VN, Pakistan look to increase trade

Deputy Minister of Industry and Trade Tran Tuan Anh and Pakistani Commerce Secretary Zafar Mahmood presided over the first meeting of the Viet Nam-Pakistan Joint Trade Commission yesterday.

The commission was formed after a trade agreement was signed between the two countries here.

At yesterday's meeting, the two sides said they expected to further boost relations, especially economic and trade ties, after the success of co-operative results in recent years.

Bilateral trade between the two countries has increased nearly threefold in five years, reaching US$222.7 million last year from $80 million in 2005. The figure is expected to reach roughly $300 million this year.

Viet Nam last year earned more than $113 million from exports to Pakistan while importing $109.5 million. Viet Nam's main exports to Pakistan included tea, handbags, steel, paper products, rubber, handicrafts, porcelain, chemicals, textiles and garments.

In a move to boost trade, both sides agreed to create favourable conditions for business.

Trade-promotion agencies in the two countries will increase trade promotion programmes and promote fairs and exhibitions.

Banks assist gold to hit new record

The domestic gold price on August 3 hit an all-time high of VND41.32 million ($2,004) per tael following increased purchases by a number of central banks on the global market and Europe's worsening debt crisis.

The price on Kitco yesterday reached $1,674.60 per ounce (one tael is equal to 1.2 ounces), hitting its ninth record in 16 trading sessions and up 17 per cent so far this year.

Sai Gon Jewellery Co (SJC), Bao Tin Minh Chau, Agribank Gold and Jewellery Co (AJC), the Sacombank Jewellery Co (SBJ), the Phu Nhuan Jewellery Co (PNJ) and Doji quoted prices of VND41.20-41.32 million per tael, up VND1.17 million against the previous session.

The price dropped slightly late afternoon to finish at VND41.10-41.22 million per tael.

Dealers reported a quiet day's trading on August 3, while customers monitored the fluctuating price.

"Today's increase is just the beginning of a new up-trend," said Nguyen Huu Dang, an analyst at AJC.

Dang expected the global price to push the $1,700 per ounce level soon, with the domestic price hovering around VND43 million per tael.

Tran Quoc Quynh, senior commentator at the Vietnam Gold Traders Association, said that the major reason for the sharp increase on the domestic market was the dramatic global price surge.

On Tuesday, purchases by South Korea and Greece's central bank, seen as a strong move to diversify their reserves away from the dollar and other beleaguered currencies, supported prices at elevated levels in trading in Asia and Europe.

Industry insiders also assumed that although the US debt ceiling increase was clinched, the US debt remained a concern for credit rating agencies, which would potentially prop up the price of the precious metal.

State shipping line suffers $33 mln H1 loss

The Vietnam National Shipping Lines, or Vinalines, suffered a loss of VND660 billion (US$33 million) in the first half, its CEO Nguyen Canh Viet said yesterday.

This was the company’s first loss in 16 years of operation, he added.

Part of the loss was reported by the five enterprises that Vinalines had to take over from the Vietnam Shipbuilding Industry Group (Vinashin), another state-owned group.

Viet said the government had approved a hike in the company’s registered capital from VND8 trillion ($389 million) to VND12 trillion, and sought VND1-2 trillion from the Ministry of Finance to tide over this difficult period.

Cambodia trade grows by 56.7%

Trade between Cambodia and Viet Nam was worth US$1.35 billion in the first half of the year, a year-on-year increase of 56.7 per cent, trade officials said.

Addressing the Vietnamese Business Forum organised by the Ministry of Industry and Trade and the Vietnamese embassy in Phnom Penh on Tuesday, Deputy Minister of Industry and Trade of Viet Nam Le Danh Vinh said trade and transit agreements signed between the two countries have helped promote their commercial links.

Trade between the two countries topped $1.82 billion last year, while Cambodia licensed 89 Vietnamese FDI projects worth nearly $2 billion.

Vinh praised the significant contributions of the Vietnamese community in the neighbouring country, saying they were a major factor in the close ties between Cambodia and Viet Nam.

The chairman of the Vietnamese Business Association in Cambodia, Nguyen Van Dinh, said most Vietnamese businesses operating in Cambodia were medium and small enterprises who wanted easier access to bank loans.

Vinh wanted Vietnamese authorities to simplify import-export formalities, enabling temporary import and re-export of vehicles.

Few fete market's 11th birthday

Viet Nam's stock market yesterday celebrated its 11th birthday, but the market has offered little cause for celebration.

Capital inflows have dried up as investor confidence has diminished. Over 40 per cent of shares listed on the nation's two stock exchanges have fallen below their face values. Many stock brokerages and fund management companies have posted losses for the first half of this year.

Since the beginning of the year, the VN-Index, the benchmark index of the HCM City Stock Exchange, has lost over 25 per cent of its value, while the HNX-Index, the barometer of the Ha Noi exchange, has declined by nearly 39 per cent.

However, the prolonged market stagnation should not obscure the achievements of the domestic stock market during the past 11 years, said State Securities Commission chairman Vu Bang.

Total capitalisation of the stock market has increased by over 50 times in 11 years and amounted to 39 per cent of gross domestic product (GDP) in 2010, up from 1 per cent in 2000 – the first year the stock market began operations, Bang said

Market volume has also increased 60-70-fold and the number of listed companies has soared from the original 10 to almost 700, with over 100 securities companies and nearly 50 fund management companies operating on the market.

Through 2010, a total of VND100 trillion (US$4.85 billion) was raised by companies listing shares on the market. Indirect foreign investment on the market, totalling at various points between $6.7 billion and $12 billion, have contributed to offseting the deficit in the nation's balance of payments.

"The stock market has become an effective channel for raising long-term capital," Bang said.

Independent analyst Huy Nam agreed, noting that the creation of the market has facilitated such processes as the equitisation of State-owned enterprises, the issuance of Government bonds and the valuation of assets.

"Many listed companies have benefited from the stock market, especially by raising long-term capital efficiently," Nam said. "The value of a company has become ‘more valuable' by the full recognition of the worth of the corporate assets, which could not have been reached before the operation of the stock market."

In the current market downturn, a large number of investors have suffered losses and many have decided to leave the securities market altogether. The daily value of trades on both bourses last month averaged only VND600-700 billion ($29-34 million).

Pessimism over the economy, rampant inflation (currently exceeding 22 per cent on a year-on-year basis), tight credit, and high borrowing costs have dried up flows of capital, and many market watchers now believe that new investment products are needed if the Vietnamese stock market is going to survive.

Saigon Securities Inc chairman Nguyen Duy Hung said the biggest problem facing Viet Nam's stock market today was the lack of transparency, fairness and strong principles.

"It's undeniable that we've created a peer group of strong companies along with the development of the stock market, such as Asia Commercial Bank (ACB), Vinamilk (VNM), Hoang Anh Gia Lai Co (HAG), and FPT," Hung said. "However, the rapid expansion of the market has also delivered many poor-quality goods and weak companies, and from this hard-to-control issues have arisen."

Hung pointed to insider trading and manipulation of information and share prices as increasingly negative factors that have undercut investor confidence.

"The market should start again from establishing norms and standards for listing on the stock market," he said. "The roles of the stock market are a channel for businesses to raise capital and an investment channel for investors. Therefore, the most important goal is to create a fully transparent system which helps companies raise and use capital efficiently."

To date, about 70 per cent of listed companies have yet to report their second-quarter earnings results, meaning they have failed to comply with disclosure requirements, Hung said.

He urged listed companies to build a transparent system of information disclosure in order to regain investor confidence.

National Financial Supervisory Committee vice chairman Le Xuan Nghia also said, in Viet Nam, valuable asset that were attractive to large investors, were not listed on the stock market, including stocks in the fields of telecommunications, aviation, energy, and oil and gas.

"If we want to attract big investors, the prerequisite is to have big enough merchandise," Nghia said, suggesting that the equitisation of State-owned enterprises be accelerated.

Quang Tri links with Thai twin

A seminar to enhance co-operation in investment, trade, tourism, culture and education between the central province of Quang Tri and its Thailand "twin", Mukdahan Province, was held here yesterday.

The two provinces agreed to set up sub-committees to study investment and business opportunities.

Mukdahan Governor Chanvit Vasayangkura pledged to co-operate with Quang Tri to make it simpler for Vietnamese exporters using Mukdahan province as a gateway to export agricultural and forestry products to other countries by sea.

Malaysian hypermarkets move in

Malaysia will join HCM City's retail market with the opening of hypermarkets featuring goods from most leading Vietnamese retailers.

This was announced by the Malaysian Minister of Domestic Trade, Co-operatives and Consumerism, Dato' Sri Ismail Sabri bin Yaakob, at a meeting with the Chairman of the HCM City People's Committee on Tuesday.

Sabri bin Yaakob said he highly valued the great potential of HCM City, adding that he sought co-operation opportunities for Malaysian investors, especially retailers.

Drilling firm leases site in Hai Phong

The Drilling Mud Joint Stock Company (DMC), a subsidiary of the Viet Nam National Oil and Gas Group (PetroVietnam), signed a contract with Dinh Vu Industrial Zone JSC to lease land in the zone last Friday.

Under the VND270 billion (US$12.3 million) contract, DMC will lease 7.5ha land to build the Dinh Vu Chemical Service Supply Base project.

The project aims to have a propylene warehouse and container yard. Construction will begin later this year.

Housing project for west Ha Noi

Viglacera signed contracts with five domestic and foreign partners to construct and market Thang Long Number One apartment buildings project on Monday in Ha Noi.

The VND3.9 trillion (US$186 million) project, located in Me Tri Commune, Tu Liem District, west of Ha Noi, will comprise two 40-storey apartment towers, commercial and sports areas and a kindergarten.

Maritime Bank brokerage assets up

Maritime Bank Securities Co eported total assets of VND1.89 trillion (US$90 million) until the end of June, up six-fold compared with December last year - and profits before tax of more than VND13.7 billion ($652,380), equal to 24.1 per cent of the annual plan.

Consulting services contributed the most to the bank's first half results.

Taiwan-invested leather plant to open

The People's Committee of the northern province of Nam Dinh licensed Taiwan's Yamani Dynasty Limited Liability to construct a leather bag, wallet and belt manufacturing factory on Tuesday.

The US$14 million factory will occupy 7.9ha in the Nam Hong industrial cluster of Nam Truc District.

When completed by next July, the plant will be capable of manufacturing more than 900,000 bags, wallets and belts and 50 other leather-based products per year

Japanese garment maker licensed

The Tokyo Style Viet Nam Hue Ltd Co was granted a certificate of investment to build a garment factory in Phu Bai industrial zone, central Thua Thien-Hue Province.

With an investment of US$21 million, the factory will specialise in exports. Construction will be completed early next year.

S Korea boosts technological ties
 
A seminar designed to boost trade exchanges and technology transfers between Viet Nam and South Korea took place in HCM City on Wednesday.

The South Korean Small and Medium-Sized Businesses Administration (SMBA) and the HCM City Science and Technology Centre (STC) jointly organised the event under the municipal Department of Science and Technology.

Kim Dong-sun, President of the SMBA, said the delegation of Korean businesses in the fields of ceramics, gas, environment and energy, wanted to survey the market and seek collaboration opportunities with Vietnamese partners during their visit.

Through bilateral exchanges, businesses from both countries would have opportunities to closely co-operate in the fields of clean technology transfer, human resource development and financial investment, he said.

Bui Van Quyen, chief representative of the Ministry of Science and Technology in HCM City, said the Vietnamese government attached great importance to advances in science and technology in production and business, as well as to receiving the latest technologies from abroad.

That same day, the South Korea Office of Transaction and Technology Transfer in HCM City was inaugurated, which aimed to assist the development of RoK businesses in the southern region, HCM City in particular.

In recent years, the RoK has signed many co-operative agreements in technology transfers with Viet Nam, as well as in research and training with the University of Technology and HCM City University of Industry.

Japan buys more Vietnamese goods after disaster

Vietnamese exports to the Japanese market have surged as Japanese demands have increase after the earthquake and tsunami disaster and many trade barriers have been reduced.

Le Thi Thanh Lam, deputy CEO of Saigon Food, said thanks to increasing demands from Japan after the disaster, Saigon Food’s exports to this market from April to July were 10 percent higher than the same period last year.

The Japanese market accounts for 70 percent of Saigon Food’s exports, buying 350 tons of seafood and yielding a turnover of US$1 million every year for the company, Lam said.

Nguyen Minh Viet, CEO of the Ho Chi Minh City-based software company Greensun Asoft, said his company has received a large number of orders from Japan since early June.

He predicted the company’s growth would rise by three to four times year on year.

Other commodities including textile and garments, wood products, power cables, equipments and machinery, rice and crude oil have also been exported to Japan in greater quantities.

Particularly, the export turnover of the textile and garment sector rose by 20 percent thanks to the positive impacts of the Japan – ASEAN Free Trade Agreement and the Vietnam – Japan Economic Partnership Agreement.

Yet, even though exports to Japan have increased, many Vietnamese businesses said it is not easy to enter the world’s third largest economy.

Cao Tien Vi, chairman of Saigon Paper Corporation, said the Japanese are willing to negotiate prices but never quality.

He said Japanese importers would refuse to accept a whole batch if one unit has the smallest mistake and would scrutinize the next batch very carefully.

Many trade experts thus advised Vietnamese businesses to focus on product quality to win trust from Japanese partners.

According to the HCMC Investment and Trade Promotion Center, Vietnamese exporters have yet to fully understand the Japanese market, which is reflected in the modest presence of Vietnamese products at Tokyo supermarkets.

The center has thus promised to boost trade promotion and help the processed food and handicraft sectors to enter the Japanese market in the future.
 
New measures to improve steel exporting
 
The Viet Nam Steel Association (VSA) has sent a petition to authorities and agencies to propose measures to expand steel industry exports.

Under the petition, the VSA asked responsible authorities to carefully consider the issuance of licences for steel projects at localities.

Licenses that fail to comply with regulations and planning approved by the government must be withdrawn.

For projects that produce steel for construction, licences must not be issued for the next five years. The VSA said this request was due to the oversupply of construction steel.

Before issuing licences, localities should strictly conform to regulations regarding capacity of steel plants and sustainable development requirements for steel projects, which are set by the Ministry of Industry and Trade.

In addition, it asked authorities to give priority for projects that manufacture the kind of steel that is mostly imported. This would narrow the steel trade gap.

The VSA also asked ministries and sectors to supervise and urge completion of delayed foreign direct investment (FDI) projects, especially projects that are financially weak.

It asked that businesses be prevented from acquiring land and transferring to others to earn profits instead of developing steel projects.

According to the VSA, the country should export excess steel by giving Vietnamese businesses favourable export taxes.

In addition, it should help connect them with the world's steel export market through trade-promotion programmes.

Viet Nam has about 30 large steel businesses and about 100 small to medium sized businesses, according to the VSA.

Most small- to medium sized businesses still use outdated technologies that use more power, which results in low quality products.

A number of steel projects were not conforming to the planning and regulations set by the Ministry of Industry and Trade, which has resulted in an oversupply of steel, said the VSA.

Pham Chi Cuong, VSA chairman, said most steel plants had low capacity, between 200,000 – 300,000 tonnes per year.

Only two or three had capacity of over 500,000 tonnes per year.

Only two plants had capacity of over 1 million tonnes per year, but both were still under construction.

Most products were of low quality, thus failing to compete with other producers in the regional or world market, he added.

Other challenges also facing the industry included a 20-30 per cent increase in prices of raw materials compared to last year, high inflation and tighter government controls over bank credit, especially for real estate projects. These factors have affected all steel projects in the country.

Because of low demand, the price of steel is expected to continue to drop next month, according to the VSA.

After scrutinising recommendations from relevant associations, the Ministry of Finance yesterday said it would not impose the previously proposed export tax of 3 per cent on steel and 5 per cent on cement at this time.

The ministry last month submitted a proposal to the Government concerning export taxes on steel and cement, saying that neither currently had taxes governing their export, while the industries were benefiting from low domestic electricity prices.

However, after closely reviewing the difficulties that steel and cement producers face due to higher input costs and low domestic demands, the ministry changed its mind. It decided not to tax the products at this time so as to facilitate exports of the domestic producers.

The ministry reported that the Government's measures to control inflation result in many construction works delaying their projects, which then cause the cement and steel industries to burden a large product volume in stock.

VSA Deputy Chairman Nguyen Tien Nghi said steel producers this year suffered a stockpile of roughly 420,000 tonnes, double that of previous years.

According to Nghi, July's steel consumption volume hit roughly 270,000-300,000 tonnes, a decline of more than 100,000 tonnes against May.

"Steel purchasing power is forecast to continue decreasing next month due to tightened monetary policies and the rainy season," Nghi said.

A similar situation occurred with cement producers, said head of the Viet Nam Cement Association's Administration Office Nguyen Van Diep. He added that cement supply had far exceeded demand and that cement producers were dealing with large volumes of stock.

Company found illegally transferring money abroad

 A company in the Mekong Delta province of Dong Thap has been found illegally mobilizing money and transferring it to the US.

Nguyen Ngoc Thach, director of the Dong Thap branch of the State Bank of Vietnam (SBV), said Diamond Holiday JSC had persuaded locals to pay US$371 as reservation for accommodation at one of the company’s three-star hotel partners if they were to travel domestically or abroad.

More than 1,000 Dong Thap residents sent money to the company and were asked to recommend more people to join the program as they would receive a commission of 5 to 13 percent of a new customer’s joining fee.

But a representative from the company said if customers did not travel within a year after their registration, they would lose their advances.

Lawyer Tran Dinh Trien was quoted by Thanh Nien Newspaper as saying that Diamond Holiday’s business was a form of illegal capital mobilization.

“In the first stage, the company would use money of the new customers to offer commissions for the previous ones, but they would later swindle all of the money,” Trien told Thanh Nien.

Diamond Holiday however said it only played the role of an agency and had nothing to do with customers’ advances.

All of the customers’ money would be transferred to Diamond Holiday’s parent company in the US, the company’s representative said.

But the SBV’s Foreign Exchange Department said it had never granted any license to the company to transfer money abroad.

This means Diamond Holiday has violated the foreign exchange regulation as it is against the law to transfer foreign currencies abroad without the central bank’s license.

“If Diamond Holiday fails to present their license this week, the central bank will audit it and stop this illegal business,” Thach said.

Vietnam owes $36.5 bln in 2009: state audit

Vietnam’s total foreign debt as of December 31, 2009 was $36.5 billion, or a 39 percent of the country’s GDP of that year, according to the state budget audit conducted by the State Audit of Vietnam (SAV).

In its audit report recently submitted to the National Assembly, SAV also showed that state budget collection in 2009 exceeded estimates by 16.6 percent, despite a troubled economy that year.

The report also revealed that state spending was lower than estimates, but spending for administrative management has increased by 4.2 percent, while spending for sectors including education, profession training, science – technology has all decreased, by 3.7 percent, 8.7 percent and 13.2 percent, respectively.

The audit also found a total VND3.2 billion misspent in Ho Chi Minh City, while the figure is VND1.1 billion in the central province of Phu Yen.

31 localities were found to exceed local People’s Council spending targets. Nine of them even exceeding limits by 30 percent.

SAV suggested increasing the state budget by VND4.9 trillion and reducing budget spending by VND2.4 trillion.

It also called for crackdowns on the violators detected by the audit as well as amendments on 60 out-dated legal documents.

Phu Quoc to become special economic zone

The government plans to make Phu Quoc island a centrally administered special economic zone by 2020.

Phu Quoc is Vietnam’s biggest island at 593 square kilometers, and is now part of Kien Giang Province.

Besides, under a development plan for the period up to 2020, the province, situated 250 kilometers south of Ho Chi Minh City, will also upgrade the stretch of National Highway 80 between Lo Te to Rach Soi, build a coastal road south of HCMC, and build a Ha Tien – Rach Gia – Bac Lieu highway to aid development of the Rach Gia and Phu Quoc airports.

Kien Luong town and Ha Tien city, Thanh Hung from Giong Rieng town, and Soc Xoai from Hon Dat town will then merge with the province.

Vincom urges stiff fine for manipulation

Real estate developer Vincom (VIC) yesterday proposed a penalty more severe than administrative sanction for investor Dang Thu Hoai, who has been accused of attempting to manipulate the price of VIC shares.

"The manipulation not only affected our company but also the transparency of the Vietnamese securities market," said Vincom chairman Le Khac Hiep.

He said this behaviour would seed doubts among investors about the value of the company and its shares, although he saw the attempt at price manipulation as a failure.

Hiep asserted that the volume of the shares which Hoai had traded was insufficient for the price of shares to be manipulated.

"Our share prices were supposed to go down after the incident, but they climbed instead," he said.

VIC closed on the HCM City Stock Exchange yesterday at VND120,000 (US$5.80) per share – 9 per cent above their peak during the alleged manipulation period.

From November last year until late February this year, Hoai used two trading accounts to purchase VIC shares with high frequency, aiming at creating a fake demand for the shares.

The State Securities Commision on Tuesday decided to fine her VND250 million ($12,100) for the violation.

However, VIC share prices increased by nearly 70 per cent during that period, from VND65,000 to VND110,000 ($3.15-5.30).

"It was also a time when we preparing plans for dividend payouts and announcing a series of major projects," Hiep explained, noting that the company also posted solid net profits during the period.

HCM City sees 21.7% rise in exports

Viet Nam's southern hub generated over US$15 billion in exports during the first seven months of this year, a surge of 21.7 per cent against the same period last year, according to municipal Statistics Office figures.

The rise was fuelled by earnings gathered from garments and textiles, which raked in $1.22 billion, an increase of 18.3 per cent; footwear which fetched $323 million, an increase of 17.7 per cent; seafood which brought in $226 million, an increase of 12.4 per cent and milk which collected $68.7 million, an increase of 37.4 per cent.

Rice exports, making up 11 per cent of the city's total export value, saw a 5.2 per cent decline in turnover, reaching only $800 million as export prices dropped by 6.7 per cent compared to last year.

During the period, exports in the in State-owned sector rose by 22.5 per cent, while the foreign-invested sector was up 19.4 per cent.

The city's total export value is expected to reach about $23.5 billion by the year-end, up 12.1 per cent against the previous year. Besides its traditional markets, the city plans to continue exploring new export outlets during the remaining months of this year .

VN examines joining maritime conventions
 
Viet Nam should carefully consider its decision to join international economic conventions on the carriage of goods by sea as the legal and business environment must be improved, foreign and local experts have recommended.

The Government is considering accession to the Hague-Visby Rules, Hamburg Rules or Rotterdam Rules, which all pertain to transport of goods by sea.

Experts said the Government must examine the details of each convention to assess the requirements for compliance.

Speaking at a workshop on the topic held in HCM City yesterday, Dr Nguyen Minh Hang of the Foreign Trade University's law faculty recommended two options for Viet Nam.

Hang said the country could join only one of the three conventions and amend the Vietnamese Maritime Law to comply with the convention's regulations.

The other option would be not to join the conventions but to perfect the Vietnamese Maritime Law, which contains many similar terms to the conventions.

"Terms in the country's maritime law issued in 2005 are similar to Hague-Visby Rules, including obligations of carriers, liability exemptions, and time for notice of loss of damages," Hang said, adding that the country should not join the Hague-Visby convention.

"The Vietnamese lawmakers who wrote the 2005 Maritime Law used Hague-Visby Rules and Hamburg Rules as references," Hang noted.

Hang said the Rotterdam Rules were the most complete and appropriate for the modern context of maritime carriage.

Also speaking at the conference held by the EU-Viet Nam Multilateral Trade Assistance Project (MUTRAP III), Dr David Luff, an expert with MUTRAP III, said 20 countries still needed to ratify the Rotterdam convention. Only Spain has done so.

Luff said 34 countries were contracting parties to the Hamburg Rules, and 88 countries and territories to the Hague-Visby Rules.

No ASEAN-member country has signed or become a contracting party to the Rotterdam and Hamburg conventions.

The Hague-Visby has been criticised as obsolete, according to Luff.

"None of the conventions appear to be ‘universal' in the current context," he said.

He said Viet Nam should learn from its trading partners.

"Many of Viet Nam's usual trading partners, including China, the US, the EU, Thailand and Korea apply a somewhat mixed regime of their own," he said.

Experts also warned about the impact of the convention on bilateral trade.

Pham Dinh Thuong of the Ministry of Industry and Trade's legal affairs department said the top five import markets of Vietnamese goods were mainland China, Singapore, Taiwan, Korea and Japan.

However, only Singapore has taken part in both Hamburg and Hague-Visby conventions. Mainland China has joined the Hague-Visby, while Japan and Korea have not joined any of them.

He recommended that the country make a careful risk assessment before joining any of the conventions, and include the involvement of stakeholders from the maritime transport sector.

MUTRAP III, implemented by the European Delegation to help Viet Nam prepare for, carry out and follow up on WTO commitments, held two workshops in Ha Noi and HCM City for maritime-sector stakeholders.

Stable economy set as national goal
 
Stabilising the economy should remain a major goal for the next few years since this will ensure efficient distribution of natural resources and sustain high economic growth, an economist told a meeting in HCM City yesterday.

Dr Vo Tri Thanh, deputy head of the Central Institute for Economic Management, told the "Investment 2011-2012: Who's in?" conference this task should be accomplished along with a restructure of the economy.

There should be a transition from loose monetary policy to tightened monetary policy and sustainable growth.

This year the focus should be on tightening financial policy and slashing public investment.

In the first half of this year, the Government's revenues stood at VND327.8 trillion (US$16.4 billion) while spending was VND355.6 trillion ($17.8 billion).

Public investment was cut by VND80 trillion ($4 billion).

If the economy stabilised this year, Viet Nam could achieve a growth rate of 6.5-7 per cent and bring inflation down to below 8 per cent in 2012, Thanh said.

"Interest rates have been relatively stable since April. The pressure on the interest rate remains high due to high inflation and large trade deficit."

The pressure on the dong should be eased, making the currency more appealing, and measures should be adopted to support small and medium-sized enterprises (SMEs), agriculture, and social security, he added.

Trinh Hoai Giang, deputy general director of HCM Securities Corporation, said in the short term, inflation would come down to 17 per cent and the budget deficit to 3 per cent of GDP.

He estimated the GDP to grow at 5.2 per cent this year and the trade deficit to be $14 billion.

He agreed with Thanh, saying inflation needed to be contained at below 8 per cent.

The inflow of portfolio investment would remain positive but limited, primarily focused on companies with large capital, Giang said.

He said economic policies should focus on cutting business input costs, increase labour productivity and investment efficiency, narrow the trade and budget deficits, improve the financial market infrastructure, and speed up economic reforms.

The banking system was currently the biggest concern, with 15 per cent out of the total outstanding debts of VND2,200 trillion ($110 trillion) likely to be non-performing, he said.

Bad debt could surge further in the next two to three quarters given that loan interest rates continue to be frozen, he added.

The market expected companies'performance to worsen in the second half and capital flow from foreign investors to remain limited.

Giang said more mergers and acquisitions were likely this year since the market value of listed companies had dropped to a very low levels even in industries like foodstuff and beverages, pharmaceuticals, health care, and retail.

Former trade minister Truong Dinh Tuyen said that without economic stability, the stock market's woes would continue.

Administrative procedures should be further simplified to create a more open and transparent investment climate while efforts should be made to develop SMEs.

Inflation topped 13 per cent in the first half, leading the National Assembly to double the inflation target from 7 per cent to 15 per cent and underline that economic stability was a top priority.

The Government is expected to more aggressively tighten monetary policies and make bank credit even less accessible.

The foreign exchange rate is stable at present but pressure from the trade deficit remains a threat.

The conference gathered local and foreign experts, researchers, business executives and managers, and senior officials who discussed key issues like interest rate policies, the health of the banking system, capital mobilisation, and the stock market.

The annual conference was organised by Nhip Cau Dau Tu (the Business Review) magazine.

Curbing inflation in the face of rising CPI

Vietnam needs to ensure the supply-demand balance to curb inflation, say economists.

The Consumer Price Index (CPI) in the first seven months of 2011 kept growing abnormally, with a sharp increase in April.

Then, after two months, it bounced back to 1.17 percent in July after two months slowing down and this is attributed to the price hikes of food and foodstuff.

According to economists, there are many reasons for the increasing prices of food, foodstuff, as goods, including short supplies on account of epidemics, bad weather, speculative activity and price manipulation.

In addition, there are unreasonable fees paid for goods passing through the hands of middlemen, says Vu Vinh Phu, chairman of the Hanoi Supermarket Association.

He notes that the price of sugar delivered from factories is VND17,000 per kilo in factories but it is VND26,000 in the retail market.

It is high time to stop the monopoly over the sales of goods, especially essentials, he says.

He predicts that the CPI will slow down in August.

However, other economists say, synchronous measures should be put in place to keep the rate of inflation in 2011 at 17 percent because it has already risen over 14 percent in the first seven months.

They also propose expanding production to ensure the supply of goods, especially food and foodstuff and tightening the management of food exports and market prices.

Vu Dinh Anh, Director of the Market and Price Research Institute under the Ministry of Finance, says managing market prices is part of efforts to curb inflation but it is still based on administrative measures.

According to the Department of Price Management under the Ministry of Finance, it is necessary to take effective measures to stabilize prices and prevent speculation and smuggling.

Vietnam should focus on managing the prices of electricity, petrol, and coal in line with market-driven mechanism, it says.

Vietnam’s exports earn US$51.46 billion in first seven months

Vietnam’s export turnover in July is expected to reach US$8.4 billion, up 38.5 percent from a year earlier, according to the Ministry of Industry and Trade.  

Agro-forestry and seafood exports to hit US$13.9 bil

In the first seven months of the year, the country’s export turnover is estimated at US$51.46 billion, up 33.5 percent against the same period last year while foreign-invested enterprises claim to earn US$23.7 billion from exports, up 32.8 percent.

Thirteen export items fetched more than US$ 1 billion in total including seafood, coffee, rice, rubber, crude oil, oil and gas, wood products, garment and textiles, footwear, gems stones, computers, electronics and components, mechanics, equipment, means of transport and spare parts.

Exports from the agro-forestry and seafood sector showed an increase of 38.8 percent to more than US$11.26 billion, making up 21.9 percent of the country’s total export turnover.

Fuel and mineral exports are also expected to earn US$6.34 billion (up 37.6 percent), followed by oil and gas (up 68.8 percent), mineral ores (up 63.7 percent), crude oil (up 39.1 percent) and coal (up 8.1 percent).

Export turnover of processed industries are estimated at US$25.76 billion (up 24.3 percent) to contribute US$45 billion to the country’s export turnover.

Other goods also show strong export growth such as ores and other minerals (40.3 percent), cassava (38.8 percent), oil and gas (21.3 percent), iron and steel (20.3 percent), coffee (18 percent) and rice (9.0 percent). Meanwhile, some export items following a downward trend are cashew nut (16.9 percent), tea (4.8 percent), coal (12.8 percent) and crude oil (3.9 percent).

In general, Vietnam has achieved a high export growth in foreign markets like ASEAN (19 percent), Japan (23.1 percent), China (57.7 percent) and the US (20.1 percent), the EU (47.1 percent).

VietinBank provides VND250 billion for steel project

The Binh Duong branch of VietinBank has signed a credit contract to provide VND250 billion for a project to build a steel construction complex in the southern province.

The investment will be made within 60 months with a grace period of six months.

The Dai Thien Loc steel complex, part of Song Than Industrial Park No 3, will cover an area of 105,000m2 and have a capacity of 680,000 tonnes of steel per year.

The complex will use European technology in its production lines, which meet the quality demands of the markets of Europe, the US and other developed countries.

Once operational, the complex will help raise the capacity of the Dai Thien Loc company by more than one million tonnes per year.

It is expected that the project will manufacture its first products in 2012.

Petrolimex offering is well received

Petrolimex, Vietnam’s leading oil importer and distributor, raised VND412.3 billion ($20.1 million) via its initial auction on July 28 .

The state firm sold entire its offering of 27.43 million shares, representing for 2.56 per cent its registered capital, according to Hanoi Stock Exchange. The average price was VND15,032, little higher than the starting price of VND15,000.

Investors previously bid for 30.1 million shares, 10 per cent higher than the firm’s expectation. Some 304 individuals registered to purchase more than 22 million shares and three institutions bid for eight million.

That result outperformed that  of big state-owned firms including Vietnam Steel in early June and Mekong Housing Bank a week ago. The steel giant sold more than 39 million shares, or 60 per cent of its total offer, at the price of just VND10,100 per share.

The state lender missed its target with 18 million shares sold, or 28 per cent of its offer, at an average price of VND11,025 per share.

Foreigners were not allowed, by Vietnam’s Ministry of Industry and Trade, to bid for the auction, due to energy security reasons.

Listed banks report high profits

Despite the dreary performance of the stock market, banks are among a few listed firms that fared the best in the second quarter, according to dozens of consolidated financial reports that have been made public.

VietinBank (coded CTG on the southern bourse) in January-June obtained VND2.59 trillion in profit, taking up its first half pre-tax profits to VND3.62 trillion, or 71% of its plan for the entire year.

For Vietcombank, another leading bank in Vietnam, its pre-tax profits in the first six months was over VND3 trillion, rising 8.2% from the same period last year. Meanwhile, Eximbank earned VND1.69 trillion, soaring 86% year-on-year, and Sacombank posted VND1.49 trillion in pre-tax profits, leaping 37.8% year-on-year.

Even their credit operations yielded good results at a time when the central bank is tightening money supply.

Eximbank’s gross earnings from credit operations rose by 95% year-on-year, while Sacombank posted an increase of 92%, VietinBank 74%, and Vietcombank 28.3%.

The leader of a joint-stock bank said that credit operations still generated income for banks because such institutions acted as intermediaries and they would raise the lending rate for an agreeable margin if the deposit rate increased.

Hochiminh City Securities Co. (HSC) commented that banks unlike some other sectors often had greater flexibility in business to generate profits. The broker said the good performance of banks could be due to some reasons, such as forex gains from volatility in the first quarter may have offset trading losses elsewhere.

Until this far, only 30 companies listed on the southern bourse have submitted their consolidated financial reports. Apart from banks as the best performers, those enterprises that could pass on higher cost to consumers have posted high profits and attained their half year’s targets.

Vinamilk (VNM) in the first half attained pre-tax profits of VND2.47 trillion, increasing 20.3% year-on-year. Meanwhile, Hoa Phat Group (HPG) posted its first-half pre-tax profit of VND1.16 trillion, increasing 58% from the same period last year.

HSC expected several big players on bourse by end-June would have realized half of their full-year targets this year, including VCB, VNM, CTG, ACB, EIB, DPM, HPG, PVD, PHR, PVI, and PNJ.

According to finance information provider Vietstock, by July 23, among 75 companies on Hanoi and HCMC bourse having announced the second quarter results, up to 36 companies reported lower profits year on year while eight other incurred losses.
 
July budget revenue up 21 per cent

Vietnam's state budget revenue rose by 21 per cent year on year to over VND51.5 trillion (roughly $2.53 billion) in July, reported the Ministry of Finance.

Domestic tax collection increased by VND7 trillion compared to June, attributable to influxes of income taxes paid by enterprises for the full second quarter as July is set as the deadline.

Extra tax payments and the State Bank’s second quarter income-spending difference contributed some VND8 trillion (roughly $392 million) to state budget revenue in July.

The issuance of government bonds raised almost VND47 trillion (roughly $2.3 billion) from domestic resources by late July, to make up for state budget deficits and cover investment in infrastructure projects such as traffic facilities, irrigation, education and medical health. The proceeds have accounted for 55 per cent of the full year target.

State budget spending in July is estimated at VND58.63 trillion.

Dinh Vu IZ hooks big project

Drilling Mud Corporation (DMC), a PetroVietnam member and the Dinh Vu Industrial Zone (IZ) authorities have inked a land lease contract for a petrochemical service supply project.

With investment of VND270 billion ($13.04 million), the project consists of a propylene resin store, a container depot with an annual capacity of 100,000 20-foot equivalent unit (TEU) and a 5,760 square metre warehouse.

Construction of the project will be kicked-off in early fourth quarter of 2011 and the project will come online in the second quarter of 2012. The Dinh Vu petrochemical service supply base will be one of DMC’s key logistic service supply chains in northern Vietnam.

DMC’s Dinh Vu base is the fifth project of PetroVietnam’s member firms and the 35th project in Dinh Vu IZ.

DMC’s investment decision showcased the IZ’s compelling advantages with internal 20,000 dead weight tonnage general port system, convenient transport links to key areas and lucrative tax incentives for domestic and international investors, said Dinh Vu IZ Joint Stock Company deputy general director Do Thi Kim Thanh.

Gov’t okays BT for ‘bauxite route’

Deputy Prime Minister Hoang Trung Hai has just approved a Build-Transfer project to set up a route for transporting alumina from a bauxite mine in the Central Highlands to a port in Dong Nai Province for export.

Alumina will be transported by trucks through a corridor stretching 210km from Tan Rai bauxite mine in Lam Dong Province to Bao Loc Municipality via Provincial Road 725, and then via National Highway 20 to Dau Giay Junction. From there, alumina will be transported through Provincial Road 769 in Dong Nai to Go Dau Port on the Thi Vai River for export.

Under his approval, the deputy prime minister entrusted the Ministry of Transport to assess and approve all components of the BT project to establish a corridor for transporting alumina.

Under this BT project, National Highway 20 is the backbone of the alumina transport route, but the road has seriously deteriorated under the burden of heavy-duty trucks transporting materials and machinery for the bauxite project in Tan Rai over the past few years. Therefore, authorities of Lam Dong and Dong Nai provinces in late June proposed the Transport Ministry quickly upgrade the road.

Nguyen Van Cong, manager of the Transport Ministry’s Office, told the Daily on Thursday the ministry had already obtained approval from the Government for a project to upgrade the national highway. But the Government has not made any decisions on upgrading other roads for alumina transport.

Asked about the sources of capital for upgrading the route, Cong said the ministry would consider a financial plan only after approval from the Government.

On Wednesday, authorities of Dong Nai Province and Vietnam National Coal-Mineral Industries Corp. (Vinacomin) as the alumina project owner traded barbs over the transport of the mineral resource via Dong Nai. Provincial leaders said that traffic police would stop alumina-transporting trucks with gross weight of 40 tons to prevent the roads from further deteriorating.

All road sections within the proposed bauxite corridor can accommodate vehicles of a maximum gross weight of 30 tons, while Vinacomin’s representatives at the meeting admitted that all alumina-transporting trucks have a gross weight of 40 tons or so.

Upgrading the proposed bauxite route is just a temporary solution, as Vinacomin would develop a seaport at Khe Ga in Binh Thuan Province for exporting alumina. Cong of the Transport Ministry said once the port construction is completed, relevant parties will upgrade seven roads from bauxite mines to the port.

Apartment prices soften but remain out of reach

With savings of nearly VND1 billion in his pocket, Ngoc Tu, an office worker in the city, plans to buy a home of his own after hearing that the selling price of apartments in HCMC is in decline given the market downturn.

He and his wife spends a fortnight driving through the streets and alleys of Nha Be and District 7, visiting dozens of locations from land lots and row houses to apartments.

However, he has yet to buy due to the fact that the properties are located far from his office and they are far too expensive.

During his journey, he passes An Hoa 1 condo project developed by Nam Long Group, and has a look at a 40-square-meter apartment.

He is surprised to see that the apartment, which is developed for relocated families and is quite old, is priced at VND930 million, some VND200 million more than in 2009.

Even with a billion dong on his hands, finding an apartment in a commercial condo project near the central business districts is impossible, except if you choose to buy an old condo.

At a time when credit for the property sector is being tightened and interest rates are still running high, purchasing an apartment in a condo project near the city center is beyond reach of most people due to high prices.

For example, with a budget below VND2 billion, a buyer may not find an apartment in the Orient apartment project on Ben Van Don Street in HCMC’s District 4 since the price is from VND28.5 million per square meter (psm).

In another development nearby, apartments in the Constrexim Square project on Ton Dan Street are being offered from VND25.5 million to VND30.5 million psm. With those inflated selling prices first-time buyers are still struggling.

To be able to buy an apartment with a limited budget, buyers have no choice but to move out to districts on the fringe of the city such Binh Chanh, Tan Phu, Binh Tan and Thu Duc, over 10 kilometers from the city center.

For example, Korean firm IDE Vietnam is offering apartments in the Green Hills condo project in Binh Tan District from VND15 million psm, or around VND1 billion per unit. Also in the district, apartments in the Binh Tri Dong B condo project sell for VND550 million to VND900 million per unit.

Some market research companies recorded that selling prices of apartments at all grades decreased in the first half of this year, and the trend is expected to continue on the market downturn.

According to Cushman & Wakefield Company, selling prices of high-end apartments in the central business districts have decreased from VND78 million per square meter to VND77.5 million in the last quarter.

Meanwhile prices of mid-end condos dropped to VND32 million psm and affordable condos saw selling prices fall to VND14 million psm in the last quarter.

Abundant supply offers more choice to potential buyers, but a meager budget plus high interest rates are discouraging many people. Many people have a wait-and-see attitude, hoping housing prices and interest rates will come down.

Most developers have not slashed their selling prices for fear that the action would leave a negative impact on the previous buyers. To boost sales most developers have to offer different incentives to entice homebuyers. Instead of cutting prices, they woo potential buyers with a flexible payment scheme, interest rate support, cash discounts and lucky draws for luxury cars, motorbikes and gold.

Nguyen Phu, sales manager in the Saigon Pearl project near the Thu Thiem Bridge in Binh Thanh District, said sales were slow but the company had no intention of slashing the selling price of its Sapphire apartments that stands at US$2,300 psm, nearly VND5 billion per unit.

The current price has decreased US$600, though, from the US$2,900 psm recorded at the project launch.

Some market observers projected that the residential market would continue to see prices soften further throughout the remainder of this year but it remains to be seen how low things will play out.

Listings do more harm than good: local firms

Many local listed firms might have wished they had not traded shares on the stock market or wished they had given listing a second thought now that they have got trapped when it comes to expanding business scopes.

At a seminar in HCMC yesterday, some cried out their grievances when their companies were now termed foreign-invested enterprises due to their shares being held by foreigners, and therefore, certain business areas are now off-limits to the companies.

Nguyen Xuan Han, director general in Phu Nhuan Service Joint Stock Company, said in the mid-year review meeting held by the HCMC Union of Business Associations that his company had trouble when reregistering business.

The company was listed in the end of last year, then, more than 10% of its shares were bought by three foreign investors. Now, when the company registered for a business license in secondary education, it was rejected by the HCMC Department of Planning and Investment.

The reason is that the company has become a foreign-invested one, making it not eligible to do business in education in accordance with Vietnam’s commitments to WTO.

According to Vietnam’s investment law, foreign-invested companies are those established by foreign investors, or have shares held by foreign investors, or have been merged with or acquired by foreign ones.

“We did not know that there’s any thing of our business registration related to Vietnam’s commitments to WTO. Foreign investors bought just a small part of our shares via the stock exchange and they have nothing to do with our management,” he told the Daily on the sidelines of the meeting.

“I know that there’re many other local enterprises that have met troubles with business registration after mobilizing capital via the stock exchange and having shares bought by foreign investors beyond their knowledge,” he added.

Chemical Pharmaceutical Joint Stock Co. (Mekophar) in the middle of this month decided to de-list after being refused a business license when the company applied for doing business in retailing pharmaceutical products. It’s because the company has 4.7% of its shares owned by foreign investors.

The medicine producer is making effort to buy back its shares, but it seems hard to track the individual investors that own its shares.

“There’s one Japanese investor who bought a very small part of our shares. He has changed his place. It’s really difficult to find him,” Dang Thi Kim Lan, vice director general of Mekophar, told the Daily via the phone yesterday.

“The trouble is not limited to our company only. Many other local medicine firms have large parts of their shares owned by foreign companies. It means that if they want to expand their business areas or apply for business licenses upon expiry, it would be a big problem,” Lan added.

According to the Vietnam Business website, there’re 15 pharmaceutical companies listed and all them have shares owned by foreign investors, such as Imexpharm (47.91% owned by foreign investors), and DHG (47,15%).

PV