties during the economic slowdown.

He also urged the administration to pay more attention to studying and forecasting market demand.

The administration was asked to quickly finalise a project to attract investment from the private sector in maintaining marine infrastructures.

In June, Viet Nam had more than 1,680 ships, including about 450 international cargo vessels capable of carrying nearly two million tonnes of goods.

At present, in terms of loading capacity, Viet Nam ranks sixtieth out of the 152 flag states worldwide – and fourth out of the 10 ASEAN members.

Provinces ordered to inspect coal mines

Deputy Prime Minister Hoang Trung Hai has ordered nine provinces and cities to increase inspections on coal mining in a bid to crackdown on illegal coal mines in the area.

The localities include Bac Giang, Bac Ninh, Hai Duong, Hai Phong, Nam Dinh, Nghe An, Quang Ninh, Thai Binh and Thanh Hoa.

Hai said the business licences of those committing serious violations will be revoked, especially for those making serious breaches in rules on labour safety and environmental protection or those illegally transporting, processing and trading coal.

The Ministry of Natural Resources and Environment has been assigned to quickly submit to the Government information on the location of coal seams to help in the issue of coal mining licences by provincial People's Committees.

In addition, Hai also required the Ministry of Industry and Trade to add coal to the list of commodities for trading under special terms and conditions.

Statistics from northern Quang Ninh Province's Police Department recorded 520 illegal coal mines that have had their operations suspended, while police officers also seized about 20,000 tonnes of coal and fined 296 suspects, with these fines totalling over VND1 billion (US$48,000).

City's foreign investment falls in first seven months

The southern economic hub attracted approximately US$820 million in foreign direct investment during the first seven months of this year, down by 57 per cent year-on-year, according to the municipal Statistics Office.

Up to 214 new foreign-invested projects, worth over $292 million, were granted licences in the city while 65 operating projects were allowed to raise capital by $528 million during the period.

Singapore was the city's leading source of foreign direct investment (FDI) with 38 projects capitalised at $118 million, accounting for 40 per cent of the total FDI registered in the city.

Japan ranked second with 46 projects valued at $83 million, followed by South Korea, Malaysia, France and the British Virgin Islands.

The heath sector took the lead in terms of investment capital during the period, gobbling up $83.9 million or 28.6 per cent of total FDI. It was followed by industry and services, attracting $83 million and $72.5 million respectively, while the construction sector drew $20 million.

To date, HCM City is home to 4,275 foreign-invested projects worth a total of $30.8 billion.

The city was focusing on achieving the ambitious target of attracting $2.5 billion in FDI for the whole year mainly through the finance and banking, insurance, transport and logistics, import-export services, and telecommunication technology industries, the municipal Department of Planning and Investment deputy director Lu Thanh Phong told the Vietnam Investment Review.

It would also pay attention to hi-tech industries and sectors of high added value such as electronic engineering, information technology, pharmaceutical chemicals, rubber, food processing and bio-technology industries, he added.

Energy saving technologies and supporting industries would be other areas of focus, he said.

Apart from Japan, the city has also been seeking FDI from the US, the EU, north-east Asian countries, Germany, Belgium and Holland, he said.

PM urges progress at international port

Prime Minister Nguyen Tan Dung has asked Hai Phong northern City's authorities and other agencies to make sure that work on Lach Huyen international port is finished on schedule in 2016.

Dung was speaking at a meeting with Hai Phong leaders during a visit to the site of the port in Lach Huyen, Cat Hai District, yesterday.

The first phase of the project will cost a total of more than VND22 trillion (US$1 billion. It means the completion of two wharves capable of handling 100,000 dead-weight tonne (DWT) vessels, breakwaters, roads, and electricity and water infrastructure.

The municipal leaders said the city had told Cat Hai district to focus on site clearance to ensure progress was made.

Dung praised the city's comprehensive socio-economic development results in the first half of the year, despite difficulties in domestic and world economies.

He advised the city to give priority to industrial development while helping businesses, especially those making construction materials or were involved in shipbuilding, to expand their markets and access capital sources.

He encouraged it to make the most of its advantages by developing industrial and economic zones as well as speeding up infrastructure development to lure investment projects with high technological content.

The Government leader asked ministries and agencies to take measures to help boost the city's development in the remaining months of the year, focusing on infrastructure projects such as the Ha Noi-Hai Phong Expressway and a project to dredge Hai Phong Port.

According to the municipal People's Committee, in the first six months of the year, the city recorded a GDP growth of 6.81 per cent, 1.55 times higher than the national rate.

Vinacomin asks to cut export duties to 10%  

The Vietnam National Coal and Mineral Industries Holding Corporation is seeking PM approval to cut coal export taxes to 10% to ease its difficulties.

The Vietnam National Coal and Mineral Industries Holding Corporation (Vinacomin) also said that the industry's outlook is quite gloomy and they would not make any profits in 2012.

According to the corporation, both sale and coal prices have dropped fast compared to the same period in 2011.

In June, coal sale stood at only 43% of the annual plan and just 87% of last year’s rate. Revenues stood at 42% of the annual plan and fell 9% compared to previous year. Meanwhile their mineral sale also fell below expectations.

In addition to domestic woes, coal exports also had to compete fiercely with supply exceeding demand.

As of June, their inventory stood at 8.5 million tonnes, pushing up borrowing costs. Furthermore, the rise in environmental fees and taxes have increased manufacturing costs by VND 2.2 trillion (USD105 million).

Another factor that make Vinacomin's revenue fall is the cheap price they sell coal to the electricity sector, they said.

From July 1, when electricity prices increased, coal price also went up by 10-11.5% but Vinacomin said they lost VND8.5 trillion (USD407 million) because their prices were still cheaper than market prices.

Vinacomin's revenue also dropped VND4 trillion due to the fall in coal export prices. Only 25,000 tonnes were sold and they have no new contracts as of July 15.

According to Vinacomin, the 20% tax rate is too high during a period where world coal price have rapidly fallen. Since they can't cover their expenses, the corporation is reducing export volumes. "The government will not be able to collect taxes due to small export volume." they said and asked to lower the export tax to 10%.

Last year, Vu Huy Hoang, Minister of Industry and Trade said that Vietnam might have to import coal from 2015. The government ordered related agencies research coal imports from Australia, Indonesia and Russia.

Huge urban area projects abandoned in Me Linh   

Dozens of projects in the expected 'super urban area' of Me Linh District have been left abandoned for almost four years.

After securing capital, many project owners just neglected and abandoned their projects.

According to the urban planning of Hanoi period 2020-2050, Me Linh is expected to be the capital's central urban area. The planning attracted many investors to Me Linh, including HUD, Cienco 5 and Vinaconex.

The Me Linh site Clearance Board said that there were nearly 50 housing projects in their 16 communes. Four communes, Tien Phong, Trang Viet, Dai Thanh and Thanh Lam, along with Quang Minh Town, have over 20 small and big projects, such as Cienco 5, Diamond Park New, River Land.

Most have been abandoned since 2008 or 2009 even though ground sites have been cleared.

The urban area project Minh Duc, which has total area of 17.1 hectares, still has not completed the site clearance work. But they continue to advertise in the real estate market.

SOEs need to stick to what they do best

Vietnam’s state-owned corporations and groups need to pull back from non-core investments by 2015 to assist their restructuring.

According to Minister of Finance (MoF) Vuong Dinh Hue, non-core investments have weakened enterprises’ powers, especially those that have invested in the risky sectors such as securities, insurance, real estate and banking, although most have maintained an acceptable rate of 30 per cent lower than their charter capital.

A MoF source said state-owned enterprises’ investments in those risky sectors had been surging from VND6.114 trillion ($293.94 million) in 2006, to VND14.441 trillion ($694.28 million) in 2007 and to VND19.840 trillion ($953.85 million) in 2008.

Thanks to Decree 09/2009/ND-CP that restricted non-core investments, the figure declined to VND14.991 trillion ($720.72 million) in 2009. However, this figure soared up to VND21.814 trillion ($1.1 billion) in 2010.

The abnormal hike in state-owned enterprises’ non-core investments in 2010 resulted in increasing their charter capital by payment dividends by shares, reward shares and giving existing shareholders the right to purchase additional shares, Hue explained. And thus, it made those state-owned non-core investments increase, but not exceeding the 30 per cent rate.

State-owned corporations and groups have been requested to withdraw from their non-core investments by 2015.

Deputy head of the National Assembly’s Economic Committee Nguyen Duc Kien said each state-owned enterprise must withdrew based on ensuring transparency and state-capital and assets.

In terms of securities, the decision to withdraw from non-core investments is not easy at all due to profits-investments ratio of non-core activities is higher compared with state-owned corporations and groups’ core business.

For example, Vinalines’s profits-investments ratio of its financial activities was 8.63 per cent, while shipping building made no profits. Vinacomin and Vietnam Cement Industry Corporation also made profits in their financial investments.

“State-owned enterprises should take the initiative to withdraw depending on financial markets in order to ensure investment capital,” Kien said.