Loan interest rates down to 17-19 percent in mid-September

The State Bank of Vietnam on August 29 announced a group of solutions to adjust monetary and banking policies in the last four months of 2011.

Accordingly, it will not apply the regulations on the percentage of capital used to create rotation and harmonization of capital between market 1 and market 2 as well as between the banks with redundant capital or insufficient capital, in order to help the banks short of capital to increase credits and lower their lending interest rates.

The State Bank of Vietnam will continue to maintain the ceiling mobilization interest rates for the Vietnam dong at 14 percent per year with the aim of reducing the loan interest rates for the production sector to between 17-19 percent per year. It will also continue to keep the ceiling interest rates for mobilized foreign currencies.

In a move against ‘dollarization’ the State Bank will tighten the mechanism for lending foreign currencies and increase the rate of compulsory reserve in foreign currency with a view to controlling foreign currency credit growth.

Vissan Food Company reduces pork prices  

The Vissan food processing company and Saigon Co-op Mart have decided to decrease the price of pork, from August 29 to September 11, in all their chain stores and distribution outlets in Ho Chi Minh City.

Prices on different kinds of pork were reduced by VND12, 100 to VND14, 000 per kilogram. For instance, fresh pork butt dropped from VND85, 000 to VND72, 900 and pork shoulder butt from VND82, 000 to VND68, 000.

This is the second time in August that Vissan has reduced prices on its meat products, mainly as a bid to push up consumption as well as respond to the ‘goods promotional month’, to be launched in September by the Ho Chi Minh City Department of Industry and Trade.

According to Van Duc Muoi, General Manager of Vissan, more than 4,000 tons of pork meat has been stockpiled by the company to supply to the market.

In addition, the company has tied up with other private pig breeding farms in the country to increase pork supply by more pig-breeding so as to stabilize the pork markets from now until the end of the year.
 
Fuel imports add to trade deficit
 
The country spent US$976 million on importing 1 million tonnes of refined petrol and oil in August, nearly double both the imported volume and value of the previous month, the General Statistics Office reported.

Meanwhile, the coun-try's export volume and value of crude oil during the period decreased $14 million over July to $165 million, leaving a trade deficit of more than $810 million during the month.

In the first eight months of the year, imports of petrol and oil reached 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.

Meanwhile, crude oil exports in the January-August period reached just 1.46 million tonnes, worth $1.34 billion, up 25 per cent in volume and 74.6 per cent in value against the same period last year, and resulting in a petrol and trade deficit of $5.55 billion, the office reported.
 
Experts said that the country's first oil refinery Dung Quat, which became operational in 2009, helped to make the country more independent, imports had risen due by 7-10 per cent due to increased domestic demand and a reduction in crude oil exploitation.

Last year's crude oil exploitation output was 15 million tonnes, against 18.8 million tonnes in 2005.

Deputy Minister of Industry and Trade Nguyen Thanh Bien expressed concern that crude oil exports had not offset imports of refined petrol and that the trend would continue this year.

Meanwhile, Dung Quat oil refinery has pumped 3.3 million tonnes of refined petrol and oil into the domestic market.

Finance Ministry to resolve tax anomaly

The Ministry of Finance has asked the Prime Minister to modify regulations to ease difficulties faced by petrol importers, who have been fined for late payment of tax.

The move follows the announcement by PV Oil and several other major petrol importers that they had incurred hefty fines for not paying tax on time, even though the delay had not been their fault.

According to the current sales price calculation on petrol and oil, it takes importers about 30 days to have the official sales price on which they pay import tax authorised. Importers had therefore been forced to declare temporary sales prices for customs' clearance.

However, importers had to pay daily fines worth 0.05 per cent on any discrepancies between the price they had declared and the official sales price if the latter was higher.

The ministry said it would consult with other ministries and agencies to build a new price list to calculate tax rates on products that had not been granted an official sale price when importers had sought customs' clearance.

Inflation slows growth of retail sales
 
The total value of retail trade and services 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, the GSO said.

Vu Manh Ha, a senior expert in the GSO Trade Department, blamed the period's slower retail sales pace on higher inflation, 15.6 per cent, compared with 6.12 per cent and 13.29 per cent in the first and second quarters, respectively.

The increasing consumer price index had led consumers to curb spending, Ha said.

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.

The service sector, accounting for nearly 10 per cent of the total revenues, experienced a 22.7 per cent rise while the tourism sector saw a 14.8 per cent increase.

From January to August, the stockpile index in the manufacturing and production sector rose by 17.8 per cent against the same period last year, or 1.8 per cent higher than in the first seven months.

Retail sales would likely maintain the period's growth rate or slightly increase in the remaining months of this year due to several festivals and the Tet (Lunar New Year) holiday, Ha forecasted.

Last year, the country's total retail sales value of goods and services jumped by 24.5 per cent to VND1,561 trillion ($74.3 billion) against the previous year.

Modern retail chains currently account for 20 per cent of distribution in the country. This level is low compared with other countries in the region. However, experts have predicted this figure would grow to around 31.2 per cent by 2015.

Land lot projects kick off in Binh Duong

Two property project investors in the urban area in Binh Duong Province kicked off their construction and land lot offer at the end of the seventh lunar month, during which property developers and buyers restrict their transactions for fear of bad luck in Vietnamese belief.

Becamex IJC Co. explores the market purchasing power by offering some 100 land plots of The IJC Commercial Town project located in Ben Cat District and under planning for Binh Duong New City.

The IJC Commercial Town project has the total investment capital of VND450 billion and is developed on a 4.5 hectare area with 300 land plots for commercial houses covering 125-150 square meters each.

Nguyen Vinh Minh Thanh, general director of An Cu Lac Nghiep Company as the project distributor, said the project owner quoted the price at VND4.4 million a square meter. Buyers will enjoy a 10% discount when striking a deal and an extra 20% if they complete their payments according to the required progress.

Thanh said 85 out of the 100 offered land lots were registered on Sunday.

In another project, Becamex TDC Co. and Kim Oanh Real Estate Joint Stock Co. have signed an investment agreement on the first phase of the City Garden commercial street project in Ben Cat District, Binh Duong Province.

The two firms will invest some VND100 billion to develop a 7.5 hectare area into eight house blocks with 339 commercial houses. The price for each square meter is VND1.7-2.6 million.

Along with flexible payment and discount, the project investors commit to hand over land use right certificates to customers right after they purchase the land lots.

According to a market survey by Savills Vietnam, there are 10 new projects in Binh Duong with over 1,800 houses and land lots having been offered as of end-August.

There are currently 68 projects in both primary and secondary markets, supplying 22,700 houses and land lots in total. The land lot segment continues to prevail, accounting for 56% of all offers with the projects in Thu Dau Mot, Thuan An, Di An, Ben Cat districts of Binh Duong Province.

The average price is US$2,075 a square meter for villas and semi detached houses and US$159 per square meter of land.

Savills predicted Binh Duong would have 16 more projects in the near future, supplying 5,600 houses and land lots for all segments.

The infrastructure projects to be developed, such as National Highway 13, My Phuoc-Tan Van Expressway, HCMC-Chon Thanh Expressway and belt roads 3 and 4, will help promote property development in Binh Duong Province, said Savills.
 
Free business advice on offer

The Centre for Foreign Investment Studies (CFIS) and Ernst & Young, one of the world’s largest professional services firms, just inked a cooperative deal on establishing a charge-free advisory counter in Hanoi.

Accordingly, Ernst & Young experts will consult with foreign investor a broad range of issues covering investment and tax policies in Vietnam as well as latest updates in accountancy and tax policies in Vietnam.

The advisory counter will operate about three hours on every Friday at CFIS headquarters in the eighth floor at Vietnam National University, Hanoi’s National Economics University building, according to CFIS director Phan Huu Thang.

Interested businesses would register with CFIS at www.ueb.vnu.edu.vn or forward registration to www.cfis@vnu.edu.vn to be consulted based on issue groups.

The activities would benefit from support by representatives from relevant organisations, press agencies and different business associations.

Techcombank launches loyalty campaign

Technological and Commercial Bank of Vietnam (Techcombank) has started a loyalty program, allowing clients to earn points to receive high-value gifts.

Such programs have been used by many retailers and service firms for a long time, or by local banks for clients using credit cards. However, Techcombank is the first bank to offer this program for all clients.

Accordingly, clients opening bank accounts, making deposits and using credit cards will earn points after each month. The bank will give points to payment accounts having a monthly balance of over VND5 million, VND200 million for saving accounts and every VND10,000 for credit cards.

Dang Tuyet Dung, head of personal financial services of the bank, said the most popular services were applied in the very first phase. The bank would also include other services in a strategic and long-term program later this year.

Promotion Month in progress

A Promotion Month Fair has been held in HCM City from August 31 to September 4.  

The event, co-organised by HCM City People’s Committee and the Department of Industry and Commerce, aims to stimulate consumption and contribute to maintaining economic growth rate.

On display at more than 400 pavilions are industrial products, electronics, electrical equipment, mechanics, garment and textiles, footwear, fine arts and handicrafts, cosmetics, farm produce and processed food.

The fair has attracted the participation of the leading trademarks such as Sabeco, Vissan, Vinatex, Viet Tien, Viet Thang, Sanding, LEgamex and retailers such as Sai Gon Co.op.

Diverse activities will be held during the event, including music and art performances and games to promote businesses’ trademarks to consumers.

In response to the “Vietnamese people use Vietnamese goods” campaign, the fair offers an opportunity for both local and domestic businesses to share experiences and find cooperation partners.  

Danang hosts workshop on IT application in businesses

A workshop on applying information technology and improving its efficiency in businesses was held in the central city of Danang on August 31, attracting representatives from more than 150 enterprises in the central region and the Central Highlands.

According to the Vietnam Chamber of Commerce and Industry, about 95 percent of the small and medium-sized businesses in these regions have applied information technology in their production and business.

However, most of them still meet many difficulties in seeking highly efficient IT solutions.

The new solutions introduced at the seminar were aimed at helping enterprises manage their problems in production creatively and quickly.

Work on new Phu Quoc airport makes steady progress

 While the Phu Quoc International Airport is likely to be completed on schedule by the end of 2012, infrastructure works around it are making slow progress.

The VND16.2 trillion (US$810 million) airport in Duong To Commune will replace the existing Phu Quoc Airport 10 km away.

Dang Hai Nam, deputy head of the airport construction management, told Tuoi Tre that work on the runways, hangars, and terminals were proceeding on schedule.

However, several roads leading the airport were yet to be completed, he said.

The seven-kilometer Duong Dong – Cua Lap road, for instance, was only half complete though construction began as long ago as in October 2008, he said. The road was scheduled for completion in November 2009.

“[The road] is full of dust on sunny days and becomes muddy whenever it rains,” Nguyen Thi Lien, a local, said.

Construction of the Cua Lap Bridge on the road has barely started though the contractors have been given two extensions.

Hoang Ngoc Chinh, head of a construction team from 508 Company under the Civil Engineering Construction Company No 5, said 10 workers from his team were building the bridge’s abutments.

Asked when the bridge would be completed since such a small number of workers were doing the job, he replied he had “no idea.”

Danh Thanh Vinh of the Kien Giang Province Department of Transport, admitted all five traffic projects meant to serve the new airport were behind schedule.

He blamed the tardiness on the lack of funds and the poor capabilities of some of the contractors.

“The provincial people’s committee planned to spend VND338 billion this year but we have only received VND200 billion.

“The five projects can meet the government’s deadlines only if we have enough money.”
Nguyen Van Sau, deputy head of the management board for the investment and development of Phu Quoc Island, said funds were the biggest problem.

The rainy season, which lasted for as long as six months on the island, also delayed the construction, he said.

“If the funds problem remains unresolved by next year, the construction will not be done in time,” he warned.

Japanese investors to switch strategy in Vietnam

Future Japanese investments in Vietnam will mostly be centered on imports and retailing, with some existing investors even closing down operations to focus on them, a top Japanese trade official told Tuoi Tre.

Yoshida Sakae, director of the Ho Chi Minh City branch of the Japan External Trade Organization (JETRO), said in an exclusive interview that though the current trend was to build large factories to manufacture for exports, the new trend would emerge in the next few years.

It would involve setting up retail sales networks especially after the ASEAN Trade In Goods Agreement (ATIGA), a regional tax exemption regulation, took effect in 2015.

Some big plants could be shut down so that their owners could switch to import and retail sales of Japanese products manufactured in other ASEAN markets, he said.

Sakae gave the example of the Family Mart supermarket chain which currently has eight outlets in HCMC and plans to open 200 in Vietnam.

Another retailer, Aeon Group, well-known for its Jusco supermarket chain, has opened outlets in Vietnam and plans to fully tap the market by 2013.

Some Japanese companies with small factories in Vietnam would stop production to focus on distribution or building larger factories in Vietnam or neighboring countries to exploit the ASEAN market.

One example was Sony which had closed its TV factories in Vietnam to concentrate on importing and selling Malaysian-made products in Vietnam.

Many Japanese businesses in Vietnam could follow the Sony model to save costs and focus investment on major production bases for intra-regional export.

Where they would be set up would depend on the investment environment and the size of each country.

However, the number of businesses registering to be members of the Japanese Business Association of HCMC (JBAH) in the last four months had risen rapidly, signaling more firms had chosen Vietnam as a production base.

Besides, with the Japanese yen appreciating against the US dollar, more large Japanese corporations are buying companies or stakes in Vietnam and other Asian countries.

Recently Unicharm Group shelled out $128 million to acquire 95 percent of sanitary care and toiletry products maker Vietnam Diana Joint Stock Co to gain a foothold in Vietnam and expand its regional market share.

Though many Japanese firms considered Vietnam a promising market, its economic instability cause by rising inflation was their biggest concern.

The Government should take measures to stabilize the economy to attract more foreign investors.

Regarding the quality of labor, he said the quality of labor in Vietnam had improved faster than in neighboring countries in recent years.

Though the Vietnamese government had decided to increase the minimum wage by VND2 million, it did not affect Japanese investors much due to the yen’s appreciation.

But wage increases could shake investors’ confidence.

Japanese investors wanted to be better informed and consulted about changes in laws governing both foreign and domestic firms so that they could prepare better.

According to the Foreign Investment Agency, Japanese firms have invested nearly $22 billion in 1,572 projects in Vietnam.
In 2011 they have invested nearly $642.25 million in 108 new projects.

Japanese FDI is the fourth highest out of 92 countries and regions investing in Vietnam.

Banks demand premium for selling dollars

Many banks in Ho Chi Minh City are selling dollars at above the official rates due to rising demand for the greenback, collecting the premiums in the form of fees.

The director of a steel company said though banks’ selling price remained unchanged at VND20,834 a dollar, the actual prices had been rising.

He bought US$250,000 at VND21,000 to a dollar last week, but the price had risen to VND21,150 earlier this week.

MB plastic company based in Ho Chi Minh City’s District 6 said it would lose VND2.79 billion ($139,500) on the import of 3,000 tons of feedstock next month.

The current selling price was VND21,150 a dollar while it had signed the import contract when the rate was VND20,618, its sales manager told Tuoi Tre.

Many businesses said banks had been telling customers to wait if they wanted to buy at the quoted rates since there was a supply shortfall at the moment.

But they were willing to sell immediately if customers agreed on pay the black-market rate, they said.

The sales manager of a bank said since banks themselves could not buy dollars from businesses at quoted prices and had to pay between VND20,950 and VND20,980, they could not sell at less than VND21,000.

Demand for the greenback was rising since many businesses wanted to repay their debts, he added.

Nguyen Hoang Minh, deputy director of the HCMC branch of the State Bank of Vietnam, said the central bank’s inspection agency would look into the issue.

Banks are only allowed to charge buyers certain standard fees such as for money transfers and international payments, he said, and this was irregular.

Ho Chi Minh City gas suppliers cut retail prices

Cooking gas suppliers in Ho Chi Minh City have cut the price of a 12-kg cylinder by VND9,000 to VND356,000 ($US17.3).

Wholesalers said the reduction came after the contract price slumped by $32.5 a ton since early August to $827.5.

Global prices had dropped even earlier, but they only cut wholesale prices by up to VND15,000 a cylinder to compete with private suppliers, and not retail prices.

This is the fifth time that retail prices have been reduced this year while they have gone up eight times.

State-run companies found in steep losses

3 state-run corporations were found to incur losses totaling VND1.12 trillion (US$56 million) in 2009, Le Minh Khai, Deputy General Auditor of the State Audit Office of Vietnam has said.

At the press meeting held in Hanoi yesterday to announce the 2009 audit report, Khai said except for these three entities, the other state-run corporations subject to the audit – 24 in all – were all enjoying profits.

The three companies were Vietnam Machinery Installation Corporation which suffered from a loss of VND103; Song Hong Corporation with a VND20 billion loss, and the Vietnam Post with VND1 trillion.

SAV said although many state-run corporations were in a good financial state, their subsidiaries had suffered losses or were operating ineffectively, and even those that enjoyed profits didn't really make the most of their available resources.

SAV also revealed that state spending for sectors including education, profession training and science and technology had all decreased.

Khai was also quoted by the Vietnam News Agency as saying that violations in expense filing were found to be common among state-owned enterprises.

Khai said the allocation of the state budget was also flawed. Some provinces for instance failed to allocate enough in a timely manner to keep pace with projects’ progress while others allocated money improperly.

Khai also told Nguoi Lao Dong newspaper that SAV was also finishing up its audit of the Electricity of Vietnam (EVN) that it started in April as well as the fuel price stabilization fund.

Khai said when the result of this audit would be announced would depend on the General State Auditor Dinh Tien Dung.

Securities watchdog issues margin trading rules

With the State Securities Commission set to introduce margin trading in securities tomorrow, it has fixed both the initial margin trading rate and maintenance margin at 60 percent.

This means brokerages will lend up to 60 percent of the value of securities while investors will have to front up 40 percent and ensure the margin does not fall below that level.

The SCC has been considering setting the margin at 70 percent but raised it since the government wanted to improve liquidity in the market.

The watchdog said it could increase the rate if market conditions improved.

The regulations announced by the SSC also identify the shares and brokerages eligible for margin trading.

A security can be traded on margin if it has been listed for at least six months, the firm has no accumulated losses, and listing has not been suspended.

More than 60 percent of stocks listed on the two stock exchanges fail to meet these requirements.

On the other hand, two-thirds of brokerages are eligible for margin trading since they fulfill the condition that their accumulated losses should be less than 50 percent of their chartered capital.

Foreign banks seek to advise VietinBank's offshore bond

Ten foreign bidders have submitted bids to become advisers for VietinBank, Vietnam's largest partly private lender by assets, as it seeks to raise up to US$1 billion via international bonds, an official at the Vietnamese bank said on Wednesday.

"Our shareholder's meeting has approved to raise between $500 million and $1 billion via international bonds but the adviser would help us decide the right amount," the official said.

She said many of the bidders attending the Tuesday tender were foreign banks.

The Hanoi-based bank received bids from banks including Goldman Sachs, Australia and New Zealand Banking Group, HSBC and Morgan Stanley, the Vietnam Economic Times newspaper reported on Wednesday.

Standard Chartered Bank, J.P. Morgan Chase Bank, Deutsche Bank (DBKGn.DE) and BNP Paribas were also among other bidders, the newspaper said.

VietinBank hoped to sell the bond in the earliest time possible, the Vietnam Economic Times said without providing further details.

VietinBank, 10 percent owned by the International Finance Corporation, has said it planned to raise bonds overseas this year to finance major projects.

State to pay 100 per cent of farm insurance

The Ministry of Finance has issued a circular effective next month to guide implementation of Prime Minister's Decision 315 on subsidising agricultural insurance for farmers to help them overcome the impacts of natural calamities and diseases.

Under the two-year pilot programme, the government will pay 100 percent of the insurance premiums for poor farming households and individual farmers.

Those close to the poverty line will be subsidised 80 per cent, and the rest, 60 per cent.

For agricultural production organisations, it will be 20 per cent.

Insurance companies and the Vietnam Re-insurance Joint Stock Corp. (VinaRe) are participating on a non-profit basis.

There will be three categories of agriculture covered – rice farming, animal husbandry, and aquaculture.

Each category will be covered in selected provinces.

Cementing big sector’s future

The prime minister has enacted a key decision approving Vietnam’s cement industry development for 2011-2020 with a vision towards 2030.

In light of Decision 1488, Vietnam must finalise conversing cement production technology from current shaft-kin into rotary kiln by late 2015.

The decision reads that new cement projects with equipment supply contracts signed after the date Decision 1488 came into force on August 29, 2011 with burning capacity of at least 2,500 tonnes of clinker per day are required to pump capital into a specialised equipment line to help make use of waste gas and heat for power production. This is except for cement production lines using industrial and residential waste as fuel.

Ongoing cement plants and cement investment projects which have signed equipment provision contracts before August 29, 2011 must have in place an equipment line using waste gas and heat for power generation before 2015.

Cement plants with a burning capacity of less than 2,500 tonnes of clinker per day are encouraged to invest in such system for power generation.

Besides, Decision 1488 also regulates priority would be given to investing in cement projects in southern areas, areas with favourable conditions in terms of material provision, areas with good potential for industrial development and with convenient transport conditions.

Investment should be restricted in areas with hardships to material access and which would badly affect cultural relics and tourism development.

Cement demand forecast for 2011 is 54-55 million tonnes, increasing to 75-76 million tonnes by 2015 and 93-95 million tonnes by 2020. It would be around 113-115 million tonnes by 2030.

Around 32 cement plants will come online from 2011-2015, 22 cement projects proposed to come on stream from 2016-2020 and six others set investment orientations from 2021-2030.

US cotton industry seeks market in Vietnam  

A delegation from the US cotton industry will meet with their counterparts in the Vietnamese textile industry to discuss the cotton market in the country, in a conference scheduled at the Caravelle Hotel in Ho Chi Minh City on September 30.

The delegation will be led by Mr. David Collins, Executive Director of Cotton Council International and leaders from the American Cotton Shippers Association, American Cotton Producers, American Cotton Marketing Cooperative and Cotton Incorporated.

The conference agenda includes: country overview and presentation by Vietnam industry leaders; global and US production, supply, demand and availability; US cotton varieties and characteristics by region; cotton risk management in volatile times; how US cotton is exported; advantages of the US cotton supply chain in marketing; dynamics of cotton yarn and fabrics and meeting retailer needs; panel discussion and management of volatility throughout the supply chain.

PV