VCCI: Multiple sectors use capital poorly

Local enterprises in shipping, telecom, construction and electricity were highlighted for their poor use of capital as shown in the Vietnam Business Annual Report 2011, released by the Vietnam Chamber of Commerce and Industry (VCCI) on Monday.

In a corporate capability survey, VCCI selected four sectors with different revenue accumulation levels and they found that the clothing, rubber and plastic and construction industries had poor revenue accumulation.

VCCI also criticized the telecom and electricity sectors for their inefficient use of capital.

For financial capability, VCCI warned that shipping enterprises would meet stiff challenges in accessing loans in the future.

Clothing, rubber and construction sectors were reported to have a low working capability, leading to low ROS (return on sales) of 4.45%, 4.3% and 4.64% respectively.

In the science and technology sectors, expenditure for technology accounts for less than 10% of their total expenditure.

Construction and electricity sectors, meanwhile, significantly raised technology innovation costs since 2009.

Jetstar Pacific to have new Vietnamese pilots this year

Some 10 Vietnamese will join Jetstar Pacific Airlines’ pilot team by the end of this year when they finish their training abroad.

The low-cost Jetstar Pacific said the new pilots would significantly increase the number of Vietnamese pilots at the country’s second largest airline after the flagship Vietnam Airlines. Currently, the carrier has nearly 60 pilots but only three of them are Vietnamese.

Jetstar Pacific now operates seven Boeing B737-400 and Airbus A320 planes on its domestic flights from HCMC to Hanoi, Danang, Hue, Vinh and Haiphong; and between Hanoi and Danang. The carrier has plans to gradually replace its Boeing B737-400s and build an all Airbus fleet of 15 by 2014.

The airline is investing heavily in different areas, including human resources as this is one of the supporting factors for its development strategy. Recently, the Civil Aviation Administration of Vietnam (CAAV) has issued a category B (Cat B) license to 17 aircraft maintenance engineers of the airline.

Three of the 17 engineers have passed Certificate Release to Service (CRS) tests set by foreign experts to work as official engineers of Cat B rating for Jetstar Pacific. The remainder will be certified in the coming one to two years.

Le Song Lai, chief executive officer of Jetstar Pacific, said this was the first time Vietnamese had been able to reach Cat B rating, a level that only foreign engineers had met in the airline’s 20-year history. This will result in a remarkable cost reduction and helps the carrier realize its target of becoming a leading budget carrier in the local market.

Cat B rating is important recognition granted to qualified engineers to approve their capabilities for plane maintenance supervision, aircraft repair and certification of aircraft in service. The holder of Cat B certificate is required of basic and advanced training in a long term, thorough understanding of aircraft techniques, regulations and operation processes of an airline among others.

The engineers must have experience and have passed CRS tests before being admitted to an airline to work at the level. After two years of work and without any leave of no more than six months, they will have to attend refresher and advanced courses and then have their license extended by the aviation authority as a condition for their renewed CRS certificate.

Jetstar Pacific has 25 certified Cat B engineers and 22 of them are foreigners. The airline aims at half of its key aircraft maintenance engineers being Vietnamese in the next three years.

PetroVietnam Fertiliser inks two-year deal with Japan

PetroVietnam Fertiliser and Chemicals Company (PVFCCo), Japanese-based Sojitz Corporation and Japan Viet Nam Fertiliser Company (JVF) signed a two-year memorandum on fertiliser supplies yesterday.

JVF will offer PVFCCo from 30,000 to 40,000 tonnes of high-quality NPK fertilisers per year under the agreement, with PVFCCo also providing Sojitz Corp with roughly 200,000 to 300,000 tonnes of urea per year that will be exported to Thailand, the Philippines and other regional countries after domestic demands for fertiliser is ensured.

PVFCCo and JVF also intend to sign contracts on technical support. Accordingly, JVF will help PVFCCo operate and service a NPK fertiliser plant currently being built by PVFCCo. According to JVF, the company is close to securing investment in the plant from one of the leading Japanese NPK fertiliser companies, Central Glass Limited. The NPK fertiliser plant is planned to be fully operational in 2014. Both sides also agreed to set up a group to boost co-operation activities.

PVFCCo currently has a number of sizeable investment projects. The company is deploying a US$63 million NPK fertiliser plant project with a production capacity of 400,000 tonnes per year. The project is expected to be completed in the third quarter of this year. PVFCCo' s Dam Phu My Plant is scheduled to come into operation in June with an annual capacity of 800,000 tonnes of urea.

In addition, PVFCCo and Petro Viet Nam Ca Mau Fertilizer Company (PVCFC) on Tuesday signed an agreement on development of markets for granular urea sales.

Under the agreement, PVCFC will hire PVFCCo to conduct market development for granular urea sales from April until products from the Ca Mau Fertiliser Plant are launched into the market.

SBV expects 2011 BOP surplus at US$2 bil.

The central bank governor has said that if the trade gap is successfully cut to less than 16% of export revenue, Vietnam’s Balance of Payments this year will have a surplus of up to US$2 billion.  

Speaking at the National Assembly in Hanoi on Saturday, Nguyen Van Giau said the BOP was in surplus in 2008, but it swung into deficit, at US$8.8 billion, a year later and fell to US$3.07 billion last year.

“The Government originally aimed for a trade deficit making up 18% of export revenue this year. I and other ministers projected the Balance of Payments would have US$700 million in surplus,” he said. “However, the Prime Minister now wants ministries to curtail the trade deficit at less than 16% of export revenue, hence the BOP surplus of US$2 billion.”  

The governor said the State Bank of Vietnam had combined with other agencies to put the unofficial foreign exchange market under control. The U.S. dollar price on the unofficial market has gradually got closer to the official exchange rate.

Banks said they were ready to sell foreign currency to individuals who have legitimate demands, Giau said, suggesting people should use international payment cards rather than cash when traveling abroad.

As for gold management, Giau said, the central bank had proposed the Government issue a decree governing the gold market, especially gold tael trading. The Government’s Resolution 11 mentions a ban on gold tael trading on the unofficial market in the long run.

“Some said banning gold tael trading would affect people’s assets. I do affirm that’s wrong. We will take measures in a way that ensures the legitimate rights of gold owners,” Giau added.

Regarding credit for the corporate sector, businessmen said they had found it more difficult to gain access to bank loans due to monetary tightening. Giau said outstanding loans this year would rise by VND460 trillion, almost equal to last year’s VND470 trillion.

Giau admitted the slow credit increase in the first three months of the year caused difficulties for enterprises but according to an online meeting between the Prime Minister and provincial governments on March 7, no big problem had emerged so far. “However, I’ll notice this matter and attend to it when problems arise.”

VRA: Natural rubber price will grow on strong demand

The Vietnam Rubber Association (VRA) has predicted the price of rubber will continue climbing in the long term thanks to strong demand from automobile industries in China and India.

Natural rubber price has recovered from a temporary decline in the first two weeks of March. Tran Thi Thuy Hoa, secretary general of VRA, said on the sidelines of the “sustainable development for rubber industry” seminar held by the National Agriculture Extension Center in Binh Phuoc Province last week that the price of rubber is likely to rise in the long term after the recent fall.

In the first two weeks of this month the natural rubber price had dropped 40% from the peak in February amidst worries on weak demand after China, among the world’s biggest automobile makers, announced the lower-than-expected sales revenue. The Japan crisis is also blamed for the dip in the price of rubber.

The Association of Natural Rubber Producing Countries has quickly intervened and countries including Thailand, Indonesia, Malaysia and Vietnam have set up a price floor, estimated at US$4,000 per ton for exports.

“Rubber has recovered from the short-term fall and will continue the upward trends thanks to the appropriate intervention from rubber maker countries, including Vietnam,” Hoa said.

Hoa also warned that the mass plantation of rubber trees in the country may be a mistake.

“With prices climbing in the last two years, especially in 2010, it has led to widespread plantation in Binh Phuoc and Tay Ninh provinces and those in the Central Highlands,” she said. “Rubber has been grown on 740,000 hectares so far and it is estimated to reach 800,000 hectares by 2015. Without following a master plan, an oversupply in the future can be avoided.”

On the global market, Vietnam is the fourth biggest exporter of natural rubber with 10% market share, after Thailand with 34%, Indonesia with 30% and Malaysia with 16%, according to figures by the International Rubber Study Group in 2011.

Last year, it exported a record high of US$2.4 billion worth of natural rubber. It is the second most productive agricultural product behind rice.

WTO proves boon, bane for economy

Viet Nam's succession to the World Trade Organisation has been positive for its economy but it also poses big challenges, according to the Central Institute of Economic Management.

"International economic integration impacts all sectors of the economy, especially international trade and investment, which boosts domestic production, creates employment, and reduces poverty," Pham Lan Huong, head of CIEM's macro-economic policy division, told a seminar held in HCM City yesterday.

After the country joined the WTO in 2007, foreign direct investment rose dramatically as did exports, she said.

Exports grew by 25.5 per cent in 2007-08, though it fell in 2009 due to the global economic crisis, she said.

FDI had also risen dramatically since 2007, Nguyen Dang Binh of the Ministry of Planning and Investment said.

Viet Nam attracted US$116.2 billion in 2007-09, 3.6 times the 2001-06 figure, he said.

Vo Tri Thanh, CIEM's deputy director, said the WTO accession had also revealed weaknesses like the poor quality of growth, human resources, and competitiveness.

Export growth had not met expectations, remaining confined to raw materials and low-value outsourcing.

After failing to prepare well for integration, the country struggled to cope with external factors, he said, pointing out that economic stability remained a serious concern.

"We integrate with the world because we want to renovate and develop our economy. However, our policy institutions have not, to some extent, kept pace with the changes emerging from the integration process."

The country had to continue with the innovation and integration processes, but also had to understand its economic status and strengths and weakness to adopt appropriate measures to improve competitiveness, he said.

In the current situation, the Government should stabilise the economy to retain the people's and markets' trust, he added.

Binh said the Government should review its WTO commitments and come up with ways to attract investment.

In addition, improving training and infrastructure and reforming investment procedures were very important to attract more investment, he said.

The country spent a lot of foreign currency on import of raw materials for export-oriented production, putting more pressure on the trade deficit and balance of payments, Huong from CIEM said, noting that to resolve this problem, the Government must develop support industries.

Education should be reformed to improve the competitiveness of human resources and to reduce unemployment, she added.

More flights to Phu Yen in tourism year

Airlines will add more flights between the country’s two biggest cities and the central coast province of Phu Yen from this Thursday till Saturday in anticipation of higher air travel demand during the National Tourism Year opening ceremony set for Friday.

Tran Quang Nhat, director of the province’s Department of Culture, Sports and Tourism, told the Daily that everyday there would be two flights from Hanoi and another two from HCMC to Tuy Hoa, Phu Yen during the three days. The daily flight frequency will fall to one from April 19.

“We’ve completed talks with airlines about the additional flights,” he said.

Vietnam Airlines now flies once a day to Tuy Hoa from Hanoi and its subsidiary VASCO has one daily service between HCMC and Tuy Hoa.

Phu Yen has been chosen to host the National Tourism Year with the theme Beaches and Islands. Main events will be staged in the province and other supporting events will take place in other central provinces from Binh Thuan to Danang.

The organizing committee said around 30 cultural, sports and tourism events would be organized in the central region during the year-long tourism promotion program.

Nhat said the province had over 2,000 hotel rooms and 10 entertainment venues for tourists. The province’s tourism authority expects the coming festivities will attract around 500,000 tourists to Phu Yen this year, up from the 320,000 last year.

Many tour operators in HCMC have complained about the lack of information on the events throughout the year. Promoting tours to Danang is fine since the International Fireworks Competition as part of the tourism year program has been scheduled for April 29-30, while they have not been able to sell tours to Phu Yen and other provinces due to little information from these provinces.

Tu Quy Thanh, director of Lien Bang Travelink, said the National Tourism Year events were good opportunities to attract holidaymakers as they would be taking place in the summer travel season. However, given insufficient information, Lien Bang Travelink has felt its hands tied in preparing Phu Yen tour programs.

“We have yet to get a detailed list of events in Phu Yen and other provinces, so we can’t arrange tours for tourists,” he said.

ICCR to send lecturers to local university

The Indian Council for Cultural Relations (ICCR) and the HCMC University of Social Sciences and Humanities have signed a memorandum of understanding to set up a short-term Tagore chair of contemporary Indian studies at the local institution.

The signing took place on Friday at the local university in HCMC’s District 1 between the Indian ambassador to Vietnam, Shri Ranjit Rae, on behalf of ICCR, and Vo Van Sen, president of the University of Social Sciences and Humanities.

ICCR in consultation with the local institution will appoint an Indian academician who will come to the university for one semester during every academic year. The Indian academician will give lectures on contemporary Indian studies and social sciences and contribute to the academic life of the university by engaging in teaching and doing research in his or her respective specialization. The chair would commence from the academic year 2011-2012 and the memorandum of understanding would remain valid for four years until 2015.

Sen said that for the first time the ambassador representing India’s government signed a memorandum of understanding with his university to send Indian professors to his institution to help improve Indian studies through teaching and research.

Launched in 2002, 86 people have done Indian studies at the Orient Studies Faculty of the University of Social Sciences and Humanities and they are now working for the consulate general, research institutes and enterprises of India in Vietnam. In the academic years from 2008 to 2014, 35 students are learning Indian studies at the school.

* The University of Economics in HCMC has signed a memorandum of understanding on cooperation with Saigon Thuong Tin Commercial Bank (Sacombank).

The fields of cooperation include training, scientific research, scholarship granting, internship and job opportunities, career orientation, student campaigns, teaching equipment, and banking services for lecturers and students.

Nguyen Thi To Uyen, manager of Sacombank’s human resources department, told the signing ceremony held at the university last week that the bank would join training programs, teach students soft skills, and participate in the study consulting council of the university. Meanwhile, the university will design training programs and give lectures to the bank’s employees, she added.

Pham Van Nang, president of the University of Economics in HCMC, said the cooperation was a response to the Ministry of Education and Training’s request for universities to address actual human resources demand in society via cooperation with enterprises.

In 2009-2010, the university signed agreements with nearly 40 enterprises.

Agricultural SMEs struggle to raise capital

Despite having credit guarantees from the central bank, most agricultural enterprises in the country find it hard to access loans from commercial banks due to their lack of assets.

The nation has over 8,000 companies in the agriculture sector but up to 90% of them have capital of below VND10 billion each, the Ministry of Agriculture and Rural Development said at a business forum in HCMC last week.

Nguyen Thai Hoc, chairman of the Vietnam Cashew Association (Vinacas), said there are 200 cashew processors and exporters in Vietnam but only 20 have export revenue of over US$50 million a year each. The remaining enterprises have an annual turnover of under US$10 million each.

“The cashew sector is facing difficulties of outdated processing technology and the lack of international quality standards. Enterprises need capital to expand production but fail to convince lenders due to the lack of assets for mortgage,” Hoc said.

The Government earlier asked the Bank for Investment and Development of Vietnam (BIDV) to give guarantees for small and medium enterprises (SMEs) to help them reach bank loans. But in fact, only three out of 20 banks in Vinh Long Province have provided loans to SMEs at a limited level, said Ho Van Vang, vice chairman of the provincial seafood association.

Truong Thanh Nghia, director of Tan Nghia animal feed enterprise in Long An, said the Government had not supervised implementation of the supporting policies.

Other enterprises suggested the Government give specific policies for different sectors such as cashew, coffee and seafood. Specific supporting policies will benefit not only enterprises but also farmers with high sale prices and improvement of living standards.

Deputy agriculture minister Diep Kinh Tan said the ministry would provide more assistance for SMEs soon, including a credit guarantee fund, vocational training programs and business development funds.

Shareholders pressure KLS to remain in brokerage business

Kim Long Securities Co deputy director Pham Vinh Thanh announced that, following a general shareholders meeting on March 19 that failed to achieve a quorum, the company would abandon plans to leave the brokerage business and concentrate on property and corporate investment.

The move followed a flood of complaints from shareholders.

The wave of negativity from shareholders forced the board to reverse their decision, Thanh said, adding that they realised it would take a long time to finalise the transition, and they still lacked a legal framework for the shift in strategy.

The deputy director said rumours had plagued the company's future business plan. The inquorate shareholders meeting had added to the gossip, as it was thought the delay had been a deliberate attempt by the board to reconvene the meeting at a later date, having secured more votes for its proposal.

"These circumstances have been severely and deliberately misinterpreted. However, we decided that we would abide by the views of shareholders in the best interest of the company."

After the business plan was announced, an estimated 60-70 of accounts opened in KLS were switched to other securities companies.

"In fact, we're still seeing new clients opening accounts," Thanh said, adding that almost all the existing clients used their own money to trade, and had not depended on leverage tools provided by Kim Long.

"Those who wanted to go, just went. Other clients have continued trading as usual."

Switching accounts between brokers was easy, so investors hadn't been in too much of a rush, he said, adding that the company would continue focusing on long-term investment by holding the regulated maximum stakes in companies to help them improve their corporate governance.

In the latest news released by the Ha Noi Stock Exchange, Kim Long Securities shares was put under warning from yesterday, due to the company's loss of VND172.8 billion (US$8 million) in profits last year. The warning would be lifted when the profitability improved. KLS yesterday closed unchanged at VND10,500 a piece.

Securities analyst Nguyen Quang Vinh said that the Kim Long news had only had a temporary impact on trading over one or two sessions.

"Kim Long's reversal excited investors, especially who held the KLS shares, in short-term. In the long-term, however, for KLS shares to advance, the company needs to release basic information such as first-quarter earnings data to prove that the company is able to remain a popular brokerage," Vinh said.