Petrol prices drop

The price of RON92 petrol dropped at 4.30pm on January 6 by VND310 per litre, the Ministry of Finance and Industry and Trade has announced.

RON92 petrol is now selling at VND17,570 per litre.

The price of diesel oil also goes down by VND360 per litre to VND16,630 per litre.

The price of mazut oil reduces by VND200 per kilogramme to VND13,295 per kilogramme.

This is the first reduction in fuel prices this year.

New road project proposed to ease HCM City congestion

A HCM City -based company has proposed a 10-lane road linking the East West Highway and the Ho Chi Minh–Trung Luong Highway.

The 2.7km road would start from the intersection of East West Highway and National Highway 1A and end at the intersection of Tan Kien Commune and Tan Tao-Dem Market road, part of the Ho Chi Minh-Trung Luong Highway.

The estimated investment capital for the project is nearly VND2 trillion (US$94 million), not including the cost of land clearance.

Yen Khanh Company, the project investor, won the bid to collect tolls on the Ho Chi Minh-Trung Luong Highway in five years, beginning last January. However, after one year, the number of vehicles travelling on the highway declined, negatively affecting the company's business.

Vu Thi Hoan, the company's general director, said the company had carried out a survey to find out the reason for the decline.

"Transport vehicles have to take the Binh Dien 1 Bridge to go from the Ho Chi Minh -Trung Luong Highway to the East West Highway. Traffic jams often occur on the bridge, so vehicle owners do not choose to go this way," she said.

The linking road would address this problem. Yen Khanh Company would use tolls collected from stations on the Ho Chi Minh-Trung Luong Highway as part of the investment for the linking road, according to the proposal.

Manufacturing sector enjoys strong growth

Viet Nam's manufacturing sector continued to show signs of strengthening during December, recording the most improvement in eight months. Growth was supported by stronger gains in output and new orders, whilst companies continued to add to their payroll numbers at a solid rate.

The latest Vietnam Manufacturing PMI survey also showed emerging deflationary pressures, with both input and output prices continuing to fall at faster rates. The headline seasonally adjusted purchasing managers' index (PMI) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – recorded 52.7 in December, up from November's 52.1 and the highest reading since April. Growth has now been registered for 16 months in a row.

The upturn in operating conditions stemmed primarily from strengthened growth in output and new orders. Improving customer demand led to higher volumes of new work and subsequently production. Output and new work both rose to their highest levels in eight months.

December's survey indicated that demand improved from both domestic and international sources. New export business rose at a solid rate that was little changed from November's seven-month high.

With higher production requirements, companies continued to increase their purchasing during December. Moreover, the rate of growth accelerated to the sharpest since April as companies also sought to rebuild stock in anticipation of further production growth.

December's survey showed a second successive monthly increase in inventories of input purchases, while there was also an increase in stocks of finished goods. Companies reported that delayed delivery of completed goods led to a build-up of stock in warehouses.

Mild capacity pressures were evident in December as backlogs of work increased for a second successive month. Companies responded by adding to their staffing levels for a fourth consecutive month, with the rate of growth solid, despite easing to the lowest since September.

On the price front, December's survey data indicated that average input costs paid by Vietnamese manufacturers continued to fall. Companies reported that supplier prices, shipping costs and the price of fuel had all fallen when compared to November. Average input prices declined to the greatest degree since July 2012.

HCM City retailers celebrate robust holiday sales

Several supermarkets and malls in HCM City reported a surge in business during the long New Year weekend.

Saigon Co.op said its Co.opmart supermarkets were choc-a-bloc with shoppers.

Vo Hoang Anh, marketing director of the chain, said sales this year was significantly higher than a year ago and the number of shoppers had gone up by two or threefold from normal days.

Besides the long holiday, he also attributed it to the supermarket's promotions and discounts on thousands of items.

Fresh and dried foodstuff, confectionary, beer, soft drinks, and other beverages were among the bestsellers.

The supermarket estimated that average revenue during the holidays was double that of normal days, with sales of beer, beverages, confectionery, and dried foodstuff at certain outlets being four times the normal level.

Big C supermarkets, which offered discounts on more than 1,000 essential products during the holidays, also reported sales was twice that of normal days.

The French chain said its outlets elsewhere in the country saw three times the normal number of shoppers since many people took advantage of the four-day holiday to travel or return to their hometowns.

The average purchase by each shopper was also much higher than on normal days, it said.

Other supermarkets like Maximark and Lotte Mart too reported a sharp increase in sales.

At traditional markets in the city like Tan Dinh, Ba Chieu, and Thi Nghe, business was slightly better than on normal days, with fresh food being the top seller.

With supply being abundant, prices were stable during the holidays.

Bourse, business innovation board push SOE equitisation

The HCM Stock Exchange and the HCM City Board of Business Management Innovation agreed to draw up programmes to help city-run State-owned enterprises equitise and list under a memorandum of understanding they concluded last week.

"This will facilitate speeding up of the equitisation of State-owned enterprises in HCM City and their listing on the stock market, and we are committed to supporting them to carry out required procedures," said HOSE chairman Tran Dac Sinh.

Pham Minh Tri, head of the HCM City Board of Business Management Innovation, said the areas of assistance would include regulations and procedures related to IPO auction and listing, access to funding, and advanced corporate governance to improve transparency and performance.

Ten HCM City-run SOEs became joint stock companies last year by selling more than 24 million shares to the public for over VND345 billion (US$16.4 million), representing a 42.8 per cent premium on face value, he said.

SOEs sold non-core businesses for VND317 billion ($15.10 million) last year against a target of VND1.1 trillion ($52.38 million), he said.

This year 20 of them are scheduled to equitise and divest non-core businesses, with the latter to bring in VND1 trillion ($47.62 million), he added.

Golden year for tourism sector

The number of foreign tourists and domestic holidaymakers strongly increased in early January promised that 2015 will be a golden year for the tourism sector.

The Thua Thien-Hue provincial Department of Culture, Sports and Tourism reported that the province received nearly 65,000 visitors, nearly 60% of them are foreigners on the first four days of January. Room occupancy rate of big hotels reached 65-70%.

Nearly 63,000 tourists arrived in Danang City on New Year holidays, a year-on-year increase of 32%, of whom 33,000 were foreigners (up 30.1%) and nearly 30,000 are domestic holidaymakers (up 34.4%).

A Saigontourist representative said all tours in January were booked by more than 30,000 domestic and foreign tourists. Foreign arrivals came to Vietnam on New Year holidays from the EU, the US, Asia and Australia by air and sea to discover the country’s historical and cultural relics and enjoy traditional dishes.

The company is expected to serve 800 passengers and crew on board the Azamara Quest which will be en route from Ha Long bay to Danang and HCM City from January 7-13. Around 2,800 tourists and crew on board the Celebrity Century will visit tourism attractions from Vung Tau to Hue on January 27-29 and 9,600 others on board the Costa Victoria will tour Ha Long bay on January 17, 21, 25 and 29.

Earlier, the company received 3,500 visitors from the US, UK, Canada and Australia on board a luxury cruise ship. It also served a large number of domestic holidaymakers and overseas Vietnamese who toured three regions of Vietnam and visited Southeast Asian countries like Thailand, Singapore, Malaysia, Indonesia and Cambodia.

On New Year holidays, Vietravel also welcomed 13,000 tourists, an increase of 15% against a year earlier.

New FDI approvals in 2014 double in HCMC

Though the FDI picture in Vietnam was not as good as expected last year, fresh FDI approvals in HCMC doubled the year earlier.

A recent report by the HCMC Department of Planning and Investment showed that from January to December 15 last year, 414 fresh projects were approved with total registered capital of US$2.84 billion, up 195% against the same period of 2013.

The same period saw 133 operational foreign-invested companies injecting an extra US$371.2 million into the city, but this amount accounted for 53.5% of the total additional capital pledged in the same period of 2013.

With fresh capital from new and operational projects combined, the city attracted a total of over US$3.2 billion, rising 94% against the previous year. This was an impressive performance because new FDI approvals nationwide in 2014 fell 6.5% year-on-year to US$20.2 billion.  

The HCMC Department of Planning and Investment said the FDI target for 2014 was US$2.5 billion only. This shows a pickup in investor confidence in the city’s business environment.

According to the department, wholly foreign-owned firms registered 300 projects worth over US$2 billion, joint ventures with 113 projects capitalized at US$663 million and business cooperation contracts with only one project valued at US$770,000.

The manufacturing and processing sector contributed 72% of the country’s total FDI capital. Similarly, 58% of the city’s new FDI capital was poured into the sector with 43 projects. Notably, 111 projects were in the wholesale and retail sectors while the auto and motorbike repair groups accounted for 11%, and the science and technology sector for over 6%.

Singapore was the biggest foreign investor in the city, with over US$1.8 billion registered for 58 projects. British Virgin Islands and Japan came in second and third with respective registered capital of US$346 million and US$227 million.

High-profile projects approved in HCMC in 2014

Samsung CE Complex Co., Ltd with a US$1.4 billion project.

Bay Water Co., Ltd. with an apartment building project worth US$200 million.

Worldon (Vietnam) Co., Ltd with a US$140-million project.

Ascendas Land (Vietnam) Co., Ltd with Onehub Saigon complex project capitalized at US$130 million.

AEON (Vietnam) Co., Ltd with AEON Mall project valued at US$128 million.

TPP expected to create new momentum for Vietnam-US trade ties

The pending Trans-Pacific Partnership (TPP), if completed this year, will create an important momentum for the economic ties between Vietnam and the US, particularly when the two countries mark the 20th anniversary of normalization of their ties in 2015, most experts agreed.

As the US is an important market of Vietnam, the TPP, with its extensive tariff cuts and investment liberalization measures, will give Vietnam’s products greater access to the US as well as the markets of other TPP members.

It is projected that the country’s export value to the US will rise by at least 20 percent, making the US the biggest export market of Vietnam.

Nguyen Hong Duong, deputy head of the American Market Department under the Ministry of Trade and Industry, said with the TPP in place, many Vietnamese commodities will become more competitive when the tax level is reduced to zero.

“There are many opportunities for Vietnam to increase exports to the US even without the TPP, because Vietnamese goods currently account for only 0.98 percent of the US’s imports,” Duong said.

Stuart Schaag, trade counselor at the US Embassy in Hanoi, noted that Vietnam’s exports to the US have doubled since 2009, while the US’s exports to Vietnam went up by 61 percent.

He added that the TPP can also increase the flow of US investment into Vietnam.

Experts said the TPP negotiations have helped address existing issues between Vietnamese and US businesses such as intellectual property and financial service suppliers.

At the same time, they reminded Vietnamese companies of challenges they will face in the US market, ranging from pressure to open up the market to the threat of trade lawsuits.

Duong pointed to the US’s strict trade and technical barriers, especially for agricultural products and food.

Another barrier to Vietnam commodities is the requirement for materials and parts of products to have their origin in Vietnam or other TPP members in order to enjoy preferential tariff levels.

Therefore, experts urged Vietnamese manufacturers to join regional and global production and supply chains, strictly observe international regulations on investment, labour and environment as well as TPP stipulations. At the same time, the State should adjust the legal system in line with the TPP and popularise information on the agreement.

The TPP covers 12 Pacific Rim nations which are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vienam. The 12 members, which together account for 37.5 percent of the world GDP and 11.2 percent of the world population, have completed the 19th round of negotiations on the agreement.

Kien Giang province eyes major fishery hub status

The Mekong Delta province of Kien Giang is working to become a major fishery hub of Vietnam since it boasts a sea area that has been identified as one of the four key fishing grounds of the country.

The locality’s sea in the country’s southwestern region, part of the Gulf of Thailand, gives a catch of more than 450,000 tonnes of seafood a year.

The province has over 4,000 fishing boats and 250 logistics ships, with a capacity of at least 90 CV each, that are able to work offshore, the biggest figure nationwide. They are part of the locality’s current 10,880 fleet.

In 2014, over 462,000 tonnes of seafood, valued at 12 trillion VND (571.42 million USD) were caught by local fishermen while over 161 million USD worth of fishery products were exported.

In its 2010-2020 fishing port system planning, Kien Giang has set to build 10 fishing ports, 13 fishing wharfs, and 13 shelter areas.

So far, seven fishing ports, which cost a total investment of 192 billion VND (9.14 million USD), were put into service.

Meanwhile, the construction of Ba Hon fishing port and the upgrade of An Thoi and Tac Cau ports are underway, said the provincial Department of Agriculture and Rural Development.

Kien Giang’s Tac Cau port is the biggest fishing port in the country. Covering 32 ha, it handles 270,000 tonnes of seafood a year in addition to providing logistics services for not only local vessels but also the vehicles hailing from other Mekong delta and central provinces.

Vice Chairman of the Kien Giang People’s Committee Mai Anh Nhin said local authorities have asked for State budget funding for expanding Tac Cau, An Thoi and Tho Chau fishing ports, building shelter areas on Tho Chu island and Ganh Dau cape, infrastructure for a fries production centre on Phu Quoc island, and a fishery centre in Chau Thanh district.

These projects, which will be implemented between 2015 and 2020, are expected to turn local sea-based economic activities into a modern and profitable production sector that will spur the growth of relevant industries, thus contributing to poverty alleviation and socio-economic development, especially in littoral and insular areas.

Kien Giang targets the shipment of fishery products accounting for 35-40 percent of its export revenue.

Business community raises expectations for 2015

Vietnamese business community is placing new expectations in 2015 amidst the deeper economic integration into the world and tougher competitiveness, the Nhan Dan (People) online newspaper reported.

Along with the recovery of the whole economy in 2014, production and business activities also saw improvements despite a high number of dissolved and suspended enterprises.

According to the General Statistics Office (GSO), nearly 15,500 enterprises resumed business operations in 2014, up 7.1 percent compared to 2013.

Over 74,400 enterprises registered to establish with a total registered capital of over 432 trillion VND (20.3 billion USD), down 2.7 percent in number of enterprises but up 8.4 percent in registered capital. The average registered capital per new enterprise in 2014 was 5.8 billion VND (272,600 USD), an increase of 11.5 percent against the previous year. Newly-established enterprises in 2014 also created jobs for more than one million people, up 2.8 percent over the previous year.

The year 2014 also witnessed more than 67,800 dissolved enterprises but GSO Director Nguyen Bich Lam said that this was not a worrisome number as 93.7 percent of them had capital less than 10 billion VND (470,000 USD).

Lam said that Vietnamese enterprises are in the screening process under the market rules which eliminate weak ones. Thus, the bankruptcy of enterprises also helps restructure the economy, clean up the business environment and be the basis for the sustainable development, the GSO Director affirmed.

Looking back on 2014, it can be said that it was a difficult year for many enterprises. Van Duc Muoi, General Director of Ho Chi Minh City-based food producer Vissan, said that the Government has built trust in the business community through commitments on administrative reform in the field of economy. However, enterprises, particularly small-and medium-sized enterprises with weak distribution networks met lots of difficulties in selling products as consumers continued to be sparing with shopping, coupled with the economic recession and limited public investment in trade infrastructure.

2015 will witness big changes in policies and institutions with the revised Law on Investment and revised Law on Enterprises, the two 'backbone' laws for the economic activities. The two laws are expected to reduce administrative procedures and enhance the freedom right of doing business and the role of enterprises.

In 2015, Vietnam will also participate in the ASEAN Community and other economic agreements which forces enterprises to change themselves and make the economy more dynamic.

Le Phuoc Vu, Chairman of the Board of Directors of Hoa Sen Group said extensive economic integration will help enterprises to expand trade transaction, attract investment, boost exports, cut cost and improve their competitiveness. Besides advantages, Vietnamese enterprises will face tougher competition even in their home market which requires them to put forth appropriate business strategies.

Chairman Vu suggested the Government have a mechanism to ensure the harmony of interests between domestic and foreign enterprises operating in Vietnam. It is also crucial to fight against the counterfeit goods to protect enterprises and consumers. The Government should work closely with enterprises to facilitate their export activities amidst the upward trend of protectionism through trade barriers, added Vu.

Rice, aquatic products, textiles to be Can Tho’s key exports in 2015

The Mekong Delta city of Can Tho will summon up all its strength to expand the production of rice, aquatic products and textiles, which are the locality’s three key foreign currency earners.

The city has set the goal of exporting 1 million tonnes of rice this year for a revenue of 412 million USD, with 22 percent of the rice shipped to choosy markets such as Japan, the EU and North America.

To realise the target, the locality plans to expand its rice field area to 230,000 ha this year, producing about 1.4 million tonnes of products, while signing contracts with neighbouring localities to purchase 550,000 tonnes of rice materials. It will also invest in equipments for husking, polishing and packing rice in line with international standards.

Regarding the production of aquatic products, Can Tho will shift to products with high added value via encouraging the application of advanced technologies in processing and preserving products. It hopes to export 160,000 tonnes of aquatic products in 2015, earning 485 million USD.

Meanwhile, the city will upgrade garment making production factories and train 3,000 more workers for the apparel industry in order to improve product quality and raise output.

Can Tho is striving to rake in between 1.45-1.6 billion USD from exports in 2015, up 100-250 million USD against that of 2014, to which the three staples are to contribute around 1 billion USD, said Bui Ngoc Vy, Deputy Director of the municipal Department of Planning and Investment.

Last year, the city’s export turnover hit 1.35 billion USD, with the largest contributions coming from rice, aquatic products, textile and processed food.

Mekong Delta to strongly develop processing industry

The Mekong Delta key economic region, which comprises Ca Mau, Kien Giang, An Giang provinces and Can Tho City, has set the target of raising the proportion of the industry sector to 33.3 percent in the region’s economic structure in 2015.

According to the Steering Committee for the South-Western Region, the region will focus efforts on restructuring industrial production along the direction of expanding processing industry, a major strength of the region.

Towards this goal, the four localities will establish large-scale areas for rice cultivation, shrimp and fish farming and fruit tree growing to ensure stable material supply for the processing industry.

The four localities will strive to raise their combined industrial production value to over 210 trillion VND (10 billion USD) this year, up 12.7 percent from the 2014 figure, while attracting additional 1.4 trillion VND (65.8 million USD) in investment from domestic investors and 350 million USD from foreign firms, according to the Steering Committee’s deputy head Nguyen Phong Quang.

In addition, the region will shift strongly to the production of high-added value products using environmentally friendly technologies, Quang said.

The region also aims for 11.9 billion USD in export turnover, up 8.1 percent year-on-year.

To assist with industrial production, local authorities will adopt measures to help local businesses enhance their competitiveness through expanding cooperation with foreign partners to access modern technology, establishing distribution networks, as well as developing brand names for key products such as farm produce and seafood.

At the same time, more incentives will be adopted to create a fair and favourable investment environment.

In 2014, the Mekong Delta key economic region attracted 1.23 trillion VND (57.8 billion USD) in investment from domestic investors and 324 million USD from foreign businesses. The region’s industrial production value almost reached 185 trillion VND (8.79 billion USD), accounting for 30.6 percent of the economic structure, helping increase the industrial production value of 13 provinces and city in the Mekong Delta to a record 469 trillion VND (22.3 billion USD).

Mekong Delta’s rice output increases six times

The Mekong Delta’s rice output has increased six times during the 1976-2014 period, according to the Mekong Delta Rice Research Institute.

According to Le Van Banh, Head of the Institute, the whole region produced 25 million tonnes of unhusked rice in 2014 while the figure recorded in 1976, when the institute was established, was just 4.2 million tonnes.

The average per-ha crop yield also increased from 3 tonnes to 8 tonnes and farmers can now have three crops a year instead of the previous one, Banh said.

The institute has been instrumental in those massive changes, he said, citing its contribution of most varieties, eight out of 10, commonly grown by farmers over 70 percent of the rice cultivation area in the region.

The institute’s rice varieties, numbering 166 so far, bear a lot of superior attributes such as disease-resistance, high yield, and good rice quality.

Many of which have been growing well in other countries such as Cambodia, Laos, Brunei, South Asian and African countries.

The Mekong Delta accounts for 90 percent of the country’s export rice.

Railway sector strives to improve passenger service

The Viet Nam Railway Corporation (VNR) aimed to continue creating conditions for railway transport companies to improve their competitiveness and ensure railway traffic safety, Deputy General Director Pham Cong Trinh said at a recent workshop.

This year, the sector would also continue taking measures to improve railway services and "manage ticket prices" better, according to Trinh.

In 2014, the number of railway accidents dropped by 6.1 per cent. There were also fewer delays, Trinh said, pointing out that nearly 100 per cent of Thong Nhat trains departed and arrived on time in the fourth quarter.

The launching of an online booking system in December made it easier and fairer for passengers to buy tickets, particularly during busy times like Tet, as customers could now use their phones to purchase tickets rather than going to the station and waiting in a long queue, he said.

Train transport accounts for 0.5 per cent of the total passenger transport market and 1 percent of total freight transport. The sector aims to raise these rates to 13 per cent of passenger transport and 14 per cent of freight transport by 2020.

As part of the plan to realise the targets, the VNR will equitise 15 rail bridge maintenance and five railway communications companies next year and withdraw capital from non-core businesses.

The corporation finished the equitisation process for five member companies in 2014, selling all shares offered.

"VNR plans to stay focused on its core business: railway management," said deputy director general Doan Duy Hoach.

VNR will continue to withdraw capital from businesses operating in mining, construction and tourism, which are unrelated to its core function.

It will also reduce its stake in the Transport Investment and Construction Consultant JSC to less than 20 per cent, in addition to lowering its stake in the Railway Construction Corporation JSC and Investment and Construction 3 and 6 to less than 30 per cent.

"After the completion of the equitisation process, VNR will allow companies to bid for transportation businesses on high-demand routes, creating a fair playing ground for all," the deputy director general said.

Deputy minister of Transport Nguyen Ngoc Dong said VNR must strengthen management capacity and keep operations and safety up to standard while implementing the restructuring plan and capital withdrawal.

Regarding VNR's restructuring plan, the minister said the corporation planned to carefully study customer demand and detect any overweight cargo, as VNR managers would be held responsible for weight violations found under their management.

The minister ordered VNR to ensure smooth transportation for the upcoming New Year and Tet holiday.

The corporation asked the Ministry of Transport and Government to come up with policies to address the number of surplus employees that resulted from VNR's restructuring process.

Opposing proposal for direct Chinese RMB - VND trading

Economist Nguyen Minh Phong has suggested that Vietnam should not accept the proposal by the Chinese Business Association and the Industrial and Commercial Bank of China for direct trading between Chinese currency Renminbi (RMB) and Vietnamese currency Dong (VND) in the country.

Dr. Phong pointed out China’s ambition to expand the impact of RMB in an attempt to globalize its currency. This move also aims to encourage partners to purchase Chinese products and receive payments in RMB.

China had made similar proposal but it was flatly rejected by the Vietnam Ministry of Industry and Trade (MoIT). Chinese RMB is not strong enough on global markets, which may cause losses to Vietnam’s economy. Over-using the RMB might reduce our income in other foreign currencies which are needed for economic development, said the MoIT.

Other economists said it is essential to reconsider payment methods with Chinese businesses. In fact, Chinese RMB is not really credential enough and has not yet become a key currency in capital flows of international financial institutions like WB, ADB and IMF, they noted.

Fitch Ratings ups Military Bank's outlook after ‘stable' perfomance

Fitch Ratings has assigned a Long-Term Issuer Default Rating (IDR) of ‘B' to Viet Nam's Military Commercial Joint Stock Bank (MB Bank), declaring its outlook "stable".

Military Bank staff help customers. Fitch Ratings has assigned the bank a "B" rating, citing a stable outlook. - VNS Photo Truong Vi

The ratings reflect the bank's relatively strong financial profile and risk management, compared to its local peers and its strong franchise as one of the largest private commercial banks in Viet Nam.

The ratings also incorporate the bank's above-industry-average loan growth and its high reliance on corporate deposits.

MB Bank's reported asset quality metrics reflect a more conservative loan classification methodology relative to its peers. At the end of June, 2014, the MB Bank reported a non-performing loan ratio of 3.11 per cent. The bank's loan book is also well-diversified across industries and highly collateralised. These credit strengths will help mitigate potential risks emanating from the bank's rapid loan growth.   

Fitch expects the MB Bank to maintain its capitalisation at around current levels as its rapid asset growth is likely to be supported by its high internal capital generation ability and the issuance of new capital, if needed.

Funding and liquidity have also generally been well managed with the loan-to-deposit ratio maintained below 70 per cent, supported by strong deposit growth during recent years. In contrast to local peers, the bank relies highly on corporate deposits (63 per cent of total deposits at the end of June, 2014), in part driven by the MB Bank's capabilities in corporate banking services.

The MB Bank's corporate deposits also include a higher share of deposits from state-owned enterprises relative to other private commercial banks. This and the high representation of the military on the bank's board of directors reflect the bank's military background.

The bank also benefits from access to the branch network of the Viet Nam Military Telecommunication Group (Viettel), the bank's largest shareholder. Lower funding costs and less reliance on a retail branch network have helped support the bank's net interest margins and overall profitability, which are higher relative to its local peers.

Also according to Fitch, positive rating actions could arise from an improvement in capitalisation, sustainable loan book growth, and increased retail franchise, while maintaining its financial performance. Upside rating potential may also arise from further improvements in the operating environment for the banking industry and a strengthened regulatory framework in Viet Nam.

The ratings could be pressured if its loan quality deteriorates significantly more than what the current rating level entails, resulting in weakening of capitalisation.

A change in the relationship with Viettel, which would result in a significant increase in funding and operating costs, will also be negative for ratings. Negative rating actions might also result from event risks, such as an aggressive takeover/merger, which might result in a significantly weaker financial profile.

Amata eyes Binh Dinh industrial and urban complex

Thai industrial land developer Amata Corporation PLC is planning to study a new project in Binh Dinh province, where Thailand’s national oil and gas firm PTT has earmarked for the construction of its $22 oil refinery and petrochemical complex.

Binh Dinh People’s Committee said an Amata delegation visited the province in December to study the investment environment. During a meeting with provincial leaders, Amata representatives learned about the expansion of Nhon Hoi Economic Zone, and the site for the planned for PTT’s $22 billion Victory oil refinery and petrochemical plant with 400,000 barrel per-day capacity and  five million  tonnes  of petrochemical products annually.

Although Amata is just in the initial stages of its enquiries, the move shows that the Thai developer is planning to exploit future opportunities in the province after PTT and its partners build one of the world’s largest oil refinery and petrochemical integrated complexes in the province.

The Vietnamese government last month agreed to incorporate PTT’s project in the country’s national oil and gas master development plan.

Binh Dinh People’s Committee has also started calling for investment into oil and petrochemical-related support industries. And if Amata develops an industrial park in Binh Dinh, it will significantly improve the province’s industrial infrastructure.

Ho Quoc Dung, Chairman of Binh Dinh People’s Committee, said they were keen on Amata to invest, as it could help to attract even more foreign investors to the province. Vietnam’s leading industrial park and township developer VSIP is also studying a project in Binh Dinh that could become the firm’s second industrial park and township complex in central Vietnam.

Amata is Southeast Asia’s leading industrial land developer, boasting thousands of customers, including Fortune Global 500 Companies and numerous multi-national enterprises.

In Vietnam, Amata owns and runs Amata Bien Hoa Industrial Park in Dong Nai province. The developer last October signed a co-operative agreement with Dong Nai People’s Committee for implementing the long-prepared modern and integrated city industrial estate worth $530 million.

The agreement is a new step in Amata’s decade-long plans to implement an industrial park and township complex in Dong Nai.

The first phase of the project is a hi-tech industrial park that is aimed at attracting manufacturing in biotech, research, nanotechnology and pharmaceutical sectors. The second phase or service township, will focus on building integrated facilities such as a housing estate, hospital, school and logistics services. The third phase will be a mega-township that will include shopping centres, food courts and recreation areas. Amata is also preparing for a mammoth $2 billion development in the northern province of Quang Ninh.

Vietcombank posts impressive results by reducing NPLs

The Bank for Foreign Trade of Viet Nam's (Vietcombank's) non-performing loans (NPLs) fell to 2.3 per cent at the end of last year, from 3.09 per cent in Q2 of 2014.

Last year, Vietcombank also reported a good result in credit growth, which was 18 per cent, higher than the 15 per cent targeted in early 2014. - Photo BizLIVE

Online newspaper VnEconomy quoted a report from the bank, saying that Vietcombank successfully handled more than VND1.8 trillion (US$84.5 million) in NPLs last year, doubling the amount seen in the previous year.

Vietcombank's risk provision fund also reached VND4.535 trillion ($212.91 million) by the end of last year, which nearly equivalent to the bank's total NPLs. The fund expanded by 29.2 per cent, compared with 2013.

The bank attributed its success in handling NPLs to economic recovery, an improvement in firms' businesses, production performance, effective policies, as well as timely support lent to for customers in terms of access to credit.

Additionally, the bank's measures for handling NPLs included direct participation of leaders and staff at the bank's headquarters that also helped it report a high record for activity. Earlier, only the bank's branches had taken part in handling NPLs.

The experience of handling NPLs contributed to the bank's significant post-tax profits last year, which reached VND5.68 trillion ($266.66 million), higher than the previous year and exceeding the bank's target set in early 2014.

Return on equity (ROE), return on assets (ROA) and the capital adequacy ratio (CAR) of the bank also improved, touching roughly 10.5 per cent, 0.9 per cent and 12 per cent, respectively.

Last year, Vietcombank also reported a good result in credit growth, which was 18 per cent, higher than the 15 per cent targeted in early 2014.

The bank's deposits also surged by about 26 per cent last year, despite an interest rate cut. The bank consecutively reduced deposit interest rates and implemented the lowest rate in the banking system last year.

Shares of Vietcombank (VCB) jumped 37 per cent last year, closing at VND31,900 ($1.497) per share, the highest price level among banks listed on the stock exchange.

Ice-to-fish ratio rule delayed on pressure

The rules governing the ratios of ice to fish and moisture content in tra (Pangasius) fillets for export will take effect early next year, instead of January 1 this year, according to a source from the Ministry of Agriculture and Rural Development.

Speaking at a National Assembly Economic Committee session on the restructuring of the agricultural sector held on December 31, Minister of Agriculture and Rural Development Cao Duc Phat said the regulations on the ratios of ice to fish and water content provided in Government Decree 36/2014/ND-CP did not come into force early this year as earlier planned, according to Hai Quan (customs) newspaper.

The delay comes after tra fish processors said they would shut down their factories if they were compelled to comply with the ice-to-fish ratio of 10% and moisture content of 83% as specified by the degree on farming, processing and export of tra fish.

The rescheduling gives tra fish processors more time to renegotiate pricing with their customers. Tra exporters said the new rules would lead production costs to rise, which will in turn require processors to mark up their products.

Doan Toi, general director of Nam Viet Joint Stock Company, said customers of his firm had not agreed on higher prices although he repeatedly explained the quality of fish would be improved thanks to the new regulations on the ratios of ice to fish and water content.

Nguyen Van Dao, general director of Godaco Seafood Joint Stock Company (GODACO Seafood), said the amount of tra fish fillets containing 10% ice and 83% water content accounts for only 10% of the total volume consumed on global markets a year.

“Therefore, if we followed the new requirements, we could not sell our products on the world market, hence factory shutdowns,” he said.

Southern Fishery Industries Co. Ltd (SOUTH VINA) earlier wrote to the Vietnam Association of Seafood Exporters and Producers (VASEP) saying it would have no choice but to shut down its factory if the rules were enforced early this year.

But industry experts have thrown their weight behind the requirements for ice and water content, saying they would build confidence in the quality of tra fish and improve the branding of the fish.

Equitized SOEs to face sanctions over listing delays

The Ministry of Finance will draft regulations aimed at monitoring State-owned enterprises (SOEs) that have gone public but delayed listing on the local stock exchanges.

Speaking to the media, Dang Quyet Tien, deputy head of the ministry’s Corporate Finance Department, said the ministry would issue regulations forcing all eligible equitized businesses to list on the stock exchanges.

Many firms have been profitable for three consecutive years and set specific earnings targets and business strategies in their five-year business plans after equitization, so they are eligible to list but have delayed it.

Meanwhile, many equitized SOEs have been trading their shares on the Unlisted Public Company Market (UPCoM) for more than two years, but they have shown little sign of moving to the stock exchanges. UPCoM is the trading floor of stocks and convertible bonds of public companies which have not been listed on the exchanges.

The Government and the Finance Ministry want to boost the listing of those enterprises. Therefore, the ministry wants eligible equitized SOEs to skip trading their shares on the UpCoM to go straight to the stock exchanges to promote their transparency and efficient use of State capital.

On the other hand, the companies active on the UpCoM that do not meet requirements for listing on the bourses will be reviewed and inspected. “The Finance Ministry will force rather than encourage equitized SOEs to list on the stock exchanges,” said Tien.

Imports, exports expected to grow strongly

The HCMC Customs Department said imports and exports will pick up sharply as a result of the free trade agreements (FTA) Vietnam has signed.

Speaking to the Daily, a representative of the department said imports and exports under the FTAs account for 65% of the city’s total, equivalent to around US$23 billion.

As the tax rates on many products imported into Vietnam were exempted and cut from early this year, the city will see import and export tax collections edging down by around VND1 trillion this year.

Besides, under the revised tax law taking effect early this year, fertilizers, animal feed and agricultural machinery are no longer subject to a special consumption tax of 5%. This means that the city’s budget will lose an additional VND3.5 trillion, with VND600 billion, VND900 billion and VND2 trillion from the three groups of items respectively.

Meanwhile, as for fuels, impact will not be great as tax collections from crude oil exports have been badly hit but the tax on fuel imports has increased significantly.

There are other sources of revenue to offset the tax shortfalls. According to the source, imports and exports of HCMC started to grow considerably two months ago and the increase may continue this year when the economy is projected to fare better. The better performance of the local economy will bring suspended enterprises back to life and encourage consumers to spend, particularly on luxury items with high import tariffs like autos, liquors and cosmetics.

If completely built-up vehicle imports into HCMC continue surging this year at the same rate as last year, at 200%, the city will be able to collect VND10 trillion in import tariff.

This year, the HCMC Customs Department is assigned to collect VND90 trillion from imports and exports, equivalent to over 35% of total collections of the customs sector. Of the amount, VND25.2 trillion is from import and export tax collections and VND64.8 trillion from value-added tax.

The HCMC Customs Department collected more than VND87.85 trillion last year and the target for this year is not much higher.

“Therefore, it is likely that the department will be able to beat the target,” he said.

Last year, the department was required to collect VND74.8 trillion and the collected amount exceeded the target by 17.5%.  With this amount, the city can be allowed to keep VND8.4 trillion for its spending.

Power supply for south seen sufficient in dry season

Vietnam Electricity Group (EVN) will accelerate the development of multiple power projects to meet the power demand of the southern region in the dry season in which hydropower generation normally inches down as river water levels sink.

Some projects to be put into operation in the coming time is Duyen Hai 1 thermal power plant, the second generator of O Mon 1 thermal power plant, and Dong Nai 5 hydropower plant, according to Southern Power Corporation under EVN.

In the past, power supply in the southern region was low and briefly ran short. Therefore, the forthcoming power projects will help add additional supply for the region.

According to the corporation, the main power supplier of 21 southern provinces and cities, the region’s demand is estimated at 48.5 billion kWh this year, up 9.5% against last year.

In addition to such major power projects, EVN is preparing to implement many power network projects for the region this year. They include a VND667 billion project to provide power for shrimp farmers in Ca Mau, Bac Lieu, Soc Trang and Tra Vinh, and dragon fruit farmers in Long An Province, a VND253 billion power network upgrade on Phu Quy Island, a VND220-billion network upgrade on Phu Quoc Island and a VND1.35 trillion power supply project on eight islands off Kien Giang Province.

Power consumption nationwide climbed 12.3% to nearly 128 billion kWh last year, with consumption in the south growing 9.41% compared to 11.12% in the central region and 15.25% in the north.

According to EVN chairman Hoang Quoc Vuong, power consumption reflects a continued pickup of manufacturing and trade activity.

Vuong said at a recent meeting that EVN had set aside over VND125 trillion for power generation development projects this year and the following years.

With GDP growth estimated at 6.2% this year, Vuong said power consumption could pick up 10.4% to around 142 billion kWh.

To ensure sufficient power supply for the country’s socioeconomic development demand, EVN has planned to develop projects with a combined investment of over VND127.5 trillion this year.

From now to 2020, EVN will finish projects to provide power for all rural communes nationwide at a total cost of over 30 trillion.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR