HSBC report confirms Vietnam’s economic balance

Vietnam has successfully ensured an economic balance, bringing down inflation and initiating much needed reforms, according to a report by the Hong Kong-Shanghai Banking Corporation (HSBC) on August 2.    

The HSBC report on Vietnam’s macro economy and future prospects for the Vietnamese market said that in July, inflation has slowed to 5 percent, back from its peak of 23 percent in 2011. The trade deficit has also narrowed to US$58 million from US$6 billion a year earlier and foreign exchange reserves risen.

However, a sluggish consumer demand has resulted in a slowdown in manufacturing in July, suggesting that another rate cut is coming soon, said the report.

According to HSBC, policymakers in Vietnam have indicated that they are willing to take the necessary measures to move the economy forward, after moves were made last year to reduce the rising credit growth rate.

The Government also recently passed several resolutions to increase the efficiency of State-owned enterprises (SOEs) as well as the banking sector, stated the report.

However, more remains to be done, including slowing down the credit growth and reducing Vietnam’s dependence on credit to sustain growth.

Vietnamese businesses are suffering from both low domestic demand and weak global growth. Cautious spending, from both corporations and consumers, and a falling inflation rate suggest that the State Bank of Vietnam will step up its policy of easing.

 Thai Retail Trade Fair opens in HCM city

More than 100 businesses are showcasing high-quality Thai products at the Tan Binh Exhibition and Fair Trade Centre from August 2-5.    

On display are food, drinks, fruits, household utensils, electrical appliances, garments and textiles, cosmetics, and auto parts and accessories.

The Thai Retail trade fair has become a long-awaited event for consumers in HCM City, creating a shopping spree whenever it takes place.

Vietnamese consumers prefer Thai products, especially household utensils and food, for their high quality, eye-catching patterns and reasonable prices.

An increase in the number of Thai businesses is the fair shows that they are interested in Vietnam’s retail market, said organizers.

The event is being jointly organized by the Export Promotion Department under the Thai Trade Ministry, Thai Embassy in Hanoi and Vietnamese agencies.

 Eximbank named best domestic bank in Vietnam

The Vietnam Export-Import Bank (Eximbank) has won the Best Domestic Bank Award 2012, presented by AsiaMoney magazine, in Ho Chi Minh City on Aug 1.     

The event affirms the position of Eximbank in the financial markets of Vietnam and the Asian region.

Over the past years, the award, based on such criteria as growth rate, new business initiatives, profit rate and the development of transaction networks, has been seen as an important factor in defining the leading banks in Asia.

Mee Ling Lee, AsiaMoney Deputy Editor-in-Chief, said that with this achievement, Eximbank is one of the most reliable banks in Vietnam.

According to Eximbank Chairman Le Hung Dung, the award will be a momentum for the bank to strongly develop in the future.

Eximbank will strive to raise its total asset to VND500 trillion (US$24 billion) by 2015, he said, adding that the bank plans to expand its network to all 63 cities and provinces nationwide as well as to open representative offices in the region and the world.

Banks eye rate cuts to boost lending
 
Banks plan to expand credit in the second half by slashing interest rates and offering preferential loans to companies.

But some big banks, who have been assigned a growth cap of up to 17 per cent, have already admitted that the growth target would be impossible to achieve this year, despite the fact that credit growth has been improved recently due to interest reduction under 14 per cent per annual.

"We hope to expand credit by 12 per cent this year, but it will be really hard since we have only achieved 3.6 per cent growth in the first six months despite reducing interest rate eight times," Nguyen Hoa Binh, chairman of the Bank for Foreign Trade of Viet Nam (Vietcombank) was quoted as saying by Sai Gon Giai Phong (Liberated Sai Gon) newspaper.

"The bank has a target of 17 per cent. It has abundant funds and would like to lend more, but has to be careful and cannot dilute standards," Binh said.

The Asia Commercial Bank is attracting more customers as industries like rubber and garment have to import their normal second-half quota of raw materials, but admitted 17 per cent credit growth was hard to achieve.

"We are choosing some real estate projects in good locations to provide loans," Do Minh Toan, the bank's deputy general director, said.

The Eastern Asia Commercial Bank is also in negotiations with housing developers to lend at 12 per cent interest, but requires them to first reduce their prices.

The Export-Import Bank (Eximbank) has earmarked VND5 trillion (US$238 million) for lending at 10 per cent. The rate is ostensibly low, but still higher than the inter-bank interest rate of 4 per cent while other asset classes like stocks are also doing badly.

"How to help companies increase sales?" Chau Van La, chairman of the Tan Binh District People's Committee, asked.

"That would make them confident about borrowing more money for production."

Truong Van Phuoc, general director of Eximbank, concurred, saying the Government should consider policies to stimulate consumption without sparking off inflation again.

"The experience of Japan shows that too strong efforts to control inflation could cause deflation. Even 0 per cent interest rate cannot revive consumption then."

Experts predict fierce competition among banks to attract and keep good customers this year.

 VND86 trillion road to link Ha Noi with neighbouring cities

By 2020, a belt line road will link Ha Noi to nearby cities and towns within a radius of 40-60km.

The Transport Engineering Design Incorporation (TEDI) unveiled a detailed plan for the road yesterday in the capital city.

The road will traverse 340km through eight cities and provinces in the northern main economic region including Ha Noi, Hoa Binh, Ha Nam, Thai Binh, Hai Duong, Bac Giang, Thai Nguyen and Vinh Phuc.

The VND86 trillion (US$4.1 billion) project will be built in four sections surrounding the capital city: Son Tay – Phu Ly, Phu Ly-Bac Giang, Bac Giang – Thai Nguyen and Thai Nguyen – Son Tay.

Beginning soon, local authorities will install signs delineating these sections.

The road will be constructed from a combination of existing national highways and new 2-4 lane-roads.

From 2020-30, all the roads in the belt will be upgraded to have at least four lanes.

This is the fifth belt line road constructed in the capital.

 Russia signs tra fish deal

Viet Nam has signed a contract to ship 30,000 tonnes of tra fish to Russia, the Management Board for Catfish Export to Russia said.

The delivery has to be made through this year.

The board also signed an agreement for co-operation with the Russia Seafood Association in seafood processing and export to that country, and to export around $300 million worth of seafood next year.

The agreements to export large volumes of tra will enable embattled Vietnamese farmers to find outlets for their produce.

The Ministry of Agriculture and Rural Development has recommended that the Government put in place a support policy for the fisheries sector.

Accordingly, those farmers who have yet to begin harvest will be entitled to borrow 60 per cent of their breeding expenses at 0.65 per cent interest per month, and processors who farm their own fish, 40 per cent at 0.9 per cent.

Processors who buy from farmers can get 100 per cent of the value of their purchase contracts.

 Wire coat hangers face US dumping action

Vietnamese steel garment hangers exported to the US might be subject to anti-dumping duties as high as 188 per cent, according to the Viet Nam Competition Authority under the Vietnamese Ministry of Industry and Trade.

Under the US Department of Commerce (DOC)'s preliminary determination which was revealed last Friday, the tariff imposed on Vietnamese steel hangers ranged between 135.81 – 187.51 per cent, while the figures for similar products from Taiwan were only between 69.98 and 125.43 per cent.

Specifically, Vietnamese mandatory respondent TJ Group received a preliminary dumping margin of 135.81 per cent, while the South East Asia Hamico Export Joint Stock Corporation had a 187.51 per cent rate imposed.

Three other exporters were subject to a rate of 135.81 per cent, and all other steelmakers in Viet Nam received a preliminary dumping margin of 187.51 per cent.

Also last Friday, the DOC announced its preliminary findings from the antidumping investigation into utility-scale wind towers from China and Viet Nam.

In particular, Vietnamese mandatory respondents CS Wind Corporation and CS Wind Viet Nam Co received a preliminary dumping margin of 52.67 per cent, while other producers and exporters were dutied a higher rate of 59.91 per cent.

The DOC is scheduled to make its final assessment in December 2012.

Last year, Viet Nam exported US$32 million worth of steel hangers to the US while wind-tower products shipped to the market hit $79 million, according to statistics from the DOC's International Trade Administration.

To date, Vietnamese companies have faced more than 31 cases relating to anti-dumping, anti-subsidies and other protective measures, according to the Viet Nam Competition Authority.

Two-thirds of the anti-dumping lawsuits related to 15 leading export items, and three-quarters were from 10 major export markets including the US and the EU.

 HCM City hosts marketing technology expo

The third International Advertising Equipment and Technology Exhibition, or VietAd 2012, opened in HCM City yesterday.

The annual event has attracted 80 domestic and foreign companies who have set up nearly 200 booths to showcase machinery and equipment for the spray printing industry, carving and engraving machines, laser cutting machines, LED technology, and advertising and display equipment.

Speaking at the opening ceremony, Dinh Quang Ngu, chairman of the Viet Nam Advertising Association, said the event would be an opportunity for networking and exploring business as well as developing local and international partnerships.

It would also seek to enhance development of the Vietnamese advertising industry to narrow the gap with the rest of the world, he said.

Professional seminars such as the application of LED technology in advertisement, new packaging trends in the world, and advertising laws will be held during the three-day event.

It is being organised by the Viet Nam Advertising Association, the HCM City Advertising Association, and Dong Nam Advertising and Commercial Promotion JSC at the Phu Tho Indoor Sports Stadium in District 11.

A similar exhibition will be held in Ha Noi in November.

 China's Levono selects Petrosetco as local agent

Chinese multinational IT and electronics company Lenovo has appointed Petrosetco Distribution (PSD) as its newest agent in Viet Nam.

It marked the appointment by launching its latest 14-inch Ultrabook IdeaPad U410 in the market. The device weighs 1.8 kg, has a height of 21mm and up to nine hours of battery life.

This Ultrabook features instant resume from sleep mode and can maintain fast boot performance even with multiple applications installed.

Its anti-theft technology allows the computer to be tracked when others connect it to the Internet and alert the owner about its location.-

 Coffee prices cool in Central Highlands

Coffee prices in the Central Highlands yesterday fell by VND400,000 (US$19) to VND43.3-43.4 million ($2,067) per tonne in the wake of a global slump.

Robusta coffee traded at HCM City's FOB also dropped by $35 to $2,200 per tonne. The decline was attributed to a surplus in the world market.

According to the International Coffee Organisation, global coffee exports in June rose 5.2 per cent year-on-year to 9.58 million bags.

 Saitama organizes Viet Nam Fair in Japan

A three-day "Viet Nam Fair" will open in Japan today as part of acivities celebrating the 40th anniversary of diplomatic relations between the two countries.

The fair is organised by Japan's AEON Group, in coordination with the Ministry of Industry and Trade of Viet Nam and the Vietnamese Embassy in Japan. It will be held at the AEON Lake Town Shopping Centre in Saitama City near Tokyo.

Apart from celebrating bilateral ties, the fair aims to introduce Vietnamese products including foodstuff, boost cultural exchange and present Viet Nams diverse cultural natural attractions to Japanese citizens.-

 Experts advise company overhauls
 
Vietnamese business owners who want to restructure to improve their performance during tough times should aim to completely transform all areas of their business, from strategy to technology to human resources, said Dao Thi Thien Huong, associate director of PwC Advisory Services.

Huong made this statement in Ha Noi yesterday at the Viet Nam CEO Summit 2012.

Viet Nam, she said, faced significant challenges when it came to administration and management. Businesses often lack strategies, capital and human resources, and continue to lag behind enterprises in more developed countries.

"Hesitance would be the biggest barrier to the success of restructuring," she said.

Raymond Mallon, economic consultant and senior advisor of Beyond WTO Programme in Viet Nam, said the economy achieved remarkable success in recent years as the country became part of the most dynamic economic region in the world.

Growth stemmed from industrial production and services in combination with increasing value-added production and joining the regional network, Raymond said.

However, he said Viet Nam's business environment had been ranked lower than that of other countries in the region. Weak management, corruption and a shortage of infrastructure, skilled workers and technology had been big challenges for economic development.

He added that positive reform measures by the Government would help the economy sharply improve.

HSBC's deputy general director Pham Hong Hai believed that the difficulties would create momentum for restructuring.

Hai expected that restructuring of the financial market would have positive results and become a source of GDP growth.

Experts agreed that the economic meltdown and financial crisis created significant pressure for restructuring. Business leaders, therefore, should plan to make changes in the future to cope with the above difficulties.

Douglas Coulter, director of Open Minds Foundation, shared case studies from the US, Europe and mainland China to demonstrate that most companies that previously invested in several sectors have adapted to focus on their core business.

Coulter said that mapping out a strategy was the first and most important step of the restructure process.

Businesses should clarify what exactly their strength is - multi-sector or core - in order to determine whether to expand their business.

He said expanding business into other sectors could benefit enterprises by sharing risks, while focusing on a key sector could help improve turnover, saving production costs.

However, according to him, good management plays a crucial role in the expansion process. A business that fails at management will almost certainly fall into crisis.

In a situation of decreasing turnover, companies might think about dismissing employees to cut costs. But in reducing the number of employees, businesses might make restructuring more difficult since talented people are essential in the restructuring process.

Douglas said that eliminating workers might even make costs higher because businesses often retain employees with low salary and therefore low efficiency.

Le Kinh Luan, a senior consultant at Tower Watson Viet Nam, shared these sentiments. He said businesses should make changes in corporate culture and management mechanisms - such as the way bonuses are awarded - to encourage employees' potential.

The annual event organised by online newspaper VietnamNet and the Viet Nam Report Joint Stock Company welcomed about 400 participants, including leading businesses from several sectors, to share their ideas about implementing corporate restructuring.

Hanoi’s belt route No. 5 needs VND86 trillion

An investment capital of more than VND86 trillion will be needed until 2030 to build the belt route No. 5 around Hanoi, said an affiliate of the Transport Engineering Design Incorporation (TEDI).

The 342.5 km belt route will run through eight provinces and cities, including Hanoi, Hoa Binh, Ha Nam, Thai Binh, Hai Duong, Bac Giang, Thai Nguyen and Vinh Phuc.

The starting point and ending points of the project at km0+000 is at the km387+700 point on the Ho Chi Minh City road in Ba Vi on the outskirts of Hanoi.

The belt route will have four sections with four lanes, said TEDI.

Supporting industries still struggle without support

Policies of priority and incentives from the Government and other authorities for supporting industries remain largely lip service as many businesses active in such industries said they have not received any support from the State.

This was highlighted at the Supporting Industries Forum held in HCMC on Wednesday within the framework of the expos Metalex Vietnam and Nepcon Vietnam 2012 slated for October.

Tran Ngoc Phuong Hang, director of Phan Sinh Company, supplier of chrome and nickel plated products to Japanese producers, said: “Despite operating in supporting industries, we are struggling all by ourselves. We have received nothing from the supporting industries development policy of Vietnam, be it taxes or lending rates.”

Speaking to the Daily on the sidelines of the event, Hang said the factory of her company is located in District 9, HCMC. Phan Sinh intends to relocate it to an industrial park to raise the capacity by two or three times to meet the surging demand of Japanese producers active in HCMC, Dong Nai and Binh Duong.

However, the State has not provided the company any support, whether it is land rentals, lending rates, infrastructure development or corporate income tax.

Many businesses shared the same view, saying there have been many positive changes in the macro policies, but these policies have yet to come into practice.

Decision 12/2011/QD-TTg on developing certain supporting industries released on February 22, 2011 is considered the first commitment of the Government to supporting industries.

Still, so far supporting industry enterprises have been given no support, said Nguyen Duong Hieu, chairman of Lidovit Trading and Industrial Joint Stock Company. He questioned which ministries would put the decision into actions so that businesses would enjoy incentives.

Other supporting industry firms complained they had great difficulty expanding the production scale due to sky-high lending rates, three times or even five times higher than in other countries.

Pho Nam Phuong, director of the HCMC Investment and Trade Promotion Center, noted businesses had the same questions as the HCMC People’s Council delegates. Many delegates raised questions about development of the HCMC supporting industries at the council’s meeting in mid-July.

Phuong remarked the city was also struggling to find a direction for development of supporting industries.

Meanwhile, Le Huong Giang, deputy director of the Southern Foreign Investment Center, said she would report to the authorities at higher levels about the opinions of businesses.

Speaking at the forum, Hiroyuki Mizunoe from the project for supporting industry development under Japan International Cooperation Agency (JICA) stressed Vietnam was now less competitive than other countries in the region in terms of attracting investment from Japan due to the lack of supporting industries.

Vietnam must strive to overcome ASEAN nations like Thailand, Malaysia and Indonesia first, before aiming at higher rivals being China, Taiwan and South Korea, said Mizunoe

The biggest weakness of Vietnamese enterprises is that they have yet to adapt to the harsh competition environment, making it hard for supporting industries to develop, he emphasized.

According to Japanese businesses, if Vietnamese small and medium enterprises can improve their skills, plus lower production costs, they will soon gain better competitiveness.

Weak supply-demand slows down economic growth

Vietnam witnessed an economic slowdown between January and July as demand and supply in the economy remained weak, according to a report of the National Financial Supervisory Commission.

However, this year’s gross domestic product growth is not likely to stay under 5% as the Government is speeding up tax rescheduling and reduction as well as disbursements from the State budget to compensate for investment capital shortfalls.

Under the commission’s calculation, the GDP growth rate will be more than 5.3% if the entire year’s credit growth is over 6%. The nation is expected to see the consumer price index rise again in the coming months and inflation is forecast at around 5% given goods price increases globally and import pressure from China in the last quarter.

The commission also warned a great danger of high inflation in the following years if policies are overly loosened.

A decline in CPI over the past two months is noteworthy. However, if prices of food, foodstuff and fuels are not factored in, inflation in July still picked up 0.6% month-on-month and 8% compared to the same period of last year.

Concerning credit growth, the commission estimated that credit growth will increase in final months of this year but not exceed 8%. Besides, it will be hard to pump credits onto the economy in the coming time given the lack of clear solutions for bad debts.

Commenting on developments in the January-July period, the commission said that both total demand and supply remained very weak.

For the supply side, the industrial production index increased only 4.8% year-on-year while in the previous year it rose up to 8.8%. Notably, processing and manufacturing industry posted up a modest rise of 4.3%.

For the demand side, most targets remained low despite improvements compared to the end of 2011. Total retail sales of goods and services rose 18.7% against the previous year and just 6.74% if inflation factors are deducted.

Meanwhile, the trade deficit was around US$58 million in the period, or a meager 0.09% of the total export revenue, making it the record low compared to an average US$9 billion annually in previous years. Notably, imports of some materials for domestic production kept falling, including animal feed and gasoline declining by 6.9% and 8.7% respectively.

Credits for the economy had yet to be improved. As of the end of July 25, the total outstanding loans fell by 0.1% from early this year as the total demand stayed weak and bad debts were on the rise.

The commission urged for a quick tackling of bad debts in the coming time to boost credit and lower interest rates. Otherwise, any solutions of monetary policies will bring little effects.

LG deepens presence in Vietnam

More than one month after launching its first brand shop in Hanoi’s Lang Ha Street, LG Electronics Vietnam has ramped up efforts to open four other brand shops.

The Nha Trang, Da Lat, Phan Rang and Quang Ngai shops are part of its campaign to develop a system of 20 brand shops across the country in 2012.

Vietnam-based LG brand shops were built and designed up to LG brand shop system’s global standards.

Each brand shop hosts a premium range of latest LG products ranging from household appliance line-ups like LCD TVs, fridges, air-conditioners, washing machines, ovens to smart hi-tech products like LG Cinema 3D Smart TVs latest versions, tablets and compelling 3D products.

Specifically, these brand shops offer consumers the opportunity to experience LG’s latest product innovations first hand. Customers can interact with any items of their interest getting heartfelt support from the team of LG staff and consultants.

Parallel to introducing customers the entire spectrum of LG product ranges at one stop, LG brand shops promise to turn customers’ monotonous shopping experience into a pleasing entertainment.

“Developing LG brand shops in Vietnam is part of the LG brand shop global development strategy. In Vietnam we have not given out a final number of our brand shops. Our prime objective is to open more brand shops throughout rural and urban areas, via which we aim to providing more experiences for our Vietnamese consumers and introduce new premium product images to our customers,” said LG Electronics Vietnam’s general director Ko Tae Yeon.

Garment firms snug amid surrounding crisis

The total export value of Ho Chi Minh City-based Nha Be Garment (NBC) hiked 20 per cent on-year in the first seven months of 2012, exceeding $240 million. Its pre-tax profits reached VND32 billion ($1.5 million) in the first six months.

The company’s success came from flexible management, a comprehensive suite of cost-saving measures ranging from materials to power, initiatives application to boost labour productivity and most importantly, its continued focus on producing items under FOB term, said NBC chairman Pham Phu Cuong.

Producing FOB items requires greater energy from firms who take charge of sourcing materials and producing items using designs either created by themselves or provided by the foreign partners depend on contract terms, thus enhancing their product added value.

NBC pilots a specific FOB division directly managed by foreign experts. The division came into existence two years ago and was considered as a breakthrough in the corporation development to help it gain high profits.

“Right in crisis time, NBC has developed a cost-worthy information system about export and domestic market to serve its development as well as share with other companies in the sector,” said Cuong.

Besides traditional markets, Nha Be took bold steps to break into new markets. In early 2012 in the face of falling export demands it stepped into Russian market through joining international garment sector trade fairs to source partners.

Currently, each month NBC ships around 400,000 items Russia and has signed export orders to Russia to end 2012.

Garco 10 is another shining point with first six months’ export value surpassing $80 million.

Despite sagging export orders from late 2011 the company still succeeded in holding up big foreign partners such as Target, Macy’s, Old Navy and DKNY thanks to products wide diversity and large production scope, said company director Than Duc Viet.

South Korea-backed Youngone Company Limited in Nam Dinh’s Hoa Xa Industrial Zone reaped over $60 million export value in the year’s first half.

Youngone has inked export contracts for whole 2012 and its current top attention is to ensure timely delivery of export shipments.

Its parent company, Youngone Group in South Korea, is a big player in textile and garment with four operating branches in Bangladesh, China, El Salvador and Vietnam.

In respect to market perspective in later months of 2012, Vietnam Textile and Apparel Association deputy chairwoman Dang Phuong Dung said plummeting export orders from EU was firms’ greatest concern.

The textile and garment sector’s total export value in the first seven months exceeded $8.2 billion, surging 8 per cent on-year. In July alone, the sector’s export value hit $1.4 billion, $300 million more than three previous months’ average level.
 
 Colossal funds poured into third rice crop

While farmers in several Mekong Delta provinces are still busy harvesting the summer-autumn rice, An Giang and Dong Thap have kicked off the autumn-winter crop, known as the year’s third crop, with huge funds needed.

Duong Nghia Quoc, director of the Dong Thap Department of Agriculture and Rural Development, said the provincial districts had registered for a total farming area of 110,000 hectares in the third rice crop. After three times checking dyke safety for rice cultivation, the figure has reduced to 87,000 hectares, down 11,000 compared to 98,000 hectares in the same crop last year.

In preparation for the third rice crop, Dong Thap has mobilized VND627 billion, including VND142 billion for irrigation, VND75 billion for canal solidification and VND60 billion for flood consequence remedy. In addition, the province has advanced VND350 billion to ensure stability and safety for the autumn-winter crop this year.

Meanwhile, Do Vu Hung, deputy director of An Giang’s agriculture department, said some 145,000 hectares of rice would be cultivated during this year’s third crop, rising 14,000 hectares against last year. An Giang has spent over VND420 billion on autumn-winter crop protection activities.

“With this fund, we will focus on channel dredging, dyke reinforcement and investment in water pumping stations for prompt drainage in case of flooding,” said Hung.

Opinions differ over the third rice crop. Some say the third crop increase the rice volume for export and stabilize food security, while others stress this crop is too costly, posing high risks, yet farmers do not gain much.

A question arises as to why the third rice crop is grown when rice export is facing many difficulties, local paddy prices are falling and farmers’ incomes are shrinking.

Since mid-July, Vietnamese rice export prices have been plunging and now stand at US$400-405 per ton for the 5% broken rice, lower than the prices offered by India and Pakistan.

The Vietnam Food Association (VFA) informed rice exports so far only reached nearly four million tons, meaning around three million tons must be exported from now to the year’s end to meet the forecast of seven million tons.

At present, paddy prices in the Mekong Delta provinces are fluctuating around VND4,100-4,300 per kilo for the fresh IR 50404 and VND4,900-5,250 for the dried type. The IR 50404 material rice is priced VND6,700-6,750 while the finished rice is sold at VND7,700-7,850 a kilo.

 Revenues of restaurants surge

The total revenue of the restaurant system in HCMC in the January-July period amounted to VND27.06 trillion, tripling that of the travel business and six times higher than that of the hotel business.

According to the HCMC Statistics Office, the restaurant revenue rose by 20.3% from last year’s first seven months.

Among the businesses of restaurant, hotel and travel, the travel business had the second highest revenue with VND9.893 trillion, but it posted the highest growth of up to 40.4% from the same period last year, mainly resulting from the number of international tourists traveling by cruise ship.

Meanwhile, the hotel business obtained VND4.584 trillion in revenue with a growth of only 10.3%.

Truong Vinh Tho, head of the Hotel Division under the HCMC Department of Culture, Sports and Tourism, said that the average occupancy rate in the first seven months of three- to five-star hotels in HCMC was 68% compared to 71% of the year-ago period. The room price of these hotels also dropped, he added.

“We do not manage all restaurants in HCMC but only manage restaurants of hotels. The overall operation of restaurants does not grow strongly, but it is still higher than the accommodation business,” he said.

There were over 2.04 million international tourist arrivals in HCMC in the January-July period, up 10% from the same period last year.

Banks told to crack down on money laundering    

Vietnamese banks should urgently classify depositors to prevent money laundering.
 
Dr. Nguyen Tri Hieu, an independent member of the Management Board of ABBank, said the depositor classification has been done in many countries, but no bank in Vietnam had yet to adopt the policy.

“A black list of depositors should be made, depending on their risks. For example, the lowest-risk group are state employees and small traders; while the highest-risk group include real estate investors, cross-border traders, gold importers and gamblers must be frequently supervised by banks,” he proposed.

Some economists said, foreign banks operating in Vietnam face less risks of money laundering than domestically-invested institutions because they pay more attention to preventive measures.

The National Assembly approved the Money Laundering Prevention Law in June, which is expected to provide a firm foundation for Vietnam to control money laundering activities. However, experts said the State Bank of Vietnam needs to have strict sanctions to force commercial banks to invest in tools to prevent money laundering. This may prove a major challenge as this would require investments of around USD1 million.

Under Decree 74/2005/ND-CP on money laundering prevention and control, credit organisations have to supervise and inform the State Bank of Vietnam of suspected cases, particularly transactions of over VND200 million (USD9,500) in cash or VND500 million (USD23,800) or more in deposits. The report must be made no later than 48 hours through documents, emails or even phone calls.

However, despite the circular being issued, banks were afraid of losing customers, and in reality, only a small number of banks have conformed with the circular. The circular has been in effect for seven years, however, only a few money laundering cases have been detected to date.

Dr. Nguyen Tri Hieu warned that Vietnamese habits of using cash and loose control by local banks over deposits have offered ideal opportunities for money laundering.

Nguyen Van Ngoc, Head of the Anti-Money Laundering Information Centre under the State Bank of Vietnam said the detection and elimination of money laundering activities in Vietnam was mainly conducted through banks, but few institutions took the work seriously.

Le Nhu Duong, Head of the Anti-money Laundering Department at Vietcombank, said, few banks have paid due attention to preventing and controlling money laundering activities. However, so far this year, Vietcombank has concentrated more on the issue and detected tens of billions of VND being moved in suspicious circumstances.

Floating dock to be sold to repay bank debt   

The Bank of Investment and Development, North Hanoi Branch has allowed Long Son Shipping and Trading JSC to sell its Venture Dock 2 floating dock to settle its debts.
 
In a document sent to the Maritime Administration of Nha Trang, the bank said Long Son Shipping and Trading JSC used the USD11.5-million dock, which has been left unused at Cam Ranh Bay since August 2008, as collateral to pay the firm’s overdue debt to the bank.

The dock is expected to be sold to pay the debt in August this year because its value is declining.

However, the Maritime Administration of Nha Trang said, in March this year, the Civil Judgment Execution Board of Binh Thanh District sent a document requiring not to permit the removal of Venture Dock 2 to ensure the civil judgement between Long Son and two other firms is enforced.

The administration also disclosed that Long Son Shipping and Trading JSC owed it a total docking fee of over USD24,300 for Venture Dock 2. The administration added that, to date, the company has not yet contacted it for import procedures for the dock. The procedure would take 180 days dating from April 26 this year.

Retail petrol market remains adverse to competition    

Although a small number of petrol companies have started to set their own prices without considering the main fuel supplier, Petrolimex, it remains difficult for these companies to compete.

Saigon Petrol, which has an 8% market share of retail gasoline sales across the country, was the first. Petrolvietnam Oil Corporation, with 25% of market share and Saigon Fuel JSC followed were close to follow.

The Vietnam National Petroleum Group (Petrolimex), which holds around 60% market share, announced their prices at 2 pm on the same day. Other companies, such as Military Petroleum Company and Materials - Petroleum Joint Stock Company, raised their selling prices instantly.

Aside from the agreed-upon increase of VND900 per litre of petrol, Petrolimex lost their price-setting status when Saigon Petrol increased their prices one hour earlier and their increased kerosene prices were lower than that of Petorlimex.

On the previous price adjustment day, July 20, enterprises simultaneously increased prices by the same amount. Many of these companies have said that they followed the prices set by Petrolimex, but refused to go into details about the reasons.

Industry experts have said that the fuel market is mostly in Petrolimex's hands, leaving it difficult for other enterprises to remain competitive if they do not fall into line.

If one small company set their prices higher than Petrolimex's, consumers might not buy from them, leaving the companies with losses as a result of trying to set higher prices. The end result, according to some, is a less competitive gasoline market.