Assoc. wants sugar price at VND18,000 a kilo next season

The Vietnam Sugarcane and Sugar Association estimates that the sugar price in the next harvest season will be VND18,000 per kilo, and it will intervene in case the price changes by 10%.

At its general meeting on Friday in HCMC, the association said the local sugar price was stable in the last three years, resulting in high income for sugarcane farmers and encouraging sugar mills to increase investment to expand sugarcane cultivation areas.

To prevent farmers to switch to rubber and cassava cultivation, the association called for efforts to maintain the sugar price at VND18,000 a kilo to ensure the price of sugarcane material not lower than VND1 million a ton. Therefore, sugarcane farmers would be encouraged to expand their cultivation area, or least not switch to other crops with higher economic value.

The sugar association said the illicit trade in sugar would remain a headache in the coming time due to its impact on local price but there has been no solution yet. It is predicted that in the upcoming years, the local sugar price will be unstable depending on the amount of smuggled sugar.

Besides, during sugar processing season from October to June, sugar mills often sell their produce immediately without storing for the market after the season. Therefore, sugar price often turns volatile between July and September.

Under pressure companies in for a break

Firms’ financial burdens will ease if a Ministry of Finance land rental reduction proposal is ratified by the government.

Last week, the ministry (MoF) submitted its land rental reduction proposal in favour of businesses to the prime minister.

Accordingly, the MoF aked the government for 50 per cent land rent reduction for firms during two years.

The MoF’s move came on the back of scores of firms voicing concerns over new land rent calculation method regulated in governmental Decree 121/2010/ND-CP dated December 30, 2010 which came into force on March 1, 2011.

In light of the decree, land rental taxable price is set close to market-based land use rights transfer prices with collection levels being 1.5 to 3 per cent of actual transfer prices.

According to Haiphong-based Hong An Equipment Company Limited chairman To Ngoc Thach, the land rental the firm had to pay in 2011, based on Decree 121, 18 times more than in 2010.

Director Truong Thuy Nga at Hanoi-based Khuyen Luong Port Company Limited said the firm was offering services on its leased 99,140sq.m space with 40 per cent of the area earmarked for building roads and relevant infrastructure.

In 2004-2005, its land rental was VND150 million ($7,240), surging to VND800 million ($38,600) in 2006, then VND1.045 billion ($50,480) in 2009 and VND1.3 billion ($62,800) in 2010. Its 2011 land rental climbed to VND4.3 billion ($207,700) based on latest notice from the tax body.

“Our land rental leaped several dozen times within just seven years, creating a turnaround in the firm’s operation. The company would incur losses of at least VND3.7 billion ($178,700) this year with this huge land rental,” said Nga.

Besides, firms complained Decree 121 was applicable to local firms only, meanwhile foreign-invested firms were just required to pay land rentals once for 50 year land lease, triggering inequality in land rental between domestic and foreign-invested firms.

Relevant to the MoF proposal, Dai Duong chairman Nguyen Sy Hung said once ratified the MoF proposal would help firm better withstand this tough time, strengthen production and trading activities and ensure labourers’ employment.

According to the MoF’s Public Asset Management Department deputy head Le Ngoc Khoa, if the proposal was green-lighted, it would help save enterprises around VND720 billion ($34.78 million) worth in land rental each year, while not having big impacts on state coffers.

Auto imports rise 30% in August

The country imported 4,000 cars, worth US$78 million, in August, bringing the total number in the first eight months of the year to 42,000, worth $782 million, according to the General Statistics Office.

The number of imports in the first eight months of the year was up 30 per cent in terms of volume and nearly 32 per cent in terms of value against 2010.

Meanwhile, 5,000 motorbikes, worth $7 million, were imported in August, down 1,000 units against the previous month.

In the first eight months of the year, 49,000 motorbikes totally worth $67 million, were imported into the country, down 23.2 per cent and 18.8 per cent in volume and value respectively against the same period last year.

Most of the imported automobiles and motorbikes were from South Korea, mainland China, Japan, Taiwan, the US and Germany.

The office said that low purchasing power in the domestic market negatively affected not only imported vehicles but also locally made products, adding that domestic motorbike producers had an inventory index of 40 per cent in the first eight months of the year.

Many motorbike dealers on Hue Street in the capital said they had to sell many kinds of motorbikes for less than their listed prices to deal with an excess in inventory.

The Ministry of Finance is drafting regulations to revise the special consumption tax on vehicles as the current regulations have proved unsuitable after two years in effect.

Under the new regulations, several kinds of vehicles - such as national defence vehicles, or those used only in economic zones and recreation areas – will be exempted from the tax.

The draft also gives detailed instructions on when and how the tax should be applied to different kind of vehicles, since the current lack of guidance has caused difficulty for businesses and customs.

Rising petrol and oil import causes high trade deficit

The country spent US$976 million to import one million tonnes of refined petrol and oil in August, nearly double both the import volume and value of the previous month, the General Statistics Office reported.

The country's crude oil export volume and value during the period decreased by $14 million last month to $165 million, leaving a trade deficit of more than $810 million for the month.

The August figures brought the first eight months of the year's total petrol and oil import volume to 7.55 million tonnes worth nearly $6.89 billion, up 5.7 per cent in volume and 55 per cent in value against the same period last year.

As crude oil exports in the January-August period reached only 1.46 million tonnes totalling $1.34 billion, up 25 per cent in volume and 74.6 per cent in value, petrol and oil imports contributed $5.55 billion to the country's trade deficit in the first eight months of the year, the office reported.

Experts said that though the country had been able to reduce imports of refined petrol and oil since 2009 when Dung Quat, the country's first oil refinery, was put into operation, it still suffered a high trade deficit in the sector due to rising demand in the domestic market and a reduction in crude oil output. Last year's crude oil exploitation output was 15 million tonnes against 18.8 million tonnes in 2005.

Dung Quat has provided the domestic market with 3.3 million tonnes of refined products since its opening.

Retail sales growth slows due to inflation

The total value of retail trade and service reached VND1,224 trillion (US$59.72 billion) during the first eight months of this year, an increase of 22.2 per cent over the same period last year, reports the General Statistics Office (GSO).

Considering inflation, however, the value rose by only 3.9 per cent, the lowest rise since the beginning of this year, GSO said.

Vu Manh Ha, an economic expert at GSO, blamed the slower pace of retail sales on high inflation which had led consumers to curb spending.

During the period, commercial sector revenue, which accounted for nearly 80 per cent of the nation's total consumption revenue, rose by 22.5 per cent year-on-year. This figure represented a 0.7 per cent drop in comparison with the first seven months of this year.

C.bank plans to mobilize more gold from public

The former head of the Foreign Exchange Management Department Truong Van Phuoc had a talk with Tuoi Tre about the State Bank of Vietnam’s plan to mobilize a large source of gold from the public to buy foreign currencies to strengthen reserves.

Phuoc said the central bank planned to have commercial banks mobilize gold deposits to make use of the gold holdings by the public, which are estimated at about 300-500 tons.

The commercial banks would issue debentures and bonds to mobilize gold deposits from the public, he said.

“The central bank would then use government’s bonds to borrow from the banks’ gold holdings to increase foreign reserves and stabilize domestic gold market.”

He said the central bank would exchange the gold for foreign currencies to increase the foreign reserves and create a stable source of foreign currencies for the country.

For instance, if the central bank mobilized 65 tons of gold, it could be changed into US$4 billion to add to the foreign reserves, he said.

“In case domestic gold prices suddenly skyrocket compared to world rates, the central bank will use the deposited gold to help the stabilize the market and save foreign currencies.”

He also said banks would offer services to ensure that people can easily withdraw their gold deposits when prices fluctuate.

He added that the central bank would allow transaction of gold via accounts to limit the circulation of gold bullion in the market.

“People have to open an account if they are to sell their gold deposits and the bank will also sell their purchased gold to the foreign partners via account transaction,” he said.

“There would be no gold bullion circulated on the market and this would save sellers time spent on receiving and transporting the gold bullion.”

As of May 1 this year, banks have been ordered to stop lending gold under a government’s measure to tighten control over the gold market and ensure safety for banks.

More local millionaires buy helicopters

The 12-seat EC 155 B1 is on offer to serve local and foreign touristsVinacopter Vietnam said it had received 6 orders for helicopters this year and would hand over the first of these by this year’s end.

Jussi Hoikka, its sales director, said the company had also sold 6 helicopters as of 2010.

A Vinacopter aircraft costs between US$2 million and 14 million excluding taxes.

At present, at least 2 millionaires in the finance and security sectors have announced their aircraft purchases.

One is Doan Nguyen Duc, Chairman of Hoang Anh Gia Lai Corporation and the richest stock investor in 2008 and 2009. Duc now owns an $7.5 million Beechcraft King Air 350 and was the first businessman to have a private jet in Vietnam.

The other is Tran Dinh Long, Chairman of Hoa Phat Corporation who ranked the fourth richest domestic stock investors in 2009. Long spent $5 million to buy his EC 135P2i helicopter last year.

Meanwhile, Do Quang Hien, Chairman of T&T Corporation, also told the media last year that he planned to buy a helicopter for his company. Hien was ranked 48 out of the 100 richest stock investors in 2009.
 
Tea industry seeks competitive edge

The domestic tea industry is seeking effective means to increase global competitiveness, according to the Vietnam Tea Association.

"Vietnam is the fifth largest exporter of tea in the world. We export tea to 118 nations and territories, but the price of Vietnamese tea is only about 60 percent of the world price," said the association's deputy chairman, Nguyen Van Thu.

"We need to find ways to boost our competitiveness and fulfil our true potential," Thu added.

The Ministry of Agriculture and Rural Development has already taken steps to achieve this, by applying new technology to improve quality, boosting co-operation with foreign partners, seeking new markets and encouraging all economic sectors to join in the industry.

In its turn, the association has focused on increasing the supply of raw materials to meet the rising demand.

The association explained that tea plantations had been developed in 34 provinces across a total area of 130,000ha, which it hoped to extend to 150,000 ha in 2015.

"Over 600 manufacturers process tea, but they are only operating at 50 percent capacity due to a lack of raw materials, producing just 160,000 tonnes per year," said the chairman of the association Doan Anh Tuan.

"It is urgent. We need a plan to develop plantations, otherwise we will not be able to solve the shortage," Tuan said.

According to the association, manufacturers needed to develop their own plantations, and new enterprises must be able to supply their own raw materials.

This would help the industry develop for the long term, the association said.

A report from the ministry said that in the first eight months of this year, the country exported 84,000 tonnes of tea, worth 127 million USD. That was down by 0.8 percent in volume but up by 3.4 percent in value over the same period last year.

In those eight months, the average price of export tea was US$1,401 per tonne, up 1.3 percent year-on-year.

Ministry approves new location for Vung Tau’s airport

The Ministry of Transport has agreed on a new location for the airport in Vung Tau city as suggested by the local government, the Civil Aviation Administration of Vietnam (CAAV) said.

CAAV announced the ministry’s approval last week after Minister of Transport Dinh La Thang met with relevant agencies of Ba Ria-Vung Tau Province.

The aviation authority had been requested to ask the Ministry of Defense to seek approval of the Prime Minister for the new site for the Vung Tau Airport.

The existing airport in Vung Tau will be upgraded to handle both military flights and services for air taxi, chartered flights and flights to oil facilities off Ba Ria-Vung Tau in line with a master zoning plan for Vietnam’s civil aviation development as endorsed by the Prime Minister in January 2009.

The current Vung Tau Airport has a 1,800m-long runway and is able to handle small-sized planes and helicopters. CAAV said this airport now served military flights and was not opened to civil services.

CAAV did not mention the new location for the Vung Tau Airport. However, the Ba Ria-Vung Tau government issued a document two years ago to order its agencies to prepare a plan for the new site of the airport with a 2,000m-long runway in Long Son Commune.  

In addition to the Vung Tau Airport, Ba Ria-Vung Tau is also home to Con Dao Airport off the coast of the province. Currently, Con Dao Airport, which is under the management of Southern Airports Corp. (SAC), serves daily domestic flights to and from HCMC by Vietnam Air Service Co. (Vasco) under Vietnam Airlines Corp. and private carrier Air Mekong.

Located 185 km from Vung Tau city and 230 km from HCMC, Con Dao Airport on Con Son Island has a 1,830m-long, 30m-wide runway and a 9,270-square-meter parking area for ATR-72, Fokker and Bombardier CRJ-900 airplanes.

The airport’s two-floor terminal received 94,305 passengers on nearly 1,950 flights last year compared to more than 67,270 passengers and 1,310 flights in 2009.
 
Power prices to be adjusted quarterly

Power prices will be adjusted every quarter instead of every year, beginning September 1, according to a new circular issued by the Ministry of Industry and Trade.

The circular followed the Prime Minister's Decision No 24, dated April 15, on adjusting electricity prices in accordance with market mechanisms.

Accordingly, power tariffs would be calculated and checked every month against changes in foreign exchange, fuel prices and electricity productivity.

Electricity of Vietnam Group (EVN) would check production costs and assess factors that are likely to affect power prices prior to the 20th day of every month.

The group is allowed to raise the price of power by a maximum of 5 percent, equivalent to the rise in production costs, according to the Ministry of Industry and Trade.

If the group wants to raise the price by more than 5 percent, it would have to seek permission from the ministries of industry and trade and finance, who then propose the hike to the Prime Minister.

If production costs decrease, EVN would be compelled to lower power prices by up to 5 percent, according to the circular.

When necessary, the Government would use the power price stabilisation fund and other measures to minimise the impact of possible price hikes on consumers.

Vietnam raised the average price of electricity by more than 15 percent at the beginning of March in an effort to build a strong power market.

Coastal Economic Zones not effective, seminar says

Although nearly 20 coastal economic zones have been operational around the country during the past nine years, their economic effectiveness is considerably low given their potential and advantages for development, a conference heard yesterday.

At the conference about policies for the coastal economic zone development held in the central province of Quang Nam, the Ministry of Planning and Investment said there are 18 coastal economic zones nationwide, which cover a total of 730,000 hectares of land and water surface.

But only 10 percent of the area is occupied by the investment projects’ infrastructure constructions.

These economic zones have attracted 130 FDI projects totaling US$25 billion, and around 650 domestic projects with total investment of VND537 trillion ($26.85 billion), the ministry said.

However, economic experts said most of the country’s coastal economic zones have been making poor development due to many slow-progress plans.

Even the Quang Ngai-based Dung Quat Economic Zone, with the key project Dung Quat Oil Refinery that has been attracting foreign investment for the central region, is now in trouble, they said.

Le Van Dung, deputy head of Dung Quat Economic Zone’s management board, said the Dung Quat had shown signs of slow progress during the past two years.

“Many projects with investment of millions of dollars have been cancelled due to financial problems as well as compensation and clearance disputes,” he said.

For instance, he said, a US$340 million project to build an underground fuel tank was yet to be carried out after it was licensed last year.

The Quang Lien steel-making plant had also been delayed for years due to investors’ financial problems, he added.

“Dung Quat has received 112 registered projects with total investment of $8.3 billion, but only $4.9 billion has been disbursed,” he said.

Similarly, many projects worth billions of dollars in the Chu Lai and Nghi Son Open Economic Zones of Quang Nam and Thanh Hoa Provinces, and the Ha Tinh-based Vung Ang Economic Zone have yet to be launched.

Vietnam’s first coastal economic zone Chu Lai was established in 2003 but only managed to attract 66 investors with total registered capitals of $1.7 billion since then.

Doctor Tran Dinh Thien, head of the Central Institute for Economic Management, said the rapid establishment of the coastal economic zones had raised competition among localities.

Vu Dai Thang, head of the Economic Zone Management Department, said some economic zones were not set up in line with the national master plan for economic development.

“Some economic zones have managed to get licenses although they failed to meet three crucial requirements for effective development: having a strategic project, deep-water port and airport,” he said.

To solve the problems, analysts urged the government to strengthen policies on compensation and clearance, as well as launch investment promotion campaigns to attract investors.

The Ministry of Planning and Investment said it would review the current coastal economic zones and focus investment on those with effective development and could even withdraw licenses of slow developers.

Vietnam oil company in Algeria inks equipment deal

PetroVietnam Exploration Production Corporation said Groupement Bir Seba, an Algeria–based oil company in which it has a 40 percent stake, Saturday signed an agreement with a Japanese company to install facilities.

Groupement Bir Seba and Japan Gasoline Corporation will build an oil refinery with a capacity of 20,000 barrels a day, a gas transportation plant capable of carrying 1 million cube meters a day, and two oil pipelines, Vietnam News Agency reported.

The facilities, to be built at the Bir Seba oil field in southern Algeria, will also include a power plant, and will take 31 months to build.

Oil production was expected to begin by 2014 when output would be 20,000 barrels a day, and increase to 36,000-40,000 barrels in 2016, Vietnam News Agency reported.

Groupement Bir Seba is a joint venture between PVEP, Thailand-based PTT Exploration and Production PCL, and Sonatrach Petroleum Corporation of Algeria.

PVEP belongs to the Vietnam National Oil and Gas Group, or PetroVietnam.

Mazda partner to build Mazda2 subcompact in Vietnam

Mazda Motor Corp said on Tuesday its Vietnamese partner would start assembling the Mazda2 subcompact at a new factory in central Vietnam from October, replacing imports from Japan.

Local distributor Vina Mazda Automobile Manufacturing, in which Mazda has no equity stake, will initially assemble about 2,000 Mazda2s a year at the Quang Nam province plant to serve the burgeoning Vietnamese market, Mazda said in a statement.

Mazda entered Vietnam in March by making Vina Mazda its exclusive distributor to sell the Mazda2, Mazda3, Mazda6 and CX-9 imported from Japan and the BT-50 pickup truck from Thailand.

The Saigon Times Daily reported last month that in addition to the Mazda2, called the Demio in Japan, the new factory would be designed to eventually assemble other cars and light trucks with annual output capacity of 20,000 vehicles. The vehicles would be sold in Vietnam and other Southeast Asian countries, the paper said.

A Mazda spokesman said the factory would have a maximum capacity of 10,000 vehicles a year and consider adding other models to the production lineup.

Mazda, like other Japanese automakers, is looking to reduce vehicle exports from Japan in the face of the strong yen, which makes it hard for exported cars to be competitively priced or profitable.

In June, Mazda announced plans to build a factory in Mexico to produce the Mazda2 and Mazda3 for the Americas.

Shares in Mazda were up 3.7 percent at the midday break in Tokyo, in line with a strong rise in other Japanese auto stocks.

Audi sales zoom in Vietnam

Audi’s sales have skyrocketed in Vietnam, Christine Bulang, the German automaker’s senior brand manager, said at a party held to mark the rollout of the Audi A7 Sportback.

Lien A International Co. Ltd, the company’s authorized dealer in Vietnam, said 191 cars were sold in the first half of this year, equivalent to the entire sales last year.

The Audi Q7 and A8, which cost US$150,000 and $230,000 respectively, were the top-selling cars, it said.

It had received deposits for the A7 Sportback costing $160,000 even before the official rollout.

Vietnam imported 4,000 complete built units of automobiles worth $72 million in July. The number is expected to remain the same in August though the value may be slightly up.

Rice exports decline as local prices climb
 
Rice xporters are expected to export 700,000 tonnes in August but may not reach that goal, according to the Viet Nam Food Association (VFA).

From August 1-25, exports reached only 435,587 tonnes worth US$209.553 million.

The association attributed the low export volume to an increase in domestic prices in August, which caused export prices to rise, making several importers shift orders to other countries.

Truong Thanh Phong, chairman of the VFA, said the export price of Vietnamese rice in August increased to $560 per tonne, $25-30 per tonne higher than that of Thai rice.

Indonesia has also bought rice from Thailand instead of importing another 300,000 tonnes of Vietnamese rice under contracts signed early this year.

As of August 25, the country had exported 5.05 million tonnes of rice worth $2.39 billion, according to the VFA.

The Philippines and Indonesia are Viet Nam's largest rice importers.

In the period, rice export value to Malaysia and Cuba increased 108 per cent and 47.5 per cent, respectively.

As demand for rice exports have declined, the domestic price of rice has fallen slightly.

The domestic rice price in the fourth week of August fell by VND200-300/kg from the third week of August.

The Cuu Long (Mekong) Delta, the country's rice granary, has harvested over a million of 1.77 million hectares of the summer-autumn crop.

The average yield of this year's summer-autumn rice crop is estimated to reach a record high of 5.5 tonnes per hectare, according to the Plant Cultivation Department under the Ministry of Agriculture and Rural Development.

In previous years, the highest average yield for the summer-autumn rice crop was 5.2-5.3 tonnes per hectare.

PM ratifies strategy to develop cement industry until 2020

The Prime Minister this week approved a strategy to develop the country's cement industry until 2020, requiring the industry to immediately apply advanced and low energy consumption technologies to save materials and protect the environment.

Accordingly, the cement industry would have to complete the conversion from its current out-of-date shaft kilns to modern rotary kilns by the end of 2015.

New cement production projects licensed since Monday this week with a design capacity of more than 2,500 tonnes of clinker per day must invest in systems to utilise discharged heat for power generation.

Projects that received licences before Monday should have the equivalent systems in place before 2015.

The strategy also states that the Government would also offer incentive policies to encourage cement production projects with a design capacity of less than 2,500 tonnes of clinker per day to construct similar systems.

Besides giving priority to projects based in areas rich in materials with good transport infrastructure, the Government would also help facilitate new cement projects in the southern provinces where there is a rising demand for cement.

The Government forecast that cement demand in the domestic market would be 54-55 million tonnes this year. That figures would surge to 75-76 million tonnes by 2015 and 93-95 million tonnes by 2020, before reaching a whopping 113-115 million tonnes by 2030.

The strategy estimated the country would need an additional 32 new cement projects from 2011-15 to meet the rising demand for cement.

Vietnamese entrepreneurs in France connect with innovators

The Vietnamese Entrepreneurs Association in France (ABVietFrance) has actively bridged Vietnamese entrepreneurs in France and the homeland.

On its first anniversary, ABVietFrance President Nguyen Hai Nam affirmed that the association had handled 30 projects in various fields, with noteworthy ones engaging in the development of retail sales and distribution networks in Viet Nam .

The association members have shown interests in importing EU-standard preservation technologies for fish farmers and fruit growers at home so as to enable them to export their products to the European markets and to develop trade exchange between Viet Nam and France and between Viet Nam and other European countries.

International trade fair opens in southern city of Can Tho

Around 400 local and foreign companies are displaying products at an international trade fair that opened in Can Tho City yesterday.

On display are information and communications technology products, electronics, agricultural machinery, handicrafts, furniture, cosmetics, processed food, garments and footwear.

The fair, which will run until September 5, is held to meet consumer demand during the national holiday this weekend.

Luxury automobiles continue to sell well despite tough times

Luxury Audi car sales have also strongly increased this year compared to sales in regional markets, the German-based Audi AG Corporation announced during a ceremony to launch its Audi A7 new car model.

The total number of Audi cars sold in the first seven months of this year increased 169 per cent, which was equal to the growth for the 2010 entire year in 2010.

General director Tran Tan Trung of Lien A International Co, the official Audi dealer in Viet Nam, said Audi sold 223 cars in Viet Nam last year and hoped car sales would double by year-end.

Electrical equipment exhibition opens in September

From September 7-10, Ha Noi will host the fourth international exhibition of technology and electrical equipment, known as Viet Nam VTE, with the participation of 150 domestic and international companies.

The event will feature a variety of electrical products as well as methods of using and preserving energy. The products will be categorised into several key areas such as thermal power, solar, nuclear, hydro and other renewable energy sources.

During the exhibition, seminars about Viet Nam's electrical equipment industry will also be held to discuss potentials, opportunities and challenges the industry will face.

Nation's industrial gains to be promoted at festival in Paris

The Vietnamese industry and trade sector's achievements recorded in the national renewal process will be introduced to French visitors at the L'humanite festival in Paris from September 15-17.

The presentation will also cover the development of the sector through phases, ranging from energy fields to heavy industries like mechanical engineering, metallurgy, chemistry and mining.

The sector's import-export performances, international integration and market expansion through various periods will be presented along with its development strategy to 2020 and the following years.

Vincom posts $16.8 million profit in first six months

Property developer Vincom Co (VIC) has posted a net revenue for the first half of the year of about VND860 billion (US$41.3 million), up 200 per cent on the same period last year. First-half net profit also soared 230.6 per cent over the same period, totalling nearly VND350 billion ($16.8 million).

Financial expenses decreased 5 per cent to nearly VND432.4 ($20.8 million) during the period, but interest costs rose 36 per cent to more than VND384.9 billion ($18.5 million). The company's earnings per share (EPS) reached just VND951 in the first half.

Firm to buy back shares to stabilise stock prices

Petro Capital Infrastructure Investment Co (PTL) has registered to buy back 7 million stocks of the company from September 6 to December 6. The buy-back was aimed at stabilising PTL share prices on the stock-market as well as optimising the company's undistributed profits, the company said.

Previously, the PTL registered to buy back 8 million shares in May for no more than VND10,000 a share, but the firm could purchase only 916,790. PTL's shares closed yesterday unchanged at VND8,000 per share.

Song Da Corp to equitise subsidiaries, reorganise

Song Da Corporation has announced it will carry out an equitisation process for the Viet Nam Machinery Assembly Corp (Lilama), the Infrastructure Development and Construction Corp (Licogi), the Construction Machinery Corp (Coma) and other subsidiaries as approved by the Prime Minister. The construction group is seeking consultants to build strategic development plans and restructure businesses.

In the first six months of this year, the group's revenue reached VND27.79 billion (US$1.33 billion), equivalent to 49 per cent of its yearly plan, but its pre-tax profit was only VND572 billion ($27.5 million), 18 per cent of the yearly plan.

Power of free samples

"Tryvertising" or trying-before-buying is a powerful but under-used marketing weapon, claims a recent retail study by the Grey Group's Eye on Asia.

Asian shoppers remembered the trial packs, the study said, adding that in categories such as beauty and health supplements, trial packs were critical.

The study found about 33 per cent of Asian shoppers (beauty products) and 30 per cent of shoppers (health supplements) preferred brands with trial packs.

Grey Group strategic planning director in Viet Nam, Sumit Pillai, said most people thought trial offers were just samples, "but we can see there are more roles the trial pack can play".

Pillai said trial packs would deliver not only products, but also the brand.

Banks told to raise foreign currency reserves

The State Bank of Vietnam on August 29 raised the foreign currency compulsory reserves ratio for commercial banks by 1 percentage point to 8 percent of total deposits in a move to limit the growing number of new loans being made in US dollars.

Under a decision effective on Aug. 31, the new ratio applies to non-term deposits and term deposits of less than 12 months at State-owned banks (excluding Agribank), private commercial banks, and foreign-invested banks, joint ventures or branches of foreign banks in Vietnam.

The compulsory reserves ratio for term deposits in excess of 12 months was also increased from 5 to 6 percent of these deposits.

At Agribank, central credit unions and co-operatives, the reserves ratio for non-term deposits and term deposits of less than 12 months was increased from 6 to 7 percent, while the ratio for longer term deposits at these institutions was raised from 4 to 5 percent of total deposits.

According to State Bank statistics, credit in foreign currencies grew 22.1 percent in the first half of the year, tripling the 7-per-cent rate of growth in loans made in Vietnamese dong.

The disparity was encouraged by the enormous gap in average lending interest rates between loans in dong, which averaged an interest rate of 18.74 percent per year, and loans in US dollars, which averaged only 6.4 percent during the period.

During July and August, borrowing costs for the dong remained high, at 16.5-25 percent, while interest rates on dollar loans continued to average 6-8 percent.

The State Bank's latest decision follows a move to cap deposit interest rates paid on US dollar deposits at just 2 percent.

To further shore up confidence in the domestic currency, State Bank Governor Nguyen Van Binh on Aug. 29 also reaffirmed that the value of the Vietnamese dong would not be depreciated against the US dollar by more than 1 percent over the next four months.

Binh said that projection was reasonable since the international balance of payments was expected to achieve a surplus of US$2.5-4.5 billion during the period.

PV