Banks expect higher profits from recovery

Many banks have planned higher profits this year as they expect better recovery in the economy.

This year, the total expected pre-tax profits of 26 banks, which have announced their business plans this year, were estimated at VND36.7 trillion (US$1.748 billion), rising 5.18 per cent as compared to last year.

The Viet Nam Joint Stock Bank for Industry and Trade (VietinBank) led in terms of pre-tax profit plan in 2014 with VND7.28 trillion (US$346.66 million), followed by Bank for Investment and Development of Viet Nam (BIDV) with VND6 trillion ($285.7 million).

At the shareholders meeting held last week, Viecombank chairman Nguyen Hoa Binh noted that his bank expected to gain a pre-tax profit of VND5.5 trillion ($261.9 million), besides setting aside VND5 trillion ($238 million) for risk provision.

Vietcombank also targeted its total assets to rise by 11 per cent against last year to VND520.6 trillion ($24.79 billion). The bank's lending and capital mobilisation are estimated to increase by 13 per cent to reach VND309.97 trillion ($14.76 billion) and VND384.49 trillion ($18.3 billion), respectively.

Military Bank (MBB) and Sai Gon Thuong Tin Bank (Sacombank) also aimed to gain pre-tax profit of VND3.1 trillion ($147.619 million) and VND3 trillion ($142.8 million), respectively in 2014.

Another notable name this year is the Viet Nam Prosperity Commercial JS Bank (VPBank) with a profit target of VND1.89 trillion against last year's VND1.35 trillion ($64.5 million), surpassing many other listed banks, including SHB and ACB. VPBank's total assets are also targeted to reach VND155 trillion ($7.38 billion) against VND121.26 trillion ($5.8 billion) of last year.

According to Vietcombank's Binh, although the domestic economy is forecast to improve, many difficulties and challenges still lay ahead. Therefore, his bank will still adopt a cautious approach with regard to its performance plans this year. He further pointed out that it has planned to set aside VND5 trillion ($238.1 million) for risk provision against VND3.5 trillion ($166.66 million) of last year. However, he remarked that Vietcombank's move towards the market will be also flexible.

Meanwhile, VPBank General Director Nguyen Duc Vinh explained that the banking system this year will undergo continuous restructuring. Therefore, he stated that profits and size cannot be the top priority, but greater emphasis should be laid on risk management and business model streamlining to prepare for a leap in the post-restructuring period.

By the end of the first quarter of this year, several indications have hinted at dismal improvements in the profits made by the banks. The unsatisfactory improvement has been attributed to the difficulties faced by the banks' biggest income source from credit activities amidst low credit growth.

Furthermore, due to the impact of the macroeconomic context, especially the real estate, this year, bad debts will continue to affect the profits of the banking sector, industry insiders have forecast.

Quang Nam seeks to lure big investments

Central Quang Nam Province will request ministries and sectors to offer special preferences for projects with over US$500 million investment capital and key socio-economic projects in Chu Lai Open Economic Zone.

This step is in accordance with a new decision taken on offering preferential policies and support for new projects in the economic zone.

The province will also offer tax exemption on land use for special projects, including university dormitories, housing for workers and public works in the fields of education, healthcare, culture, and sport.

Businesses that have invested in high-tech will enjoy a preferential tax of 10 per cent in the initial 15 years of the project.

Comprising 24 communes and five industrial parks spreading across 3,500 hectares, Chu Lai has been chosen as one of the five key economic zones to be prioritised in the 2013-15 period. Developments in the zone have created jobs for about 50,000 direct and indirect workers in the locality.

According to statistics, the Chu Lai Open Economic Zone has so far attracted more than 90 projects with a total registered investment of nearly US$1.7 billion, two-thirds of which have become operational.

Mekong Capital fund sells 5.6m MobileWorld shares

The Mekong Enterprise Fund II, managed by Mekong Capital, has sold 5.647 million shares of MobileWorld Investment Corporation, equivalent to 9 per cent of the company's issued shares, in a pre-listing share placement.

At a placement price of VND85,000 (US$4) per share, and including dividends received, this is a 21.8-fold increase from the adjusted price per share of the fund when it originally invested in the company in 2007.

With about 62.74 million shares in issuance, the company value based on this transaction is VND5.33 trillion (US$254 million). The company targets a net profit of VND435 billion ($20.7 million) this year.

Shareholders have approved a plan to list on the HCM City Stock Exchange in July.

After this transaction, Mekong Enterprise Fund II continues to hold 14.3 per cent of MobileWorld's shares.

The placement, managed by Viet Capital Securities Corp, was allocated to six foreign institutional investors plus Vietnamese retail investors.

Mobile World is Viet Nam's leading mobile device retailer. The company's TheGioiDiDong subsidiary has 220 mobile-device stores in all 63 cities and provinces, with about 22 per cent market share in mobile phone sales.

The company's Dienmay subsidiary has 13 consumer electronics stores, concentrated in the south and HCM City.

Launched in 2006, the Mekong Enterprise Fund II is the second of three private equity funds managed by Mekong Capital.

The fund made 10 investments of which six have been fully exited. Its remaining four investments include Golden Gate (restaurants), Mobile World (retail), Asia Chemical Corp (chemical distribution) and Vietnam Australia International School.

VN-Belarus economic ties promoted

A seminar on promoting trade, investment, tourism and labour co-operation between Viet Nam and Belarus was held in the latter's capital city of Minsk on Friday.

Vietnamese Ambassador to Belarus Do Van Mai said the two countries were making efforts to boost two-way trade and investment, as well as expand connections in industry, credit and export assistance.

In addition to tourism and trade ties, labour export has emerged as a field of significant potential for both sides' businesses. Hoang Kim Ngoc, deputy head of the Overseas Labour Management Department under the Ministry of Labour, War Invalids and Social Affairs, suggested Vietnamese companies recruit and train workers carefully in order to gain a firm foothold in the Belarusian labour market.

Belarusian Ambassador to Viet Nam Valery Sadokho noted that bilateral economic relations were enjoying stable development, with two-way trade currently approaching US$200 million.

The progress of negotiations on a free trade area between the Customs Union of Russia, Kazakhstan and Belarus and Viet Nam offered a chance to further bolster trade, he said.

The seminar also offered a chance for the two countries' businesses to meet and seek partners. The countries aim to raise trade turnover to US$500 million by 2015.

Rural electrification a success story

The national rural electrification programme that began in 1998 has been a great success with 15.8 million, or 96.7 per cent of rural households, having access to power last year, Minister of Industry and Trade Vu Huy Hoang said on Saturday.

Addressing an online review conference, he said the programme has played its part in developing the country and reducing poverty.

The first phase of the programme, called the rural energy project, cost over VND3.2 trillion (US$150.4 million), of which $150 million had been borrowed from the World Bank.

It has benefited 976 rural communes with 550,000 households.

According to national utility Electricity of Viet Nam (EVN), which has carried out the programme until now, official development assistance (ODA) from international donors was a decisive factor in the programme's success.

In the reviewed period, nearly VND48 trillion VND ($2.25 billion ) has been pumped into the programme, bringing power to remote and extremely disadvantaged areas, including border areas and islands, EVN reported at the meeting.

EVN Chairman Hoang Quoc Vuong commented that the programme has contributed to giving rural areas a facelift, facilitated agricultural development as well as the sector's downstream industries like the processing industry.

He pointed to a 6.6 fold increase in agriculture production value in 1998-2013 as proof of the programme's success.

Victoria Kwakwa, World Bank Country Director, said many countries were interested in the success story of Viet Nam's rural electrification programme.

She pledged that her institution would continue aiding the country by helping it find funds for infrastructure construction during the 2014-2020 period.

Deputy Prime Minister Hoang Trung Hai said at the conference that programme's success was built on the back of strong support from the entire political system and local people.

The country has embarked on a national energy development programme until 2020 and beyond, under which over 98 percent of the population should be connected to the national grid by 2015 and all rural residents will use electricity by 2020.

This is not going to be an easy task given that at current average per capita consumption of 1,200 kWh a year, the country is suffering an acute energy shortage.

According to the Ministry of Industry and Trade, the rural electrification progamme's urgent task is to supply power for 12,000 remote villages and hamlets and improving the rural power transmission lines, which will benefit around 7 million households.

The tasks would require around VND80 trillion ($3.76 billion), the ministry said at the meeting.

HCM City recovery on track

The economy of HCM City is recovering as the city experiences rising export turnover and stable business growth, the chairman of HCM City People's Committee has said.

Speaking at a meeting yesterday in HCM City, Le Hoang Quan said retail sales and service turnover reached VND51.8 trillion (US$2.45 billion) in April, up by 3.9 per cent over March and by 11.7 per cent compared with the same period last year.

For the first four months, total retail sales and service turnover totalled VND204.5 trillion ($9.66 billion), a 12.1 per cent increase over last year.

Export turnover has shown an upward trend. In April the city achieved export turnover of $2.42 billion, up by 3 per cent over March and by 22.1 per cent over last year.

For the first four months, the city attained total export turnover of $8.85 billion, an increase of 0.6 per cent over the same period last year.

Thai Van Re, director of HCM City Department of Planning and Investment, said in April the city authorities granted licenses to 7,622 new businesses with total investment of VND42.55 trillion (over $2 billion), a 52 per cent increase compared with last year.

The city also licensed 98 new investment projects with total registered capital of $701.4 million, a jump of 399 per cent in capital against last year.

To maintain high growth, the city in May will focus on measures to help businesses, including improving the links between banks and businesses so the latter can access low-interest loans.

The city will also further cooperate with credit organisations to step up the project to re-structure the banking system and to enhance measures to settle bad debts.

Market must tackle mid-long term credit

Viet Nam's capital market should be developed to handle the mid-long term credit demand of the economy, leaving the management of short credit and financial services to the banking system.

The suggestion put forward by bankers and economists is aimed at taking the pressure off balance sheets and volatile capital structures at banks that use short-term deposits to do mid-long term lending.

Viet Nam's financial market has developed exponentially, yet the development is largely dependent on bank credit, Nguyen Thi Kim Thanh, the head of the central bank's Banking Strategy Institute was quoted as saying by Vietnam Economic Times (Thoi Bao Kinh Te Viet Nam).

Domestic outstanding loans are equivalent to 104.9 per cent of the GDP, which is 6.5 times higher than the total value of the bond market and triples the capitalization value of the stock market. Viet Nam's GDP stood at US$170 billion in 2013 and $141 billion in 2012.

The State Bank of Viet Nam's statistics revealed that mid-long term money constituted 30-35 per cent of the total deposits, but mid-long term credit accounted for more than 40 per cent of the total demand.

BIDV Chairman Tran Bac Ha was cited by the Vietnam Economic Times as saying that banks take liquidity risks by using short-term deposits to facilitate mid-long term loans. This practice lays pressure on the central bank to re-finance or provide additional capital to banks via Open Market Operation (OMO) at more frequent intervals by the year-end period.

While banks' sources fall short of credit demand, the capital market is not adequately developed and in need of urgent assistance.

Government bonds, which constitute 90 per cent of the bond market, including State Treasury bonds and notes, Government-guaranteed bonds, local authority guaranteed bonds, only manage to meet 16 per cent of the credit demand.

Moreover, these tools are almost held as safe reserves by major credit institutions, such as BIDV, Vietcombank, Agribank, and Vietinbank until they mature. Credit that banks injected into government bonds reportedly reached VND65 trillion ($3 billion), up 0.1 per cent by the end of the first quarter this year as compared to the end of 2013.

After bond sales, however, mobilised money often makes a round trip within the state treasury and banks that also bore fees.

Ha suggested that the State and Government should chalk out plans to use capital mobilised from bond sales, such as public investment projects.

Tran Hoang Ngan, a member of the National Advis-ory Council on Monetary and Financial Policies emphasised that it is not just necessary to fix regulations for the stock market, but also pay more attention to revive the government bond market.

Ngan proposed sellers to diversify maturities and to make pre-sale information available to the public in order to help investors to be better prepared. Post-sale policies are also required to boost transactions in the secondary market.

In the meantime, the corporate bond market recorded a good performance last year, and Viet Nam is aiming higher by organising its technical and legal grounds in order to be well-prepared to facilitate issuers. Viet Nam's corporate bond market featured the participation of 20 issuers, but just one-fourth are active in the market.

The Ministry of Finance plans to mobilise up to VND35 trillion ($1.65 billion) from corporate bonds this year, up 1.8 per cent against 2013.

Last year, the volume of corporate bonds sold was VND34.41 trillion ($1.62 billion), up 19.87 per cent against 2012, 37.64 per cent against 2011, and 14.7 per cent against 2010.

Firms aim to join global supply chain

Small and medium-sized enterprises in Viet Nam need to make more efforts to improve their competitiveness in the global supply chain, a workshop heard in HCM City yesterday.

Nguyen Phuong Dong, deputy director of the city Department of Industry and Trade, said Viet Nam is integrating widely and deeply into the world economy, and having a presence in the global supply chain is of great concern to companies and government agencies.

But because of their low competitive edge, limitations in business vision and strategy, and lack of resources, SMEs encounter challenges while trying to enter the supply chain, he said.

For that reason, most Vietnamese firms are in the lowest rung of the chain, doing assembly and outsourcing for foreign companies, he said.

Vietnamese firms are trying to improve their competitiveness with measures like investing in areas supplying raw materials, improving technology, and co-operating with foreign partners, he said.

Jeff McLean, general manager of UPS in Viet Nam, said 25 years ago a company could produce all the components it needed for its products, but that has changed now, and companies, especially multinationals, tend to outsource.

The outsourcing trend among multinationals, coupled with regional integration and free trade agreements, allow Vietnamese SMEs to participate in global supply chains, he said.

But to be competitive exporters, SMEs must be prepared to meet product and service standards and the new challenges in global trade, he added.

Pham Que Anh, director of Ha Noi Resource Centre, CUTs International, said that SMEs, with their limitations in capital, technologies, and market understanding, should provide services and intermediate inputs to firms involved in the global supply chain to learn international practices before thinking about exporting directly.

Loc Le, general director of An Viet Long Co.Ltd, a company that makes remote control helicopters and parts, said his company did just that — initially it did outsourcing for other companies, then did market research, invested more in technology and personnel, and built brands to directly export products.

From a company that had just 10-20 employees four or five years ago, it has grown into with 300 employees that exports to many markets, he said.

Having a clear business strategy, developing strategic products, and understanding target markets are among the factors that enable businesses to access the global market, he said.

Local firms should also improve their cash flow management and enhance productivity and efficiency to cut costs and promotional activities, Anh said.

They should co-operate with one another to integrate in the global supply chain, she added.

Firms grapple with IP issues

Several domestic businesses have not paid much attention to the issue of registering for intellectual property rights and have even hesitated to cooperate with the authorities in preventing counterfeit goods.

This was revealed by Do Thanh Lam, deputy head of the Ministry of Industry and Trade's Market Watch Department. Figures released by the department, at a conference on the role of enterprises in preventing fake goods in Ha Noi yesterday, showed that they have annually issued fines for hundreds of thousands of violations relating to counterfeit goods. In the first quarter of this year alone, the market watch forces carried out 40,000 checks nationwide and handled more than 25,000 cases involving fines totalling VND70 billion, or US$3.3 million.

However, Lam said the number of violations in reality was much higher than the official figure.

"One of the important reasons is that the enterprises have not registered their intellectual property right to protect their products," he said.

He added that several firms had not cooperated properly with the authorised agencies in preventing fake goods, even for their own products.

According to Vietnamese laws, businesses which own the products' intellectual property rights have to cooperate with the authorities in handling any violations as they have enough legal basis to protect their right.

Statistics from the National Office of Intellectual Property (NOIP) revealed that last year only 106 out of 3.5 million businesses in Viet Nam registered for intellectual property rights.

"The number of applications registered for the rights has reduced. Several firms hesitated to ask the authorised agencies about handling of the violations due to their economic situation," said Nguyen Thanh Hong, a representative from the office.

Hong added that the enterprises should be aware of their rights and mobilise human resources to protect their products.

A recent report showed that fake Chinese goods accounted for 70 per cent of the total fake goods in the US, while in Viet Nam it was 10 per cent.

He was concerned that Viet Nam should take measures to avoid being listed as a country which produces counterfeit goods.

He suggested that businesses should regularly change their product samples, reduce costs, and cooperate with the authorities in resolving the situation.

Pesticide makers seek Indian JVs

Many local companies, especially members of the Viet Nam Pesticide Association, want to establish joint ventures with Indian firms to produce high-quality technical pesticides for the Vietnamese market, according to the association chairman.

Tran Quang Hung, speaking at a seminar in HCM City on Monday, said there are pesticides manufacturers in Viet Nam but they cannot produce advanced technical products, something India can do at reasonable prices.

The industry wants to build eco-industrial zones specialising in pesticide manufacture, but lacks the experience and funds for it, he said.

"So we want to seek co-operation with India."

The co-operation should not stop at trading and must be extended to other areas like investment and technology because currently it is "unworthy of the potential."

To establish the co-operation, a buyer-seller meeting between Vietnamese and Indian pesticide companies was held in HCM City yesterday (April 22).

The head of a visiting delegation representing 14 Indian companies and president of the Pesticides Manufacturers and Formulators Association of India, Pradip Dave, told Viet Nam News that the potential in the Vietnamese market "is great."

"Viet Nam and India are having the same crops. The climatic conditions are also similar and the products farmers are using are almost similar. So we have a good synergy between the Vietnamese and Indian markets.

"India produces a lot of technical-grade pesticides, a lot of good formulations, environmentally friendly formulations which are very good for crops. We see a lot of opportunities in both directions."

Joint ventures are definitely a good idea because in Viet Nam the use of pesticide formulations is increasing, he said.

Every formulator requires good technical raw material and India is strong in manufacturing technical materials, he added.

Viet Nam imports pesticides from many countries, especially China.

The imports have risen sharply, jumping from 13,000-14,000 tonnes costing around $10 million in 1990 to 103,500 tonnes and $700 million 2012.

Southern region faces power shortage

The South region is facing the threat of a power shortage during the dry season as construction of power plants is behind schedule.

The south's power demand between March and June is expected to increase by 15 per cent against recent figures, according to Viet Nam Electricity (EVN).

The South has to rely on supply from the central and north regions.

The power transmission lines in provinces like Binh Duong, Ba Ria – Vung Tau, Dong Nai and Long An are overloaded, according to a report in the Nguoi Lao Dong (the Labourer) newspaper.

Meanwhile, construction has proceeded slowly on many 220 kV power lines and transmission stations such as Nhon Trach, Phu My 2, Vung Tau, My Xuan, Tay Ninh, Ham Tan and Duc Hoa.

In recent years, the demand for electricity for the aquaculture and fruit cultivation sectors has increased significantly.

The consumption of power in the Delta's coastal provinces of Ben Tre, Tra Vinh, Soc Trang, Bac Lieu and Ca Mau in 2012, for example, rose by 50 per cent against 2011. In 2013, it increased by 49.6 per cent against 2012.

The investment in new power projects cannot keep up with demand, EVN says.

To ensure supply, EVN has told the Southern Power Corporation to work with provinces to find capital to invest in power line projects that serve business production.

Companies and local residents have also been asked to use power efficiently.

Last month, EVN put into operation Turbine 1 of the Vinh Tan 2 Thermopower Plant and Turbine 2 of the Hai Phong 2 Thermopower Plant.

It also put into use 48 projects with 500kV, 220kV and 110kV transmission lines that have a total length of 705 km.

EVN has also asked the National Power Transmission Corporation to ensure the operation of a high-voltage transmission line system and complete construction on key power projects by the end of this month.

The key projects are 500kV power transmission lines such as Quang Ninh – Mong Duong, Quang Ninh – Hiep Hoa, Phu Lam – O Mon and Pleiku – My Phuoc – Cau Bong and the Cau Bong 500kV transformation station.

Tran Viet Ngai, chairman of the Viet Nam Energy Association, told Nguoi Lao Dong that EVN had prepared all measures to supply power for the south in the dry season.

EVN was focusing on completing the Pleiku – My Phuoc – Cau Bong 500kV power transmission line project to transport power from Pleiku City to the South region, he said.

This line had an important role to ensure power supply of 2,000 MW for the South, as many power plant projects in the region were behind schedule, he said.

EVN also said that it had been operating gas-fuelled turbines at full capacity.

Several hydropower plants, including Dong Nai and Thac Mo, would soon have enough flood water for operation, Ngai said.

About one million households across the country do not have access to the national power grid, accounting for four per cent of the country's homes.

The Power Regulatory Authority under the Ministry of Industry and Trade reported that the national power grid reached all districts and 98 per cent of local communes across the country.

Vice head of the power regulatory authority, Dinh The Phuc, said that huge investment was needed to expand the power coverage to all households without electricity, mostly on islands and remote mountainous areas.

Minister of Industry and Trade Vu Huy Hoang told members of National Assembly Standing Committee earlier this month that the Government had approved VND30 trillion (US$1.4 billion) to ensure the national power grid reached all households in remote areas across the country by 2020.

NA Deputy Thach Du from Tra Vinh Province said that local farmers were using diesel powered generators for almost 85 per cent of their power needs.

This resulted in higher production costs and lower competitiveness, he said.

NA Deputy Le Dac Lam from Binh Thuan Province said that power supplies to the province only met half the demand for green dragon fruit farming.

Last Saturday, Electricity of Viet Nam started work on a 81km power line to provide electricity to five islands in Quang Ninh Province's Van Don District.

The work is scheduled to finish by the end of this year, with 10,000 households on the islands of Minh Chau, Quan Lan, Ban Sen, Ngoc Vung and Thang Loi having access to the national power grid. Earlier this year, a similar project was completed to connect Phu Quoc Island in Kien Giang Province to the national grid.

Southern industrial zones need revamp

Long-term solutions to ensure the sustainability of industrial zones in the southern region are long overdue, heard a conference of leaders of departments of industry and trade from 20 provinces and cities last week.

Nguyen Nguyen Phuong, of the HCM City Department of Industry and Trade, told the conferees that the city had developed a plan that could be adopted by other provinces to develop industrial zones by 2020.

"We will stop the development of any industrial zone that has incomplete infrastructure or contains residential areas within its borders," he said.

He conceded that the cost of wastewater treatment facilities in industrial zones required a large amount of capital, and suggested that the Government use funds from the state budget to invest in such equipment.

Capital could be recovered, he said, by collecting fees (called environment fees) from businesses operating in the zones.

He said the city had asked the Ministry of Industry and Trade to give more autonomy to management boards of industrial and export processing zones in HCM City.

They are currently managed by either the Ministry of Industry and Trade or the Ministry of Planning and Investment.

The city has also recommended that specialised industrial zones be established for investors who have advanced technologies.

In addition, it also suggested establishing satellite businesses that provide support products and services for the region.

Nguyen Minh Toai, director of Can Tho's Department of Industry and Trade, has asked the Can Tho administration to approve a project to move factories that cause pollution out of residential areas.

Can Tho has also requested that the Government help build infrastructure in industrial zones.

Meanwhile, Nguyen Van Huu, deputy director of Binh Duong Province's Department of Industry and Trade, said the province needed support from the Government to develop a programme to save and use power efficiently.

Solutions needed for the power-savings programme include investment, training, technologies and cooperation, he said.

Also speaking at the conference, Le Duong Quang, deputy minister of Industry and Trade, said, "In the long run, the region must strengthen linkages with the rest of the country to lure more investment to the area."

"Most of the provinces and cities in the region are not cooperating with each other well, which has caused conflicts of interest among localities," Quang told Viet Nam News.

Quang said the region continued to struggle as the economy slowly recovers, affecting industry and trade.

He urged local departments of Industry and Trade in southern localities to complete development plans for the power and petrol sectors as well as industrial zones and other trade sectors.

The increasingly critical problems of environmental protection and food safety and hygiene, especially in the Southern region, were among the other pressing issues discussed at the conference.

The deputy minister noted that many processing firms such as leather and footwear as well as industrial zones discharge waste and contribute to air and water pollution.

"The Ministry of Industry and Trade has also asked local departments to work closely with the power sector to resolve site clearance issues related to the development of power projects," he said.

With the current development of industry and trade, there will be a serious shortage of electricity for industrial production by 2018, he said.

"Export businesses should also be more aware of trade remedies, such as anti-subsidy or anti-dumping cases, which major export markets can impose," he said.

He also emphasised the important role of associations in helping local exporters deal with anti-dumping and anti-subsidy lawsuits.

Covering an area of 71,963 square kilometres and accounting for 21.75 per cent of the country's area, the Southern region has 33.8 million people, or 38 per cent of the country's population.

The region has two major cities – HCM City and Can Tho – and 18 provinces. It is an attractive destination for investment, accounting for more than 55 per cent of the country's total foreign direct investment.

The first of its kind, the conference was organised by the ministry and Binh Thuan Province's People's Committee. The second conference will be held next year in Can Tho.

As part of the conference, more than 200 Vietnamese companies participated in an industry and trade fair that ended today in Phan Thiet in the central province of Binh Thuan.

The Southeastern Region Industry and Trade Fair and Exhibition 2014 is organised by the Ministry of Industry and Trade and the provincial people's committee.

The five-day event aims to attract investment by showcasing the socio-economic achievements, potential and investment incentives of Binh Thuan Province and other provinces and cities in the region.

It also aims to promote exchange between enterprises to help them seek partners and investment opportunities, increase sales, improve the quality of products, and create new products and enhance their competitiveness.

The fair, featuring nearly 600 booths, focused on Vietnamese goods and services with 90 per cent of the products and services made in Viet Nam.

Vinalines officially launches restructuring

The Ministry of Transport reportedly just set progress targets for the restructuring of Vinalines, a leading domestic shipbuilder.

Accordingly, restructuring of parent company Vietnam National Shipping Lines (Vinalines) is underway and an IPO will be held in the first quarter of next year.

Vinalines members include the Saigon, Nghe Tinh, Cam Ranh, Can Tho and Nam Can ports, all to be equitised along with the parent company.

Vinalines has proposed halting the restructuring of its main shipping businesses, including Vinalines Shipping, Vinalines Container Shipping and Vinalines Haiphong Maritime Services.

These financially dependent firms will become a structural part of the parent company through the restructuring process.

As well as strengthening its Equitisation Steering Committee, in late March Vinalines submitted its plan for selecting consultants to valuate the company.

Accordingly, to up the pace of restructuring the company the MoT required consultant bidders have experience in Vinalines core areas including shipping and seaport exploitation and with restructuring other state-owned corporations.

“Vinalines will be in shambles in the coming years unless strong measures are taken to push forward its shake-up,” said the company’s new general director Le Anh Son.

Though audited figures are not yet available, it is nearly certain that Vinalines was bogged down in losses last year due to poor shipping performance.

The firm is forecasted to have sustained losses for its fourth consecutive year in 2013 surpassing VND1 trillion ($47.6 million).

“2013 was a tragic year for the shipping business. Though returns in the fourth quarter improved on the rest on the year, only ships bigger than 100,000DWT were profitable, and Vinalines has few such ships,” Son said.

Discussing solutions to the problem, Son said “The biggest challenge in restructuring our fleet is the high investment ratio. Many of our ships were invested in when shipping was at its peak and therefore investment was costly. If we wait for the shipping market to recover, our fleet will get even older and be burdened by expensive maintenance costs. Vinalines must accept selling at a loss to alleviate its financial burdens.”

To ensure the success of its IPO, one of Vinaline’s core tasks this year is completing financial restructuring.

The firm has thus far succeeded in rescheduling debts totalling $196 million from foreign credit institutions and VND43 trillion ($2.04 billion) from local institutions.

Most of the debts will be exempt from interest payments from 1-3 years, but the firm realistically needs 5-6 years, so it still faces massive pressure.

“We still owe the same amount of money and a short extension is not enough to support our restructuring efforts,” Son explained.

One encouraging sign was local commercial banks such as VietinBank reportedly agreeing to swap loans for shares in the company to support its restructuring efforts.

The company is hoping other local creditors will take a similar approach.

MoT chief Dinh La Thang noted this year would mark a turning point in Vinalines’ development.

“Vinalines can equitise successfully if it has an accurate valuation. It has significant advantages in terms of its seaports, a long-established brand and its leadership role in the domestic shipping sector. These are all appealing to investors,” Thang said.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR