Shares sag under economic gloom

While global stock markets thrived last week, domestic markets saw dismal week with trading volumes depressed by news of slowing economic growth, petrol price hikes and rising interest rates.

On Tuesday, the retail price of petrol rose by 15 per cent, the second increase in a month, while the Government last week announced first-quarter growth of just 5.34 per cent year-on-year, the slowest pace since the third quarter of 2009.

The State Bank of Viet Nam last week also increase the refinance rate by one percentage point to 13 per cent, the third increase in this key rate in the past two months.

On the HCM City Stock Exchange, the VN-Index closed on Friday up 0.31 per cent over the previous week to 459.17 points. Over the course of the week, the market saw three rising sessions and two declining sessions.

Average daily trading value dropped by 16.6 per cent from the previous week to just VND627.2 billion (US$30 million), on an average daily volume of only 28 million shares.

On the Ha Noi Stock Exchange last week, the HNX-Index lost nearly 2 per cent of its value over the course of the week to close on Friday at 91.05 points, with four falling sessions and just one session advancing.

The value of trades on the northern bourse decreased by 16 per cent from the previous week to VND479.7 billion ($22.9 million), with an average of 33.8 million shares changing hands per session.

The one positive sign for the week's trades was net buys of foreign investors, who picked up 8.8 million shares worth combined VND252.5 billion ($12.1 million) on both national stock exchanges.

Blue chips including property developer Hoang Anh Gia Lai (HAG), Vietcombank (VCB) and Vietinbank (CTG) were heavily favoured by foreign investors in HCM City, while construction giant Vinaconex (VCG) was the most active among foreign investors in Ha Noi. Gains by these large-caps helped cushioned the market from steeper declines during the week.

‘Investors aren't much bothered by economic news and maybe they have begun to become indifferent to it," said Nguyen Quang Minh, an analyst with a Ha Noi-based financial information company.

Minh said sharply declining liquidity showed that investors were not eager to sell shares at depressed current prices.

Ha Noi Securities Co deputy director Dao Viet Truong also said that investors were hesitating to buy at current low share prices because they no longer put much faith in future market prospects.

"A portion of recent transactions have been speculative investments," Truong said. "Some investors have disbursed money in one or two short rising waves following an increasing average-value strategy to keep their portfolio values from falling too sharply. Meanwhile, the fact is that cash flows for long-term investments have yet to rematerialise."

According to the financial website vietstock.vn, mid- and small-cap shares all dropped by averages of over 2 per cent last week. The pillars of the southern market remained heavyweights like insurer Bao Viet Holdings (BVH), property developer Vincom (VIC) and financial conglomerate Masan Group (MSN).

This week, investors would wait on further economic information, including a likely increase in commercial bank compulsory reserve ratios, which has been rumoured for near two months, Minh said.

Paper makers anxious on rising input costs 

Vietnam’s paper producers announced they would raise their product price this year on strong US dollars, increasing input costs and low import quotas.

Last year was a tough time for the paper industry as local producers had to cope with many challenges, including the surging input costs, high foreign exchange rate, rising lending rate and increasing transport costs.

Many plants, which had to reduce operation due to the economic recession in 2008 and 2009, looked confused when they restored their full operation capability, with the global pulp supply getting scarce.

Expert said Vietnam’s paper market remained very potential as the domestic consumption averaged below 1 kilogram per head in a year, compared to 30 kilograms per head in a year of the Euro and North America.

However, local makers have struggled to expand since they hardly found places to build plants.

Many provinces hesitated to give licenses to open paper plants as they were afraid of environment pollutions, which were caused by small- and medium-size paper makers with aging water treatment systems earlier.

A modern plant requires only 7-15 cubic meters of water to produce one ton of paper, while most local plants used around 30-100 cubic meters of water to make the same amount.

“The paper industry needs long-term investments; thus, just a few of investors are willing to attend. Most paper plants are foreign-owned,” said Cao Tien Vi, chairman of the paper maker Sai Gon.

“Last year, the operation of some small local makers, who could not afford water treatment systems, polluted the environment seriously,” Vi added.

Experts said the pulp supply in 2010 was getting insufficient as major suppliers from abroad focused solely on the big markets including the US, Euro and China, where placed orders with huge volumes.

The domestic paper cost, meanwhile, surged on the fact that many small producers halted their operation due to a strong dollar, rising lending rates and surging transport costs.

Both pulp and recycled paper increased sharply, with the former reaching around US$800-850 per ton and the later amounting to $400-450 per ton. As a result, they pushed up printing paper’s price to $700 per ton.

Statistics show the printing paper price in the first three months of the year rose 4 percent on the increase in gasoline and electricity prices and was expected to move up further on the rising pulp and coal prices.

Many paper producers were forced to raise their retail price higher than the price of imported paper, leaving them struggling to compete with foreign rivals.

Price of printing and writing papers imported from Malaysia is around VND22 million ($1,100) per ton, while local makers offer at the price of over VND23 million per ton, a year-on-year increase of VND2.2 million.

Ponthep Tuntavadcharom, marketing manager of Binh Duong province-based paper maker Vina Kraft, said many foreign paper suppliers with lower prices and abundant supply would dominate the local market.

Domestic producers, who are struggling to reduce their price due to increasing input costs, will incur heavy losses or even have to halt their operation again this year

Most transport firms in Hanoi hike bus fares 

The Hanoi Coach Station Management Company said on April 5 that ticket prices on nearly 100 intercity bus routes under its management had increased by 10-30 percent, due to the petrol price hike.

The company said some transport firms that had hiked their rates a month ago after the first hike in petrol prices in late February, have again raised their rates by 10 percent and those who had not, have hiked their prices by approximately 30 percent.

Bus routes that have seen a sharp surge in ticket prices include Hanoi-Tuyen Quang, from VND80, 000 per ticket to VND85, 000, Hanoi-Dong Hoi, from VND150, 000 to VND170, 000 and Hanoi-Dien Bien, from VND320, 000 to VND390, 000.

Nguyen Manh Hung, Chairman of the Hanoi Auto Transport Association, states that as per regulations it usually takes transport enterprises 7-10 days to submit their new prices to the relevant agencies for approval.

However, Mr. Hung said the recent two hikes in petrol prices took place within a short space of time so that many transport companies did not have the sufficient time required to seek permission from relevant agencies to raise their rates.

He added that this was the reason that the price hike happened only five days after the recent hike in petrol prices. 

Mr. Hung also said many transport companies were still in the process of getting approval to hike their transport rates, therefore ticket prices on many bus routes would show a hike in the near future.

Ensuring healthy business competition

Co-operation between the Government's Competition Authority and regulatory bodies in sectors needs to be promoted to ensure a healthy competitive business environment in Viet Nam, says Vu Ba Phu, vice head of the Viet Nam Competition Authority (VCA).

Attending a seminar org-anised yesterday by the Industry and Trade Ministry's VCA and Swiss Competition Commission, Phu said that although Viet Nam's Competition Law was passed in 2004 and took effect one year later, firms, as competitors, were still confused which institutions they should go to when they met competition-related issues.

The Competition Law applies to all sectors, with the VCA responsible for investigating, handling anti-competitive practices and promoting the law.

However, in Viet Nam, some sensitive sectors of the economy including electricity production and telecommunications are in need of involvement from the Government via sectoral regulatory agencies.

The agencies ensure fair competition between all firms in the sectors, anti-discrimination measures for new market entrants as well as establishing technical criteria for the sectors, in an effort to improve transparency.

Head of the Competition Policy Board Tran Phuong Lan said that the situation was caused by an overlap of regulations, power to handle violations and sanctions that were regulated in both the Competition Law and other sectoral laws.

Many legal documents referred to the unfair competition in communications, medicine and intellectual property rights, which imposed different fines for the same types of violations.

Do Xuan Minh, representative from the Telecommunication Department under the Information and Communications Ministry, said that since July 2010, all economic sectors could join the telecommunications market in Viet Nam, which had boosted competition in the sector.

Now, almost all service providers in the sector focused on competitive strategies based on discounts and promotional campaigns and the promotion for unfair competition was quite common, he said. As a sectoral regulator, Minh's office took moves to control service charges, discounts, promotions, and service quality; and to inspect and handle violations.

However, the sectoral regulator faced being overloaded as almost firms had approached the regulator whenever they had problems.

Minh recommended that in the telecommunications sector alone, the regulator should be the first door that firms can knock on when they had competitive conflicts. Complicated cases could be dealt with by both Government's Competition Authority and sectoral regulatory agencies.

The Swiss Competition Commission's legal advisor Marc Schroeder said as a necessary investment for the future, Viet Nam needed to organise a powerful and independent competition authority, develop a healthy competitive culture, improve the law and boost co-operation at both national and international levels.

Through a three-year project starting in 2007, the Swiss Government had helped the Viet Nam Competition Authority improve its technical skills and knowledge.

Pham Que Anh, director of the Consumer Unity and Trust Society, Ha Noi Resource Centre, said that to promote a fair competitive environment, the sectoral regulators must be independent from business interests or Government influence. Besides regularly reviewing sectoral regulations, the responsibilities between a competition authority and the sectoral regulators also must be clear.

Export value rises 33.7% in first quarter

Export statistics for the first quarter of this year indicated an increase in export value, but enterprises had to cope with a number of difficulties, heard a conference yesterday organised by the Ministry of Industry and Trade. One of the problems raised among economic experts and exporters was the high interest rate, and trade promotion activities to boost exports were also discussed.

Export value in Q1 reached US$19.25 billion, up 33.7 per cent over the same period last year. Many export items grew in both volume and value. "This growth is relatively high compared to previous years," said Nguyen Thanh Bien, deputy minister of Industry and Trade.

Agricultural products witnessed the highest growth, rising 53 per cent over the same period last year to $4.68 billion, while industrial processed products accounted for the greatest proportion of total exports, at $12.27 billion.

"Exports rose in value faster than in quantity due to increasing prices in the international market. These increases contributed $3 billion in export turnover," Bien explained.

More products were exported, but the challenges showed no signs of disappearing. According to Nguyen Huu Dung, vice president of the Viet Nam Association of Seafood Exporters and Producers, enterprises are truggling to manage loans due to high interest.

"Private equity only meets 10-15 per cent of our total capital needs so we take out loans with banks, but interest rates are too high so we can't raise the funds," said Nguyen Thai Hoc, president of the Viet Nam Cashew Association.

Bien added that interest rates might increase further in Q2.

"In addition, mortgage rates of 30 per cent have forced many companies to cut production," Hoc said, suggesting that they should be lowered to 10-15 per cent.

Some banks are making it easier and more affordable for companies to take out loans. The Viet Nam Development Bank is offering a rate of 11.4 per cent, and Vietinbank is capping lending for strategic clients to five times their equity.

Deputy Minister of Industry and Trade and representatives from the State Bank of Viet Nam (SBV) agreed that the interest rate could not be lowered without putting other banking activities at risk.

Trade promotion activities would be one way to improve exports. "I think trade promotion abroad is unnecessary while organising exhibitions within the country may be more beneficial," Hoc said. Viet Nam should also target foreign supply chains, rather than just showcasing at trade fairs.

A representative from the SBV stated that trade promotion would boost consumption and solve capital needs.

However, the Government said it intended to spend only VND55 billion ($2.62 million) on trade promotion. To secure exports, MoIT is going to start an export insurance fund, with the voluntary participation of enterprises and support from the Government.

Conference targets Indian investors

There are untapped investment opportunities awaiting Indian investors in Viet Nam, deputy head of the Ministry of Planning and Investment's Foreign Investment Agency Nguyen Thi Bich Van told a business conference held yesterday in Ha Noi.

Van described infrastructure construction, oil and gas, information technology and telecommunications, pharmaceuticals and finance as promising sectors for Indian enterprises, saying that Viet Nam would create the most favourable conditions for the firms.

With a population of over 1.1 billion and high demand with less stringent standards as the EU and US, India offered a gigantic potential market for Vietnamese goods, said the Viet Nam Chamber of Commerce and Industry (VCCI) vice chairman Doan Duy Khuong.

Furthermore, the signing of ASEAN- India Free Trade Agreement would offer Vietnamese exporters more chances to foster their exports to the market, he said.

The bilateral relationship, although showing positive results over past years, was still far from the potential and expectations of the two countries.

He encouraged the two business communities to utilise all their advantages and potential to seek new co-operation opportunities to further enhance comprehensive relations between the two nations.

Lack of flow of information for Indian businesses about Viet Nam and to Vietnamese businesses on the capabilities of Indian firms was one of the major issues in the bilateral trade ties, said director of the Federation of Indian Export Organisations (FIEO) Unnikrishnan.

The federation planned to organise more business delegations to Viet Nam and participate in trade fairs and exhibitions here while inviting Vietnamese firms to come to India in order to encourage increased trade, he said.

Yesterday's event also witnessed a memorandum of understanding inked between the VCCI and the Associated Chambers of Commerce and Industry of India.

India is now among Viet Nam's top 10 trade partners. Two-way trade reached US$644 million in the first two months of this year, up 59.5 per cent year-on-year.—

Experts urger greater IT security awareness

The sixth Security World Conference and Expo began yesterday in Ha Noi.

At the two-day ‘Securing Your Organisation in a Connected World' seminar, international and domestic IT experts forecast information security services would gain in importance. Many businesses had been affected by the spread of new virus variants. Cyber attacks had also boomed, influencing national security and business activities.

National websites have been under continuous attack with increasing sophistication; the most recent example being the denial of service attack on the Vietnamnet website on November 22. Internet crime via Vietnamese emails is increasing in frequency, making clear the need for improved network and information security.

According to a Viet Nam Information Security Association (VNISA) report, Viet Nam ranked fifth among 10 countries at highest risk of having its information security breached in 2010. According to a more recent survey of businesses by the association, 33 per cent said they had discovered network security attacks; 29 per cent were unaware their network had been attacked; and about 22 per cent responded that they did not understand the motivation behind the security attacks.

Due to limited awareness, a lack of investment in information security and poor information technology (IT) training, security risks were set to increase.

Nguyen Viet The, director of the IT Department General Department of Logistics and Technology, Ministry of Public Security, told participants that information security had a vital role to play in business, especially with the increasing use of on-line transactions. The added that in his opinion, instead of cutting information security budgets, businesses should invest more wisely.

According to Vu Quoc Khanh, director of the Viet Nam Computer Emergency Response Team, this year will be used to develop ideas, plans and programmes as part of the National Digital Information Security Project, including information security activities in important projects, investment, training and improving information security competence, investing in management processes, dealing with incidents, and the value of information security in this field.

Deepraj Emmanuel Datt, IBM Security Solutions ASEAN , said this year would be a make- or- break moment for ICT security.

The event is jointly organised by the IT Department under the General Department of Logistics and Technology of the Ministry of Public Security, and the Viet Nam Computer Emergency Response Team.

PetroVietnam boosts investment in Laos

PetroVietnam Oil Corporation (PV Oil), a subsidiary of the PetroVietnam, opened its wholly-owned PetroLao Oil Co Ltd (PV Oil Laos), a one-member limited liability company, in Vientiane on Sunday

Headquartered in the capital city of Laos with a charter capital of more than US$3 million, PV Oil Laos specialises in importing and trading oil and petrol products, wood, coffee, tea and other agricultural products.

PV Oil purchased all stakes of Shell du Laos Co in late 2009 and brought the PV Oil Laos into operation on December 1 last year.

Addressing the opening ceremony, Dinh La Thang, chairman of the PetroVietnam, said PV Oil Laos had made significant achievements and expanded its market shares in the past four months of operation.

He said bringing PV Oil Laos into operation marked a milestone in the group's development as well as its business expansion in overseas markets.

Thang said the newly established company would help satisfy Lao consumer demand for oil and gas products, boost socio-economic development in Laos, and enhance trade ties between Laos and Viet Nam.

Speaking at the meeting, Lao Minister of Industry and Trade NamVinhaketh said the Lao- Government would create favourable conditions for the company to operate effectively, contributing to strengthening friendship and the co-operation between the two countries.

Trade fair to highlight biotech innovations

About 150 local and foreign companies will take part in Analytica Viet Nam 2011, a three-day international trade fair for laboratory technology, biotechnology and diagnostics held in HCM City starting tomorrow.

Organisers said that the second edition of the fair, held at the Sai Gon Exhibition and Conventional Centre in District 7, would display the latest innovations in biotechnology, diagnostics and life sciences.

Besides local firms, several of the industry's leading manufacturers from 17 countries, including Germany, France, Japan, Spain, the US and the UK, will exhibit their products and knowhow at the event.

A conference where leading experts will present the latest advances in various fields will be part of the fair organised by the National Agency for Science and Technology Information (NASATI), the Germany-based Messe Munchen International and its subsidiary International Fair and Exhibition Service (IMAG).