The Ministry of Finance issued Circular No. 13/2013/TT-BTC on January 25, containing regulations on the supervision of securities transactions.
The circular provides specific definitions of securities transactions, securities listing orgnisations, securities registration, internal transactions, market manipulation, extraordinary transactions, and rumours.
Under the regulations, stock exchanges will be required to supervise transactions and report to the State Securities Commission on weekly, monthly, and annual bases, while the Securities Depository Centre will be required to report monthly. Organisations and individuals engaged in securities transactions will be obligated to provide timely, full and accurate information, materials, and electronic data describing securities transactions in a uniform format described by the circular.
The circular will replace Decision No 127/2008/QD-BTC of December 2008 and will take effect on March 8.
Banks to classify, report on debts
The State Bank of Viet Nam issued Circular No 02/2013/TT-NHNN on January 20, regulating the classification of assets and methods of provision against risks and the use of provisional funds to offset losses of credit institutions.
Under the new circular, the State Bank requires credit institutions and branches of foreign banks themselves to classify debts and off-balance-sheet undertakings on a quarterly basis and report the results to the Credit Information Centre (CIC).
Debts shall be classified into five categories: Standard Debt, Debt Needing Special Attention, Subprime Debt, Doubtful Debt, and Potentially Irrecoverable Debt.
Within three days of receiving the results, the CIC shall summarize a list with the most risky debts classified by credit institutions, making this list available upon the request of credit institutions.
The State Bank has also requested credit institutions to create an internal credit rating system for rating customers as a foundation for evaluating credit worthiness and for creating a risk reserve policy in conformance with the actual circumstances of the credit institution.
The Circular takes effect on June 1.
Ministry revises definition of equity
The Ministry of Finance issued Circular No 05/2013/TT-BTC on January 9, establishing a new financial regime for credit institutions. Under the new circular, owner's equity shall be defined to include: (i) charter capital; (ii) exchange-rate differences; (iii) differences upon asset revaluation; (iv) share premiums; (v) capital reserve funds; (vi) undistributed earnings; and (vii) owner's other capital.
Credit institutions are entitled to use capital and assets for business operations. However, to ensure safety, they may not invest in acquisition of fixed assets in excess of 50 per cent of charter capital and reserve funds. Credit institutions are entitled to mortgage or pledge assets, as well as transfer or liquidate them in accordance with the circular.
The new circular also requires credit institutions to submit an annual financial plan to the State Bank of Viet Nam and the Ministry of Finance by November 15 of the previous year.
The circular takes effect on February 25 and applies to the current fiscal year. It replaces Circular No 12/2006/TT-BTC of December 2006.
Steelmaker looks to capital markets to raise funds
Shareholders of steelmaker Huu Lien Asia Corporation (HLA) have approved the company's plan of issuing VND300 billion (US$14.4 million) worth of shares to its existing shareholders at the par value of VND10,000 each.
However, it has been questioned whether there are any investors who will accept this price while HLA shares are being traded for around VND6,000 on the stock market?
The expense of high interest has piled pressure on HLA's profit growth and this has driven the company to raise capital from its shareholders.
Last year, financial costs (mainly interest expenses) ate away a large proportion of HLA's profit. With around VND235 billion ($11.2 million) paying for loan interests, HLA's net profit reached just VND15.75 billion ($753,600) while its revenue totalled nearly VND5 trillion ($239.2 million).
According to Phan Van Dung, a company director, the current share price is lower than its book value of VND14,000 and some organisations are ready to pay a higher price to hold a large volume of shares and participate in management of the company.
However Dung declined to disclose further information as they are currently in negotiations with interested parties.
HLA also planned to issue shares to raise capital last year but it was unable to successfully do so due to the prolonged bear market.
Responding to questions about what a repeat failure would mean for the company, Dung said HLA would continue to borrow money to finance its production operations but would promote export activity to generate more money to offset cost.
Exports last year brought the company $25 million, a year-on-year increase of 100 per cent and accounted for 30 per cent of the company's revenue. Steel tubs are currently the company's main product and it is occupying 15 per cent of the domestic market share.
This year, HLA projects a revenue of just VND3.52 trillion ($168.4 million), down 41 per cent from a year ago, and a total pre-tax profit of VND46 billion ($2.2 million). Dividend payment is planned at 9 per cent in cash.
US firms assess local climate
Representatives of US businesses told a dialogue on Viet Nam's investment climate that they feel secure doing long-term business in the country.
Monday's dialogue was hosted in Washington DC by Vietnamese Ambassador to the US Nguyen Quoc Cuong.
It drew the participation of members of the US Chamber of Commerce and the US-ASEAN Business Council as well as representatives from 30 leading American companies, including Boeing, IBM, Microsoft, Google, DHL, KPMG, and Lockheed Martin.
The event was the first held within the framework of the 2013 Viet Nam Forum Initiative, designed to create a platform for regular talks between the Vietnamese embassy in Washington and American business leaders.
Business representatives at Monday's dialogue said they believed that recent efforts by the Vietnamese Government have stabilised the economy and contained inflation while promoting economic restructuring.
They also praised the Vietnamese Government's willingness to find ways to address problems in the business environment through dialogue.
Negotiations for the Trans-Pacific Partnership (TPP), expected to conclude this year, would also be of special importance, paving the way for investment and business expansion strategies in Viet Nam and throughout Southeast Asia, the American business representatives said.
Cuong thanked the US companies for their support and contributions, taking note of their opinions on Viet Nam's business climate and investment policies.
He also took the opportunity to brief them on Viet Nam's initial achievements in maintaining economic stability and inflation in early 2013 and shared his views on the prospects for further development of bilateral ties, including the Lower Mekong Initiative and other initiatives aimed at accelerating US-ASEAN co-operation in the coming year.
In 2013, the Vietnamese Embassy in Washington planned to host additional dialogues on such issues as human resources training, improving the business and investment climate, trade promotion, development of the Greater Mekong Sub-Region, and public-private partnerships, he said.
Rice producers seek to build on net grains
The agriculture sector will try to maintain rice production area, raise productivity and further expand application of Good Agricultural Practices in rice cultivation this year.
The targets were mentioned at a meeting held in Kien Giang Province last Friday to review rice production last year and set orientation for this year.
Viet Nam's rice output reached about 43.96 million tonnes last year, a year-on-year increase of 1.64 million tonnes.
Southern provinces produced more than 30 million tonnes of rice, up nearly 1.45 million tonnes over 2011.
Overall, there was an increase in cultivation area, productivity and output, contributing to increased rice exports last year, the meeting heard.
Bui Ba Bong, Deputy Minister of Agriculture and Rural Development, said at the meeting that Viet Nam enjoyed strong growth in rice production last year, especially in the south.
To maintain the success, many things must be done this year, including restructuring rice production and production of seedlings, and strengthening measures to limit the overuse of agricultural materials in production, he said.
He asked the agricultural sector to expand large-scale rice production models and develop close linkages between farmers and businesses in rice production and trading.
First Japan-funded farmers’ store opens in Vietnam
A farmers’ store at the Binh An Road Side Station was inaugurated in the central province of Quang Nam on January 31.
The inauguration ceremony was hosted by the Japan International Cooperation Agency (JICA) and the Quang Nam provincial People’s Committee.
The event is part of a project to develop local economies with the participation of farmers based on a model applied in Japan’s Minhamiboso city, and is the first of its kind in Vietnam.
On display in the store were 50 VietGAP products from different areas of the central Quang Nam province and some specialties from Japan.
The Binh An Road Side Station was built in Binh An commune was funded by JICA under the authorisation of Minhamiboso city. It encompasses a chain of restaurants and is expected to welcome around 2,000 visitors per day. The station is a place which provides information to visitors, supports the development of the local economy and doubles as a shelter from natural calamities.
JICA also financed the plantation of new vegetable lines in Binh Trieu and Binh Sa communes, Thang Binh district.
Mayor of Minhamiboso city Ishii Yutaka said that putting the store into operation has demonstrated closer cooperation between Quang Nam province and Minhamiboso city. The store has also ensured the equalisation of benefits for farmers and businesses by seeking outlets for farm produce, especially high quality products.
800,000 tonnes of coal exported in January
Vietnam has earned nearly US$50 million from exporting 800,000 tonnes of coal in January, up 17.1 percent in volume but down 22.9 percent in value compared to the same month last year.
The National Coal and Mineral Industries Group (Vinacomin) said the biggest importers of Vietnamese coal are China, the Republic of Korea and Japan.
According to Vinacomin, the world price of coal is falling as supply surpasses demand.
Japanese ODA promotes Vietnam's economic growth
The Japanese International Cooperation Agency (JICA) held a conference in Hanoi on January 30 to review Japan’s official development assistance (ODA) to Vietnam over the last 20 years and its future orientations.
Under these orientations, Japan will help Vietnam achieve its industrialisation goal by 2020. Japanese ODA will focus on promoting economic growth, increasing competitiveness, as well as the restructuring of State-owned companies, the financial sector and public services.
Addressing the event, JICA Head Representative to Vietnam Tsuno Motonori said Japan has been the largest provider of ODA to Vietnam for 20 years, with a total of more than JPY1.8 trillion.
Furthermore, Japan has sent around 5,000 experts and 500 volunteers to Vietnam , and trained 18,000 Vietnamese employees in Japan .
Japan considers Vietnam a leading partner in terms of ODA and will continue to provide a high level of aid to Vietnam. It will boost bilateral cooperation, despite its recent natural disasters and the global economic crisis, said Motonori.
Japanese ODA has contributed to improving the friendship between both Governments and peoples.
At the 2012 Consultative Group (CG) Meeting held recently, Japan pledged to provide about JPY110 billion in ODA to Vietnam .
Presently, Japanese funds are helping the construction of the international terminal T2 at Noi Bai international airport, Nhat Tan Bridge in Hanoi, and Ho Chi Minh City’s urban railway No 1.
Exports to ASEAN up 25.7 percent
Vietnam's export earnings to ASEAN in 2012 hit US$17.08 billion, increasing 25.7 percent from 2011 and accounting for 14.9 percent of the country’s total export value.
Its major earners included computers and electronic products (US$844 million), mobile phones and components (US$750 million), rubber (US$339 million), steel (US$243 million), and coffee (US$224 million).
Only rice exports fell by US$518 million compared to last year’s figure.
Singapore remained Vietnam’s largest trading partner estimated at US$9.03 billion (23.9 percent), followed by Thailand at US$8.41 billion (22.2 percent), Malaysia at US$ 7.91 billion (20.9 percent), Indonesia at US$4.61 billion (12.2 percent), Cambodia at US$ 3.32 billion (8.8 percent), the Philippines at US$2.84 billion (7.5 percent), Laos at US$866 million (2.3 percent), Brunei at US$627 million (1.7 percent), and Myanmar at US$227 million (0.6 percent).
Vietnam’s largest importer is Malaysia, followed by Cambodia, Thailand and Indonesia.
Cha Lo int'l border gate bustling with activity
More than 60,000 tonnes of goods worth US$25 million were traded through the Cha Lo international border gate in Quang Binh province in January 2013, a year-on-year increase of 70 percent.
Nguyen Van He, Deputy Head of the Quang Binh provincial customs department, said his staff had to work extra hour in cooperation with the local police and market management to combat the smuggling of goods through the border.
53,000-tonne cargo ship delivered to UK company
The Ha Long Shipbuilding Company on January 30 handed over a 53,000-tonne cargo ship to its United Kingdom’s partner, MUHR Maritime Pte.
The cargo ship, named Anne Kjersti, is to make its maiden voyage to Singapore on January 31.
The ship is the ninth in a series of ten 53,000 tonne-vessels that the shipyard has built for foreign partners.
It is 190m long and 32.26m wide and capable of moving at 14 nautical miles per hour.
The company will complete the last vessel destined for a Thai cargo company in the second quarter of 2013.
Exports to the Americas rise sharply
Vietnam’s trade surplus to the Americas in 2012 is estimated to hit US$15.3 billion, a growth of 15 percent on the previous year.
Statistics from the General Department of Vietnam Customs showed that two-way trade between Vietnam and American markets reached US$31.3 billion, of which Vietnam exports accounted for US$23.3 billion.
The strong performance is mainly due to the sharp increase in export revenue from several major markets, such as the US (US$19.5 billion, up 16 percent), Canada (US$1.14 billion, up 18 percent), Brazil (US$710 million, up 19 percent) and Mexico (US$658 million, up 16 percent).
Its key export items included garments (US$8 billion, up 9 percent), footwear (US$3 billion, up 17 percent), timber (US$1.88 billion, up 29 percent), seafood (US$1.56 billion, up 4 percent), machinary and equipment (US$1.08 billion, up 57 percent) and computer and electronic devices (US$1.05 billion, up 50 percent).
The success is partly thanked to numerous trade promotion and market development activities that Vietnam participated in over the year.
The country attended the Havana International Fair (FIHAV) in Cuba, the Forum for East Asia-Latin America Cooperation (FEALAC) in Colombia and the American Economic Forum in Canada. It also sent trade delegations to several American countries to seek business opportunities and attract more investment.
TPP agreement and its impact on Vietnam
The Trans-Pacific Partnership (TPP) agreement will give Vietnam numerous opportunities to establish and expand its export markets, experts say.
In particular, Vietnam will increase its key exports such as garments, seafood, footwear and wood products to the US, while attracting more investment from the world’s largest economy.
The country can also take full advantage of opportunities created from the restructuring of regional economies and the trend of closer cooperation, experts said at a workshop in Ho Chi Minh City on January 30.
However, the agreement will put more pressure on Vietnam to open its markets, as well as on the competitive capacity of domestic businesses.
Along with revising the legal system and developing human resources, the government needs to pay attention to a number of sectors such as agriculture, manufacturing and service industries which have yet to meet development requirements, they suggested.
Le Thanh An, US Consul General in HCM City, said that trade liberalization has a broad impact on people’s lives, pointing to the fact that farm products are exported to many countries; products manufactured at industrial and export processing zones are consumed in various markets overseas; and foreign investors bring state-of-the-art technology into Vietnam.
Undoubtedly, trade liberalization helps promote cooperation and bring practical benefits to many countries, he said.
He argued that once the TPP agreement is signed this year, it will assist signatory parties with tariffs, increase competitive capacity internationally and attract new investment.
The US is committed to strengthening the exchange of information with Vietnam to speed up TPP negotiations, the diplomat assured.
Vietnam has joined TPP negotiations since November 2010. Fifteen rounds of negotiations have been conducted to date, and the agreement is expected to be signed in 2013.
Ngo Chung Khanh, an official of the Ministry of Industry and Trade, noted that TPP covers all socio-economic matters, including tax, technical barriers, and non-traditional areas (labour, the environment, and anti-corruption for instance).
He said Vietnam is overcoming several challenges in the negotiations to protect national interests.
JICA-funded forest management project expanded
Officials from the Japan International Cooperation Agency (JICA) and northern Dien Bien province have agreed to expand their pilot forest sustainable management project beyond selected areas given initial encouraging achievements.
They met in Dien Bien province on January 29 to review the progress of the five-year JICA-funded project on Sustainable Forest Management in the Northwest Watershed Area (Susform-Now), which was commenced in the locality in August 2010.
The added sites are Muong Phang commune (Dien Bien district) and Muong Muon commune (Cha district), along with Sai Luong and Phieng Ban villages (Dien Bien district), Hang Tro B, Na Phat A, Tia Ghenh C, Huoi Mua A villages (Dien Bien Dong district), and Ta Leng commune and Nam Thanh ward (Dien Bien Phu city).
Susform – Now aims to assist local authorities of the benefited locations to protect and extend their watershed areas, reduce carbon dioxide emissions from deforestation and forest degradation, increase secure livelihood for locals while heightening their awareness of forest protection.
The initial outcomes showed the forest in the benefitted sites was protected and expanded effectively and the income of engaged local residents soared.
According to the JICA Tokyo Senior Advisor and Head of the Delegation to the review meeting, Hiro Miyazono, Susform-Now should be combined with the Reducing Emissions from Deforestation and forest Degradation (REDD) to raise its efficiency.
JICA will work with the Vietnam Administration of Forestry to co-coordinate Susform – Now in 2013.
In the 1970s, Dien Bien province encountered severe forest overexploitation in its watershed areas, which seriously affected the locality’s ecosystem.
PM approves plan to buy 1 million tonnes of rice in reserve
The Prime Minister has approved a plan to buy 1 million tonnes of rice in reserve from the 2012-2013 winter-spring crop, according to the Vietnam Food Association (VFA).
VFA President Truong Thanh Phong says businesses will buy rice at market prices, but not below VND5,000 per kilo as of February 20 after the Lunar New Year festival.
The Ministry of Finance estimates the average rice production cost in the Mekong Delta at around VND3,616 per kilo.
In the past two days, the price of rice in the Mekong Delta has increased slightly by VND200-300 per kilo.
Vietnam already shipped more than 300,000 tonnes of rice in January and is expecting to see up to 1.1 million tonnes exported by the end of the month.
National economy at risk of bottoming out in 2013
Vietnam’s economy is likely to bottom out in 2013 unless more effective measures are taken, said the Vietnam Academy of Social Science (VASS).
Its January report, based on economic growth rates in the 1989-2012 period, showed the national economy experienced its slowdown in 1989, 1993, 1999, 2003 and 2009.
Regarding the gloomy picture of economic growth in 2013, the VASS stressed the need for medium and long-term plans to ensure economic growth in a more balanced and sustainable manner by taking into account fluctuations on both local and global markets.
There are three scenarios for Vietnam’s economic growth, of which the most likely one forecasts the growth rate at 5.3 percent, the inflation rate at 7.3, and the unemployment rate at 3.85 percent.
The VASS recommended that the Government should help businesses iron out their snags by reducing the corporate and value added taxes and lowering interest rates on loans to small-and-medium-sized enterprises (SMEs). Due attention should also be paid to implementing fiscal policy on agriculture and rural development, it added.
US businesses keen to invest in Phu Quoc Island
A US delegation of businesses visited Phu Quoc Island in the southern province of Kien Giang on January 29.
The visit aimed to promote trade cooperation between Vietnam and the US in the context of international integration.
While working with the Management Board for Investment and Development of Phu Quoc Island, US businesses expressed keen interest in the island district’s development plan approved by the Vietnamese Government.
They wished to provide financial and technological support as well as technical consultancy for infrastructure and tourism development.
Over 5,000 guest workers return to work in RoK
This information was revealed on January 31 by Phan Van Minh, Director of the Vietnamese Overseas Labour Centre under the Ministry of Labour, Invalids and Social Affairs (MoLISA).
This information was revealed on January 31 by Phan Van Minh, Director of the Vietnamese Overseas Labour Centre under the Ministry of Labour, Invalids and Social Affairs (MoLISA).
Minh said his centre and the RoK’s Human Resource Development Service will hold a computer-based Korean language test in early March for those who wish to apply for jobs again.
Last year, 2,600 Vietnamese workers who left the RoK on time took Korean language tests and more than 500 workers returned to work in the RoK for the second time.
In the first quarter of this year, the Vietnamese Overseas Labour Centre and the Overseas Labour Management Department will hold conferences in 15 cities and provinces having a high number of illegal workers in the RoK to call on them to return home under the signed contracts.
Five-star cruise ship Minerva docks at Quy Nhon
The UK five-star cruise ship Minerva carrying 500 tourists and a crew of 200, docked at Quy Nhon port in the southern province of Binh Dinh on January 31.
This is the first five-star tourist ship to dock at Quy Nhon port. More than 300 passengers went ashore to visit tourism sites Banh It Cham Towers Complex in Tuy Phuoc district, and Quang Trung Museum in Tay Son district.
Minerva recently departed Hong Kong for the Hai Phong-Ha Long-Da Nang-Quy Nhon-Nha Trang-HCM City cruise. After a stopover in HCM City, Minerva will head on to Cambodia.
At each stop, Minerva’s passengers disembark for several hours to see the key sights, go shopping and experience the local culture. The ship will stop for a longer stay of two days in HCM city.
Van Trong Hung, director of the Binh Dinh provincial Department of Culture, Sports and Tourism, said that tourist numbers to the province increased by 24 percent and revenues over 30 percent in 2012.
Shrimp prices sky rocket in Mekong Delta
According to the Vietnam Association of Seafood Exporters and Producers (Vasep), shrimp prices have sky rocketed in the Mekong Delta.
At present, traders are paying VND240,000 a kilogram for 20 tiger prawns and VND160,000-170,000 a kilogram for 30, an increase of VND100,000 compared to a week ago. This is the highest price in the last one year.
The price of white leg shrimps has been hiked continuously to reach VND125,000-130,000 a kilogram for 40 shrimps and VND116,000 a kilogram for 50.
Despite the price increase, most breeders now do not have shrimps left for sale because it is not their main farming crop.
Moreover, widespread diseases have led several farmers to quit breeding, causing a severe shortage of shrimps this year.
$156 mil approved to ease traffic in Mekong Delta
The World Bank on January 30 approved an additional financing of $156 million to the on-going Mekong Delta Transport Infrastructure Development Project, with an aim to relieving key bottlenecks in the main transport corridors in the Mekong Delta region and improving access of the poor to those corridors.
Specifically, the additional financing will be used to improve the standard of national trunk roads connecting the main economic hub of the Mekong Delta, to improve the standard of trunk waterways connecting the Northern and coastal delta areas to Can Tho and HCMC, and to improve the connectivity of poorer and more distant producer communities by upgrading feeder roads, ports, and landing stages at the district and provincial levels in the Mekong Delta.
By the time of completion at the end of 2015, the project is expected to reduce average rice barge travel time from Rach Gia to HCMC by 5 hours, average travel time by truck on the National Highway 91 by 10 percent, fatality rate on the highway by 15 percent, and accident rate on inland waterway corridor by 5 percent.
Real estate directors avoid creditors before Tet
A number of real estate directors have been seeking ways to avoid their creditors on these days leading up to Tet.
Recently, Mr. Tuan, the director of a property firm in Hanoi, has often been absent from the office as a way to delay the debt settlement. He said, “In 2012, most staff members had to be let go. Now we have only three left. However, the company could not ensure sufficient salary even for them. I would go somewhere far from home to escape these problems during Tet."
He offered his five-floor house near the West Lake up for sale to repay his debt, but has yet to find a buyer.
Despite selling his house and car, Mr. Hung, another director of a real estate company in Hanoi has not been able to fully settle his debts. At this time two years ago, he spent the time before the holiday season shopping for branches in Nhat Tan Peach Village, often spending upwards of VND10 million each (USD476).
This year is a different story. His office has been closed for three days and he leaves his house early in the morning, not even informing his family where he went.
A director of a real estate company in Trung Hoa area, Hanoi’s Cau Giay District had to write a letter to express gratitude to his staff and explain why they were not to be given any Tet bonuses. Since April staff members there have been working for half-salary, and he promised to gradually pay back the remaining. Around half of the employees have already quit.
This is especially shocking when seen in the light of the traditional Tet taboos. One of which is not to leave unsettled debts for the new year. This, it is thought, will badly affect the entire year to come.
According to a recent report by the Ministry of Construction, a range of property transaction offices in Hanoi and HCM City have stopped operation, with more than half in HCM City having closed their doors.
Last year 680 real estate companies suspended business activities or were completely liquidated.
The report showed that around 42,250 apartments; 92,800 square metres of offices for rent; 98,400 square metres of trade centres and 7.9 million square metres of land remained vacant. The ministry estimated that the total value of these assets was VND111.96 trillion (USD5.38 billion).
Nguyen Hoang Nam, a representative of one real estate business, said the frozen real estate market was due to two factors; the decrease in investment capital as a result of the economic downturn and a loss of confidence in the market.
Consumer goods giants still earn big bucks
Leading companies in the fast-moving consumer goods (FMCG) sector last year earned hefty profits, even higher than their profits in 2011, despite the difficult economic situation.
A financial statement of Vinamilk shows that the company in the final quarter of 2012 achieved more than VND7.2 trillion in sales revenue, nearly VND1.1 trillion higher than in the fourth quarter of 2011. The company’s after-tax profit was put at VND1.6 trillion, versus VND1.03 trillion in the year-ago period.
Vinamilk general director Mai Kieu Lien attributed the year-on-year growth of 58.5% in after-tax profit to an increase of 17.54% in sales revenue. Moreover, other earnings also rose thanks to the backing of suppliers, standing at VND159 billion, compared to VND97.9 billion in the fourth quarter of 2011.
In all of last year, the top player in the local dairy market earned more than VND27.3 trillion in revenue, up 23% against 2011. The after-tax profit was some VND5.7 trillion, up 39%, exceeding the growth target of 20%.
Similarly, Vinacafe Bien Hoa, owner of the instant coffee brand Vinacafe with a large market share, also recorded impressive growth in 2012, when the company operated under Masan Group, holder of its 51% stake.
The company’s revenue from goods sales and services in last year’s fourth quarter surged 55% year-on-year, from VND467.6 billion to VND728.3 billion. This resulted in an after-tax profit of VND151.6 billion, a sharp rise of 210% over the year-ago period.
This spectacular business result is attributed to the launch of new products and the change from imported materials to coffee produced by the company itself.
Overall, Vinacafe Bien Hoa last year earned more than VND2.1 trillion in revenue, some VND600 billion higher than in 2011. The whole-year after-tax profit was VND303.8 billion, up 44% against the preceding year, exceeding the target of VND300 billion.
Meanwhile, confectionary maker Kinh Do reported it had earned a gross profit of VND528 billion last year, a year-on-year rise of 53%. This result is attributed to efficient operation and lower lending rates, although revenue from sales and services only picked up 1.1%.
The after-tax profit of Kinh Do was over VND398 billion, up 42.8% against 2011.
The company last year focused on foodstuff as its core business field. In addition, its executive board improved their management, managed costs well and paid attention to the products with high profit margins.
Banks see gold bar trading unprofitable
Local banks licensed for gold bar trading have yet to make gains from this business, with some even having incurred losses due to stringent trading regulations of the State Bank of Vietnam.
Trinh Van Tuan, chairman of Orient Commercial Bank (OCB), said that gold bar transactions have been dreary in recent days, partly because OCB has never provided this service before. Besides, demand has plummeted sharply as gold prices have stabilized.
Although this business has yet to generate profits, OCB will continue it and offer a new product for customers. OCB has not taken gold trading into account in this year’s profit target, Tuan said.
Another banker in HCMC told the Daily that his bank has been trading gold for a long time. However, this business has declined since last year as the bank has run out of gold liquidity.
Some customers have come to transact with the bank after it had got approval to trade in gold bars. To sell gold bars to clients, a branch like his must contact the head office to buy gold, making transactions more time-consuming and costly. As a result, his bank branch sees no profits from transactions and even incurs losses due to the cost of transport from the head office to the branch.
Some customers have complained about slow service. Therefore, the bank only sells gold to keep clients rather than to make a profit, the banker said.
The bank branch has seen just small transaction volumes in recent times at below 10 taels each as there are just a few sellers. When the branch has bought gold, it has to sell to the head office to prepare statistics as required by the central bank.
Earlier, this branch was given 100 gold taels as an available balance to facilitate trading. But now, staff members are reluctant to carry out gold transactions with customers due to the complicated procedure, the banker added.
Meanwhile, deputy general director of a small bank has also seen gold bar trading unprofitable due to strict trading regulations.
As banks are required to keep their gold position not exceeding 2% of their chartered capital and obtain a positive position with gold by the end of each day, each transaction is strictly supervised by the head offices. Customers have felt unpleasant at slow service while the transaction time at banks is restricted.
Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said this agency has yet to receive any complaints about gold bar trading from banks and the gold market has seen relative stability. However, banks that have never provided gold trading service before still need more time to familiarize themselves with this business.
High inflation looms large
Vietnam’s higher inflation is forecast to warrant double-digit rates this year, which will challenge the Government’s drive to stabilize the macro-economy.
Dr. Nguyen Duc Thanh, director of the Vietnam Center for Economic and Policy Research under the Hanoi-based University of Economics and Business, raised the warning at a meeting to an annual economic report in Hanoi on Wednesday.
“We forecast that this year’s inflation will rise by 10%, higher than last year. It is most likely that the Government would fail to achieve the target of keeping the inflation rate below 6%,” Thanh told the meeting.
The consumer price index (CPI) has risen by 1.25% this month while policies which aim to stimulate the economy and support enterprises under Resolution 02 are being carried out. Such policies may push inflation higher.
According to Thanh, the inflation rate is forecast to leap due to the power price hike which started late last month and the minimum wage adjustment which will take effect in the middle of this year.
Besides, last month’s credit loosing and the possible food price rise are among the factors that have sent the CPI up, he added.
The signs of rising inflation also worry several experts.
“What I am most concerned about is high inflation will damage social resources and sap the confidence of investors and people,” said Luu Bich Ho, former head of the Development Strategy Institute under the Ministry of Planning and Investment.
Thanh of the Vietnam Center for Economic and Policy Research said that last year’s total investments accounted for only 33.5% of GDP compared to 34.6% of 2011, which indicates that investments are in decline.
Besides, foreign investor confidence in Vietnam’s business environment has weakened, with total registered foreign capital last year dipping 20%.
“Large companies do not want to make investments in Vietnam. Foreign investments are flowing to Southeast Asia, but Vietnam has been unable to catch this opportunity,” said Thanh.
According to Le Quoc Phuong, deputy director of the Industry and Trade Information Center under the Ministry of Industry and Trade, bad debts are still the greatest threat to the economy.
Bad debts account for around 10% of the total outstanding loans, or some VND300 trillion, which is seriously high. This has made credit growth to stay at the lowest level in the past ten years as enterprises either failed to get access to loans or did not need loans.
Meanwhile, Ho said that bad debts, bankruptcy and production stagnation are big problems and can hardly be solved this year. “Existing solutions are just short-term remedies, and thus this year could not be as good as what the Government says.”
The Government failed to achieve targets set by the National Assembly in the past, Ho added.
Besides, according to economic expert Bui Trinh, a big problem is embedded in the most outstanding achievement last year, namely the export growth of up to 18.3%. Main export products of foreign direct investment (FDI) enterprises such as computers, components, electronic products, garment and footwear are outsourced and fabricated, and thus their added value for the domestic economy is inconsiderable.
“This means that the benefits Vietnam enjoys are very small while those of foreign countries are enormous,” Trinh said.
Consumers prefer discounted Tet goods
With the Lunar New Year having about ten days to go, HCMC consumers have begun a holiday shopping spree, preferring products with reasonable prices and discounts.
At grocery stores and traditional markets, consumption has got stronger than on normal days. Confectionery, beer, soft drinks and dried food have gone like hot cakes.
Consumers prefer reasonably-priced home-made products to luxury imported ones, said Tran Ngoc Hien, manager of an 805mart shop in HCMC’s Go Vap District.
Meanwhile, a trader identified as Quyen at Tan Chanh Hiep Market in District 12 said sales volume this year was significantly lower than last year.
Consumers are switching to supermarkets. In addition, the economic woes have led them to cut spending, she explained.
She hoped the situation would get better next week, when laborers begin their holiday and start doing the shopping.
At supermarkets citywide, the number of shoppers is rising, especially in the evening.
The products necessary for Tet like confectionary, beer, soft drinks, packaged food, house ware and clothes are selling well. Those with big discounts are greatly sought after.
Supermarket chains will extend opening hours to serve latecomers. For example, all Big C supermarkets will be open for an additional 0.5-2 hours from this weekend to Lunar New Year’s Eve on February 9.
In particular, Big C Mien Dong on To Hien Thanh Street in HCMC’s District 10 will operate from 8:00 a.m. to 10:30 p.m., half an hour longer, on February 3 and 4, and from 7:30 a.m. to 11:00 p.m. from February 5 to 8. On February 9, it will be open from 7:00 a.m. to 12:00 noon.
To help small traders, the management boards of nearly 50 traditional markets in HCMC allow traders to sell goods at the market front and in empty spaces until midnight. The items on sale are mainly clothes and shoes.
Int’l tourist arrivals rise this month
The number of international tourists coming to Vietnam this month has grown 2.2% from last January to around 651,800, most of them Russians who travel to Vietnam’s coastal cities to avoid cold weather in their country.
According to the General Statistics Office, except for arrivals from South Korea that maintain growth of 39% year-on-year, the number of tourists from other big markets like China, Japan and Taiwan has declined this month.
However, the Russian market has fueled strong growth this month with some 25,800 Russian tourists arriving in Vietnam, a steep rise of 88.8% from the previous month and 37.7% from last year’s same month. Currently, in addition to direct flights from Russia to HCMC, there are chartered flights from Siberia, the Far East and Moscow to Khanh Hoa Province everyday.
Vietnam Airlines has recently announced that it would open a direct service between Moscow and Khanh Hoa, with the maiden flight scheduled to be launched on April 5. This air service using Boeing 777-200 will be available once a week in summer and twice a week in winter.
With the new direct flight, Russian tourist arrivals are expected to be higher as they can fly straight to Khanh Hoa Province’s coastal city of Nha Trang without transiting in HCMC.
Stretch of East-West Highway upgraded over flood concern
The sidewalk of a stretch of the East-West Highway in HCMC is under upgrade due to concerns about flood tides, said a member of the Urban-Civil Works Construction Investment Management Authority of HCMC.
There are many workers digging the sidewalk of the highway near the Saigon River Tunnel toll collection station. The road and the tunnel were just opened to traffic over a year ago.
The sidewalk on the left side of the toll station seen from the tunnel has been paved with concrete bricks. In the meantime, the opposite sidewalk is still in a messy condition.
The sidewalk upgrade is to cope with climate change, the official said, adding that those in charge of designing the East-West Highway had not expected such a scenario.
HCM City to build four steel overpasses
To deal with the current traffic congestion during peak hours, HCMC authorities will construct four more steel overpasses after the first two at Hang Xanh and Thu Duc intersections.
The four flyovers will be located at Lang Cha Ca Roundabout running from Hoang Van Thu to Cong Hoa streets, Cong Hoa-Hoang Hoa Tham crossroads in Tan Binh District, Ba Thang Hai-Nguyen Tri Phuong-Ly Thai To crossroads in District 10 and Cay Go Roundabout in District 6.
Work on the steel flyover project at Lang Cha Ca will start on Tuesday, while the other three will kick off construction on June 20. Other infrastructure works around the three areas must be relocated before this time.
In the list of urgent traffic components, Hoang Van Thu-Cong Hoa overpass construction will be carried out within 130 days to ease traffic overload at Lang Cha Ca as a gateway heading to Tan Son Nhat International Airport. As planned, the construction team will set up barriers for part of the road surface and do the next jobs during Tet with low traffic flow.
The important work is estimated to cost VND142.7 billion and must be done as soon as possible to return the road surface intact on February 24. To implement the works’ construction, all the gates of the spring fair at Hoang Van Thu Park will be set up in front of the Military Zone Seven Stadium.
The flyover at Cay Go Roundabout will have three lanes in parallel with Hong Bang and Ba Thang Hai streets. HCMC vice chairman Nguyen Huu Tin has asked related authorities to tackle infrastructure problems to get the project off the ground on schedule. The flyover is set for commencement in June and completion later this year at a cost of VND372.6 billion.
Similarly, Cong Hoa-Hoang Hoa Tham flyover will be developed with a total investment of VND142.7 billion. Meanwhile, the 168-meter-long flyover at Ba Thang Hai-Nguyen Tri Phuong-Ly Thai To crossroads in District 10 will need over VND200 billion.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR