Lending interest rate hardly to decline, experts say 

The credit growth rate of commercial banks is relatively low in the first quarter of the year, but many lenders still offer depositors the interest rates that are higher than the central bank’s 14 percent cap, experts said. 

Statistics from the State Bank of Vietnam show that the outstanding loan of banks in Ho Chi Minh City reached VND740 trillion (US$37 billion) in the first three months of 2011, a year-on-year increase of 31 percent.

Of the amount, the total amount of dong loans rose 27.2 percent and the dollar loans moved up 41 percent year-on-year to VND214 trillion.

The total deposit of commercial banks increased 30.3 percent year-on-year to VND809 trillion ($40.45 billion), of which the amount of dong deposits increased 30.4 percent to VND580 trillion.

Analysts said it was normal when the credit growth was slow in the first quarter as the demand for loans on production of businesses was often low at this time every year. Especially, the lending rate of commercial banks –18-22 percent per annum - remains very high this year.

According to the central bank, the depositing interest rate in the first three months of this year is steadier than the last quarter last year, with the rate on dong deposits amounting an average of 13.4 percent per annum and the rate on US dollar deposits reaching 4.2 percent.

However, an investigation of Dau Tu Tai Chinh Newspaper reveals many lenders are eager to offer higher depositing rates through negotiation.

At a transaction office of the Bank for Investment and Development of Vietnam, clients who want to deposit VND1 billion ($50,000) or more in three months will be recommended a interest rate of 17 percent per annum.

A transaction office of TrustBank followed a similar pattern, recommending a depositing rate of 18 percent per annum to clients who want to deposit VND1 billion ($50,000) or more in three months.

The State Bank of Vietnam last month recognized, for the first time, the rate cap on dong deposits that had been established by the bank association. All banks are required to publicly announce their deposit rates and are not allowed to offer perks or cash bonuses that would raise rates above 14 percent, the central bank said.

Financial experts said many lenders were seeking dollar loans with low interest rates from abroad in an effort to reduce their lending rates on the greenback.

The HCMC-based Sacombank and The Netherlands Development Finance Co (FMO) have entered an agreement on a $150 million loan, of which $25 million will come from FMO. The lending with a maturity of 10 years is the first FMO’s secondary lending to a Vietnamese bank.

MariTime Bank and Asia Commercial Bank also said they found out loans with low interest rates from their foreign partners to lend back local businesses.

City introduces new Vietnamese high-quality products 

The month to introduce new Vietnamese high-quality products has begun in supermarket chains like Co.op Mart and Big C in Ho Chi Minh City on April 1. 

The program aims to present new goods made by local enterprises to consumers. The promotional strategy will be implemented at Co.op Mart chains including those on Nguyen Kiem, Phu Tho, Ha Noi highway, Ly Thuong Kiet, Phu My Hung and Dinh Tien Hoang from April 1 to 9.

The event will continue in Big C supermarkets on April 15, 16, 22 and 23.

The program will include activities such as product sampling, raffles, games and a direct survey of consumer opinion.

Miss Grand Slam Asia 2009 Huong Giang, drama actress Thanh Thuy and director Quang Dung will take part in the program.

The event is part of a project for new product development by the High-Quality Vietnamese Product Business Association.

Dung Quat Refinery to carry out overall maintenance 

The Binh Son Petrochemical Company under the Vietnam National Oil and Gas Group (Petrovietnam) announced on March 31, that the Dung Quat Refinery would carry out overall maintenance of its plant after two years of operation.

The overall maintenance will take place for more than 2 months from the middle of July to middle of September, 2011 with the participation of thousands of Vietnamese and foreign experts and workers.

On the same day, a US$25 million contract was signed between the Binh Son Petrochemical Company and its foreign contractors Jcon Dong-II, Ubee firm and Deachang of Korea.

Domestic gas prices go up 

The Vietnam Gas Association announced on March 31 a hike in retail prices of liquefied petroleum gas (LPG) by VND19, 000 per 12-kilogram cylinder from April 1, due to local and global price hikes. 

A 12-kilogram gas cylinder currently costs from VND350,000 to 355,000 depending on the brand.

The association said that the domestic gas price was hiked following an increase in global LPG prices, which have just risen by US$45 per ton, as well as other costs that have gone up like fuel prices and overhead costs.

Gas producers said they have faced difficulties in seeking sources for import since the world is suffering a shortage of gas supplies.

In addition, they said that local supplies have run short because the country’s only oil refinery, Dung Quat, has temporarily halted operation for maintenance purposes.

LPG prices were raised three percent in March, to VND330,000 per 12-kilogram cylinder, due to rising world prices.

Remote City area gets tap water

The water shortage in HCM City's outlying Can Gio District is set to become a thing of the past with a newly inaugurated water-supply project that is expected to fully meet the needs of the 18,000 local households.

The first phase of the Sai Gon Water Supply Corporation (SAWACO) 's project is finished and will begin supplying water soon, ending a water subsidy for residents which rose to VND60 billion (US$2.8 million) last year.

The project began in January 2010 and was expected to be finished last year, but was held up by delays in acquiring land for the pumping station in the adjacent Nha Be District.

The water will be supplied from SAWACO's Thu Duc District water-treatment plant.

A 42-km pipeline to carry the water has been laid.

Around 39,000cu.m will be supplied daily to Can Gio residents.

Nguyen Van Toan Chau, head of the project, said hundreds of engineers and workers were working in three shifts, often without electricity or water, to complete the work, but they got strong support and encouragement from local people.

Doan Van Son, deputy head of the Can Gio People's Committee, said for nearly a decade, the district had suffered from a shortage of electricity and water and poor infrastructure.

The city government had already addressed the electricity and infrastructure problems, he said.

Initially around 8,000 households would be supplied with water but before the year is out, all 18,000 households with 70,000 people would be covered, he said.

"The system will help the city save VND60 billion every year." The city used to subsidise the 2.5 million cu.m of water that residents bought during the year at the rate of VND30,000 to VND32,000 per cubic metre.

The second phase of the project will be carried out in 2020, when the supply will increase to 80,000cu.m a day.

Vietnam’s economic growth at 5.43 pct in first quarter

Vietnam’s Gross Domestic Product (GDP) in the first quarter this year rose 5.43 percent compared to the same period last year.

The agro-forestry-aquatic sector registered 2.05 percent, the industry and construction sector 5.47 percent and the service sector 6.28 percent.

The Ministry of Planning and Investment said the national economy faced a lot of challenges in the first three months of this year.

The prices of many goods in the world followed an upward trend. Some big economics which had just recovered from the financial meltdown continued to face risks.

In the country, runaway inflation, adverse weather conditions, and epidemic breakouts, affected both production and business operations.

Bulgarian businesses seek investment opportunities in Vietnam

The Vietnamese Embassy in Bulgaria recently held an annual meeting with Bulgarian businesses to promote investment opportunities in Vietnam.

The meeting attracted the participation of 140 Bulgarian businesses which have been interested in conducting investment and business activities in Vietnam.

Speaking at the meeting, Ambassador Tran Van Thinh briefed the delegates on Vietnam’s social and economic situation, and talked about the country’s socio-economic development strategies in the period of 2011-2020 as well as cooperative investment results between Vietnam and Bulgaria.

He affirmed the important role of businesses in strengthening bilateral relations between the two nations in the context of the economies gradually recovering from the global financial crisis.

The embassy’s officials introduced the businesses to foreign direct investment (FDI) in Vietnam, the country’s investment laws and incentives for foreign partners, as well as tourism potential and opportunities for cooperation in the sector between Vietnam and Bulgaria in the future.

Representatives from Bulgarian enterprises praised Vietnam’s achievements, saying that this was the time to promote traditional friendship relations by cooperating in trade, education and commerce.

Participants highly appreciated the purpose and meaning of the meeting and vowed to work closely with the Embassy to maintain and further enhance economic cooperation between the two countries.

EU removes anti-dumping duties on Vietnam’s leather-capped shoes

The European Union (EU) officially removed anti-dumping duties on leather-capped shoes imported from Vietnam on April 1, said the Vietnam Association of Seafood Exporters and Producers (VASEP).

In October 2006, the European Commission (EC) decided to impose anti-dumping taxes of 10 percent on leather-capped shoes imported from Vietnam for two years.

Later, the EC continued to extend anti-dumping taxes of 10 percent for another 15 months from February 31, 2009. The decision reduced Vietnam’s share in the EU market from 15 percent in 2005 to 10 percent in 2009. The EU’s removal of anti-dumping duties will open up many opportunities for Vietnam’s leather and footwear businesses to continue expanding their shares in the EU market.

In 2011, thanks to the EU’s removal of anti-dumping duties, the Vietnam’s leather and footwear sector expects to earn an export turnover of US$5.5 billion, against US$5.3 billion last year.

Vietnam’s first private firm receives ODA loan

The Vietnam Development Bank (VDB) has signed a credit contract with the Hoa Phat Energy JSC to grant VND319 billion in official development assistance (ODA) loan to the company.

The preferential loan, funded by the Japanese Government through the Japan International Cooperation Agency (JICA), will be used for the second phase of the construction of the Hoa Phat Coke Coal and Thermoelectric Power Plant.

With these funds, the Hoa Phat Energy JSC became the first private enterprise in Vietnam to receive an ODA loan. The company was given the loan at a preferential annual interest rate of 9.6 percent for a 15-year term.

The Hoa Phat Coke Coal and Thermoelectric Power Plant will be built according to state-of-the-art world standards using clean technology and ensuring environmental safety.

Once completed by the end of the first quarter of 2012, the coke plant will have an annual capacity of 700,000 tonnes of coke coal while the power plant will generate power with an average monthly output of 26 million KW, equivalent to a medium-sized hydro-electric power plant. This electricity source will provide an adequate supply of electricity for the production line of the coke plant and 35-40 percent of fuel for Hoa Phat iron and steel complex.

Bulgarian businesses seek investment opportunities in Vietnam

The Vietnamese Embassy in Bulgaria recently held an annual meeting with Bulgarian businesses to promote investment opportunities in Vietnam.

The meeting attracted the participation of 140 Bulgarian businesses which have been interested in conducting investment and business activities in Vietnam.

Speaking at the meeting, Ambassador Tran Van Thinh briefed the delegates on Vietnam’s social and economic situation, and talked about the country’s socio-economic development strategies in the period of 2011-2020 as well as cooperative investment results between Vietnam and Bulgaria.

He affirmed the important role of businesses in strengthening bilateral relations between the two nations in the context of the economies gradually recovering from the global financial crisis.

The embassy’s officials introduced the businesses to foreign direct investment (FDI) in Vietnam, the country’s investment laws and incentives for foreign partners, as well as tourism potential and opportunities for cooperation in the sector between Vietnam and Bulgaria in the future.

Representatives from Bulgarian enterprises praised Vietnam’s achievements, saying that this was the time to promote traditional friendship relations by cooperating in trade, education and commerce.

Participants highly appreciated the purpose and meaning of the meeting and vowed to work closely with the Embassy to maintain and further enhance economic cooperation between the two countries.

Seminar discusses new Business Fund

About 70 representatives of private-sector firms, investment funds and development agencies gathered in a forum in HCM City yesterday to discuss the establishment of an inclusive business fund.

"Inclusive businesses were those that provided socially beneficial products or services, as well as income for the poor," said Asian Development Bank (ADB) country director for Viet Nam Ayumi Konishi.

"The concept fits in perfectly with the Government's strategy to develop a market economy with a socialist orientation, which must provide for inclusive growth that shares the benefits of rapid economic expansion with low-income groups," he said.

The forum was held by the Ministry of Planning and Investment, the Asian Development Bank (ADB) and the Netherlands development organisation SNV.

SNV Asia regional director Asia Allert van der Ham said, "Inclusive business initiatives are being tested in Latin America and Africa, but our work in Viet Nam would be the first comprehensive development partner-supported initiative in Asia."

The event discussed key findings of the ADB/SNV study, confirmed possible investment opportunities, promoted the exchange between companies interested in inclusive business and possible financial institutions, and determined further steps needed to establish an Inclusive Business Fund in Viet Nam.

The feasibility study found that over 70 companies were already doing business at the "base of the pyramid (BoP)", and at least 16 investors and funds in the country could be interested in debt or equity investment in an inclusive business fund for Viet Nam with an initial size of US$60-100 million.

Some private companies in Viet Nam had already engaged in business ventures working with and for the poor, the study noted. It further found that the business environment in Viet Nam was highly conducive to the idea of social financing at the base-of-the-pyramid. Private-sector enterprises were also found to be forthcoming with specific concepts for new BoP ventures seeking investment.

The study proposed the ADB act as the "seed investor" with $20 million. Financing needs for inclusive business ventures were estimated to be between $400,000 and $10 million for an average of six years, with an average of about $3.7 million per venture.

In addition, the study also proposed a grant-financed $5-6 million regional technical assistance project to facilitate inclusive business incubators in six countries. Various development partner agencies showed interest in co-operating with the ADB on both the capacity-building initiative as well as on the establishment of the investment fund.

Capital markets had adequate conditions for the establishment and operation of an inclusive business fund that generated attractive social and financial returns, according to the study.

VN goods sought-after in Cambodia

Cambodia offers plenty of opportunities for Vietnamese exporters though there is fierce competition from countries like Thailand and China, a conference concludes.

Viet Nam's exports to Cambodia were growing at more than 30 per cent annually, Vu Thinh Cuong, the country's Trade Counsellor in Cambodia, said at a conference titled Cambodia – opening market for Vietnamese businesses held earlier this week.

In the first two months of this year, they were up 44 per cent to US$306 million, with the main export items being plastics, garments, steel and seafood, he said.

Nguyen Thi Hanh, general director of Saigon Co.op, said since Cambodia had to import large volumes of consumer goods, it offered a good opportunity for Vietnamese firms.

Vietnamese products were very suitable to Cambodian consumers in terms of price, design, and quality, she said.

Cambodia, especially its capital Phnom Penh, offered rich prospects for Vietnamese retailers because modern trade channels had not developed there, she added.

The securities market and construction were also promising sectors for Vietnamese firms.

The Cambodian stock exchange was scheduled to open in July, Hang Chuon Naron, Cambodia's Secretary of State for Economics and Finance, said.

Lao Tip Seiha, director of the country's Construction Department, said with many factories, amusement centres and property developments granted licences, the construction sector was set to boom.

But Vietnamese goods could expect to face fierce competition from other countries, especially Thailand and China, Cuong said.

Last year Thailand's exports to Cambodia almost doubled to $2.34 billion, much higher than Viet Nam's, he said.

China's exports were worth more than $1 billion last year, he added.

Many delegates said though bilateral trade had increased strongly in recent years, it remained low compared to the potential.

Vietnamese firms had yet to tap the potential of the market, they said.

Businesses blamed the situation on the shortage of commercial centres, warehouses and showrooms in border areas.

To encourage Vietnamese firms to do business in Cambodia, Cuong said the Government should develop a financial mechanism to spur them to invest in rubber plantations, mining and hydro-power in border provinces.

He also said the Governments should invest in upgrading the trade infrastructure, building wholesale markets and setting up banks in border areas to facilitate trade.

Vietnamese firms should invest in building trade centres in Cambodia to distribute Vietnamese goods, he added.

By last year, Vietnamese firms had invested $566 million in 41 projects in Cambodia, mainly in rubber farming, aviation, telecom, garments, tourism, construction materials and mining.