State budget collection increases

Eight out of 14 collected State taxes and fees posted up strong rises in the first six months, of which foreign direct investment (FDI) enterprises, land use fee and registration fee had the highest growth.

According to the Ministry of Finance, domestic revenue in June was estimated at VND30.7 trillion, or just 81.5% of the previous month, and achieved only 67.5% of its forecast. To realize the year’s target, domestic revenue should reach VND45.6 trillion a month.

The ministry blamed reductions of key tariffs for the fall in domestic revenue. The revenue from value added tax dropped by around VND900 billion, corporate income tax down over VND3.5 trillion and special consumption tax down around VND600 billion.

Meanwhile, farm produce prices declined given economic difficulties, hurting the earnings of enterprises and their tax payments. The domestic revenue figure indicated slow and unsustainable recovery of the economy in the period.

Revenue earned from crude oil stood at VND8 trillion in June, falling by VND380 billion against the previous month, as the world oil price has declined since May.

Although State budget revenue during the first six months reached only 43.7% of forecast, it still rose 4.5% compared to last year’s first half.

Domestic revenue in the first half increased by 7.56% year-on-year. FDI sector revenue surged 35.3% while the industry-commerce tax beyond the State-run sector rose 14.5%, personal income tax was up 4.9% and asset registration fee up 27.8%.

These figures suggested that FDI and private firms were still active in production and business, earning profits and contributing to the State budget.

The ministry did not mention sources for registration fee revenue increase. In the report it sent to the Government, three out of 14 collected items and taxes in the first half reached over 50% of forecast for the year.

JFE Engineering eyes city’s infrastructure projects

JFE Engineering Corporation of Japan has expressed interest in traffic, waste treatment, water supply and solar power projects in HCMC.

After 13 years of operation in Vietnam with representative offices in Hanoi and HCMC, JFE Engineering has made an application for establishment of a company to gain advantage when bidding for the above projects.

Speaking at a meeting with HCMC Vice Chairman Le Manh Ha on Monday, Yuri Miyaoka, senior managing director of the overseas business sector at JFE Engineering, hoped the city would quickly give it the license so that the company could start operation in August.

“JFE Engineering Vietnam will operate in the fields of environment and energy, particularly maintenance and repair of water treatment facilities and steel structures… We’re also interested in other infrastructure projects in HCMC, including traffic, waste treatment and solar power projects,” said Miyaoka.

In response, Vice Chairman Ha said: “HCMC always welcomes foreign investors.”

JFE Engineering, a subsidiary of JFE Holdings, started operating in Vietnam in 1999 with a liquefied petroleum gas (LPG) extraction system in Vung Tau, followed by an undersea pipeline in Dung Quat, Quang Ngai, a fuel supply system at Noi Bai International Airport and a lubricant factory in Haiphong.

Soc Trang highlights aquatic breeding

By 2020, the Mekong Delta province of Soc Trang will be able to meet 43.1-63.8% of the provincial demand for aquatic breeding.

The Soc Trang People’s Committee has issued Decision 119/QDHC-CTUBND approving a project to revise and supplement the province’s aquatic breeder production by 2020. Of the estimated capital of VND592 billion (US$28.2 million), VND188 billion will be from the State budget and the rest from other sources.

The province has a driving ambition to have 200 units producing, farming and trading aquatic products by 2015 and 310 units by 2020. These will produce and cultivate some 5.8 billion offspring by 2015 and 10.58 billion by 2020, meeting 43.1% and 63.8% of the demand respectively. The project can create 1,000 jobs by 2015 and another 1,630 five years later.

An area of 154 hectares will be set aside for producing fingerling until 2020, with a majority of it for aquatic cultivation in the province (tra fries, freshwater and brackish water fingerling, and brackish water and saltwater young shrimp).

By 2015, 113 farms will produce 2.253 billion brackish juvenile shrimp, meeting 20% of the demand; six farms will turn out 33 million tra fingerling, 22% of the demand; and 21 farms will have output of 225 million other freshwater fries, 25% of the demand. By 2020, 140 farms will be able to produce 3.489 billion brackish water juvenile shrimp, representing 25% of the demand; 15 farms with 90 million tra fries, 30% of the demand; and 33 farms with 397 million other freshwater fingerling, 35% of the demand.

If the project is on schedule, it can help set up a chain of big-scale, modern and centralized brackish water shrimp farms, attracting investment in new production plants and improve management and quarantine to produce quality offspring, contributing to the quality of raising brackish water fingerling. The project also helps improve farms and attract the participation of other sectors.

Developing traditional freshwater fish farms and improving productivity and technology to meet various demands are an integral part of the project. Moreover, it also helps better the management system, breeding quality control and quarantine at all stages, from production to distribution.

To ensure success, several issues must be tackled effectively. The Soc Trang Province People’s Committee has plans to protect farming areas in Cu Lao Dung and Tran De districts and Vinh Chau Township which are rich in breeder sources and home to a wide range of aqua products. The province also places emphasis on the protection of clam farming areas which will be exploited reasonably.

The province aims to create 1,000 direct jobs at breeder farms by 2015, and 1,630 more by 2020. By 2020, 1,120 people will work at brackish water shrimp farms; 110 at tra fish farms; 220 at other freshwater fish and specialized fish farms; and 180 at other aquatic product farms. The project is expected to attract 130 and 215 well-trained employees by 2015 and 2020, respectively, besides 5-10 postgraduates specializing in aquatic breeding.

The province’s Department of Agriculture and Rural Development has recently announced the project in detail and informed local authorities of it. Supporting programs have been devised to create a sustainable aquaculture in Soc Trang when the project is finished.

VEPR says 7-10 years needed to tackle bad debts

It will take 7-10 years for the banking industry to deal with the amount and complexity of its bad debts, according to Dr. Nguyen Duc Thanh, Director of the Vietnam Centre for Economic and Policy Research (VEPR).

Credit institutions claimed that the country’s bad debts rate had been maintained at 3.57 percent by March 31, 2013 but the State Bank of Vietnam (SBV) estimated the real figure at 8.6 percent.

Assuming that this difference was maintained until September 2012, Thanh argues the banking system’s bad debt rate would rise to 9.53 percent, or VND241 trillion.

At the end of February 2013, the bad debt rate was annouced at 6 percent.

Judging from different figures, Thanh says, the bank’s bad debts would hover somewhere between VND180-300 trillion if the debts were classified and the collateral evaluated properly.

If the amount bad debts doubled as it was, the capital adequacy ratio (CAR) would be half the current level, he says.

Thanh recommends that bad debts should be handled systematically because they are closely related to other macroeconomic indexes.

He cited some major factors that have pushed up bad debts, such as the rapidly growing but unstable economy, high inflation rate, and increasing numbers of insolvent businesses, as well as falling asset prices leading to the weak consumption power, and ineffective operation of many state-run enterprises.

Another negative factor is attributed to the annual growth rate of the banking system in the years up to 2010 at more than 23 percent, which was much higher than the GDP rate in the same period.

Moreover, bad debts can also be blamed on the cross-ownership of banks, increasing number of inter-bank loans, low quality credit assessment and the banks’ tendency to make short-term profits.

Thanh proposes that the Government take immediate measures to iron out these snags and, come up with long-term solutions.

Bad debts need to be tackled in line with the restructuring of economy, both public and private businesses.

He argues that creating a legal foundation for the Government and related agencies to deal with problematic and insolvent banks, while developing a mechanism for them to cooperate, is essential for managing and controlling the financial market in an effective manner.

Thanh adds that the impact of bad debts on the macroeconomy must be identified with coordinated efforts from the Asset Management Company (AMC) and relevant agencies.

He suggests that capital can be mobilised through direct contributions or sponsorship money from the state budget, government bonds and the business sector.

Thanh recommends three steps to handle bad debts: first, re-buy them from banks; second, evaluate debtors’ business performance and business plans; and third, have a roadmap to write off all debts at any cost.

VNCB to raise capital to VND7.5 trillion

Shareholders of Vietnam Construction Bank (VNCB) during the annual general meeting (AGM) last week approved a plan to increase the lender’s charter capital from VND3 trillion to VND7.5 trillion by the end of this year.

The plan was approved by over 200 shareholders, who represented 93% out of 95.7% of shares with voting rights in the lender.

This is the first AGM of the bank since its name changed from TrustBank to Vietnam Construction Bank. As of the end of May, VNCB had six founding shareholders including Agribank, Long An Foodstuff Company, Thien Thanh Group and three shareholders belonging State agencies.

TrustBank earlier has sold an 84.04% stake to a new shareholder group including Thien Thanh Group and other individual shareholders. Thien Thanh holds a 9.67% stake.

G-bonds forecast to sell well in H2

The government bond market has seen positive signs in recent times, with the year’s G-bond sales target seen obtainable.

By the end of June, the State Treasury had raised over VND124.3 trillion of G-bonds, meeting 73% of this year’s target of VND170 trillion assigned by the Ministry of Finance. In June, the agency was expected to mobilize over VND13.7 trillion.

Tran Van Dung, general director of the Hanoi Stock Exchange, which organizes G-bond auctions, told the Daily that the market has enjoyed better macro economic factors and policies while its technical infrastructure has improved compared to previous years.

G-bonds proved to be attractive to investors in the first half of this year. In 2012, VND167 trillion of G-bonds were sold, accounting for 52% of the volume on offer. The figure in this year’s first half represented 69.5% of the entire volume sold in 2012.

The secondary market also saw an increase in scope, reaching VND456 trillion in the year to June 15, a 19% year-on-year rise. Trading value was around VND210 trillion, almost equivalent to the entire 2012. Trading value per session also rose significantly to VND1.9 trillion, more than two times over 2012.

Although their yields declined steadily, G-bonds remained attractive in the first six months of 2013. Many investors who have invested in G-bonds since last year have reaped high profit, Dung said.

Concerning the rising attractiveness of the G-bond market despite falling yields, Dung said the market would continue luring investors as bank deposits have kept increasing. As banks need time to speed up low credit growth, there will be surplus cash at banks, creating a need to make investments, especially in G-bonds.

G-bond yields in Vietnam are high compared to international markets. If the exchange rate and the balance of trade were stabilized, Vietnamese G-bonds would remain attractive, Dung said.

As large G-bond volumes on the market have created big transaction demand, there is a strong possibility of developing the secondary market and G-bonds remain an investment vehicle of choice for large investors.

In the second half, the State Treasury will continue organizing scheduled G-bond auctions but it will increase bond issues to meet capital demands of the State budget. It will also underwrite 15-year G-bonds.

Although G-bond issues went smoothly in the first six months, Dung said, excessive mobilization or ineffective use of G-bond capital can place a burden on the nation and pile pressure on inflation within the next five years.

Mid-end condos still sell well

With reasonable prices and flexible payment plans, several mid-end apartment projects achieved fairly good sales in the year’s first half.

Project owners launched their products on schedule, with many sales events organized in the first six months. Thus, the market was not as gloomy as many people thought.

Hung Loc Phat Co. last Saturday started offering 100 apartments among the total of 358 at the Hung Phat project on Le Van Luong Street in HCMC’s Nha Be District.

These apartments are quoted at VND14.7 million per square meter and will be handed over to buyers when they have paid 60% of the home value, or some VND630 million. The remaining sum will be settled within 24 months.

Half of the apartments on offer found buyers on the launch day, said Nam Viet Real Estate Co., the project distributor.

Earlier, Nam Viet put up 100 apartments at the project Khang Gia-Tan Huong in Tan Phu District for sale at around VND15 million per square meter. Some 90% of these flats have been reserved.

Luong Tri Thin, general director of Dat Xanh Group, said the mid-end segment was currently the center of the market, so project owners must have suitable pricing strategies and financial support for customers.

A member company of Dat Xanh on June 23 offered over 40 apartments at the Gia Phu Khang project in Thu Duc District, which were all sold in the morning with prices starting from VND10 million per square meter, exclusive of VAT.

Dat Xanh has been selected as the distributor for 336 apartments at the project 4S Riverside Linh Dong developed by Thanh Truong Loc Co. in Thu Duc.

Meanwhile, Nam Long Investment Corp. continued to offer its Ehome 3 condos at the project in Binh Tan District after selling 330 units in August last year.

Thirty three of the 161 units going on sale on June 22 have been registered. These apartments are offered at prices starting from VND710 million per unit with two payment options.

With the first option, buyers will make a down payment representing 30% of a home’s value when signing contracts, and will not have to pay any installment until the apartments are handed over to them.

Meanwhile, the second option allows homebuyers to make a 10% down payment when signing contracts. From then to apartment handover, they will make further payments reaching 30% of an apartment’s value.

HCM City to offer green buildings higher land use coefficient

HCMC will offer a higher coefficient of land use for eco-friendly buildings, those with an open space for the public and those protecting the city’s architectural heritages.

The land use coefficient for the above buildings will be increased by 1-2 or multiplied by 0.25-0.5, depending on which calculation produces a lower coefficient.

For example, a building is given a land use coefficient of 10, meaning 1,000 square meters of floor space can be developed on a 100-square-meter area. If such a building provides public open space, the coefficient may be raised to 11, which means up to 1,100 square meters of floor space can be developed.

However, preferential land use coefficient will only be offered to buildings with more than nine stories located in downtown areas, except Phu My Hung and the 930-hectare downtown area, according to the regulations on planning and architecture management in HCMC.

The HCMC Department of Planning and Architecture on Tuesday submitted the draft regulations to the municipal government. In addition to preferential land use coefficient, there are provisions for organizing urban architectures and landscapes in accordance with the general planning for the city.

Huynh Xuan Thu, director of the Planning Information Center under the planning department, said the regulations would help the city manage its planning in a consistent and transparent way, keeping each structure in harmony with the overall space.

Architecture existing before the regulations will remain as they are. However, if they are repaired or renovated, they will have to comply with the new regulations.

The planning department said the regulations would serve as a basis to make planning for the unplanned areas and draw up regulations on management of specific urban areas.

Hau River’s vessel passage cash lifeline

The Government has agreed to grant capital to reinstate a project developing a heavy-load vessel passage leading to the Hau River due to an urgent need of cargo sea transport in the Mekong Delta.

As such, related sides are seeking to construct a number of components of the project under the build-transfer (BT) format. As the project for heavy-load vessels entering the Hau River has an important meaning to the delta’s economic development, the Government has let the scheme continue, Nguyen Nhat, director of Vietnam Maritime Administration, said.

The Government last Wednesday asked the central bank to advance capital from the VND20 trillion for investment in southern dyke systems and the passage linking with Tat Canal.

The maritime administration has recently worked with Transport Engineering Construction and Business Investment Company 584 as the project owner on constructing the project’s components under the BT format, Nhat informed.

During the project’s deployment, the Dinh An Passage in Can Tho City is still the most important gateway for incoming and outgoing ships through the ports on the Hau River.

Certain capital volume is still set aside for dredging the Dinh An Passage annually but due to huge annual capital needed for the waterway’s dredging and maintenance, the transport ministry has called for investors to carry out the Dinh An Passage’s dredging project under the build-operate-transfer (BOT) format and other investment forms.

However, because of the complicated waterway, no investment plans are seen as feasible as of now although many investors have shown interest in the scheme, with some already submitting investment plans to the Government via the transport ministry for approval.

Developing the waterway for heavy-load ships to enter the Hau River is aimed at handling ships with loading capacity of up to 10,000-20,000 tons at the ports on the river.

The project started construction of the 6A bidding package in December, 2009. It was scheduled for operation at the end of 2011 to meet annual throughput capacity of some 22 million tons of cargo in the ports on the Hau River in the context of rising cargo import-export demand.

The scheme had been put on hold until 2015 but the transport ministry then reviewed to adjust the project with total investment of an estimated VND10 trillion and asked approval from the Government to continue the important scheme.

The ministry now is also cooperating with the Ministry of Planning and Investment to seek Japan’s official development loans for the project via the Japan International Cooperation Agency.

Airport runway back in service

Runway 25R/07L of Tan Son Nhat International Airport was put back into use on Tuesday after four months of repair, easing air traffic pressure at the airport, especially during the slot time.

The runway is 3,048 meters long and 45.72 meters wide, capable of receiving huge aircraft like B747-400 and B777-300 ER.

The runway suspended its service for repair on February 25. The contractor was racing against time to finish the repair job two months earlier than planned.

Tan Son Nhat International Airport was operating normally when the runway was under repair, with over 400 flights departing and arriving a day. During this time, international flight schedules were unchanged, while some adjustments were made to domestic flights to avoid congestion during peak hour.

With the runway now back in service, takeoffs and landings will be more favorable and congestion can hardly occur, especially during the peak travel season. It will also help Tan Son Nhat meet its capability of serving 25 million passengers per year.

Jetstar and Vietnam Airlines said they had not adjusted flight schedules after the runway resumed service.

Travel demand rises sharply in summer, leading air carriers to schedule more flights. Vietnam Airlines has added more than 3,600 services, with a total capacity of 700,000 seats, to its domestic and international schedules for the peak season from June 1 to August 31.

Similarly, VietjetAir has scheduled 1,600 extra flights, supplying an additional 300,000 seats, for the period from May 20 to August 31.

Tan Son Nhat International Airport has two runways, 25L/07R and 25R/07L, built in 1965-1967. The runway 25L/07R was rehabilitated and upgraded in 2002 and has been functioning well.

Meanwhile, the 25R/07L was rehabilitated and upgraded in 1992. Since then, it had deteriorated and thus needed repairing.

Tan Son Nhat has achieved the highest growth in the country over the past few years, with an average rate of 10% per year in passenger number and 15% in cargo volume.

In 2012, the airport served over 17.5 million passengers, accounting for 47% of the total number of passengers at all airports nationwide.

Disagreement over cashew price predictions

A number of companies expect Vietnamese cashew nut export prices to continue to decline in the final months of the year due to oversupply.

However, the Vietnam Cashew Association (Vinacas) denies the claims, saying that the news has been released by exporting enterprises who are trying to purchase cashew from small processing facilities with lower prices.

Seeing the farm produce market’s volatility, Quang Vinh Company has recently forecast that Vietnam’s export cashew nut prices would continue deep falls in the next few months.

Vietnam enjoyed a bumper cashew harvest in the last season with a combined yield of 420,000 tons, up 60,000 tons from the 2012 crop, Quang Vinh noted. Besides, the country is looking to import around 400,000 tons of unprocessed products in all of 2013, meaning it will have about 230,000 tons of cashew nuts processed for export this year, according to the firm.

The huge local supply, plus slackened cashew import demand, will force companies in the industry to reduce selling prices, Quang Vinh predicted. That’s why prices of cashew nut products have plunged to their lowest in three years, the company explained.

Because of the aforesaid elements, Quang Vinh said, export cashew nut prices would continue dropping strongly in the months to come. The price of WW320 cashew nuts stood at US$3.15-3.20 a pound on Tuesday, which the firm forecast would dwindle to US$3 in the near future.

Crude cashew imports totaled 205,000 tons in the first six months, marking up roughly 48% year-on-year, the Ministry of Agriculture and Rural Development reports. The quality of many imported shipments is poor while their humidity is reportedly high, Vinacas said, adding several foreign exporters even sell substandard products of the previous crops to local enterprises.

Cashew demand from other Asian nations, Europe and North America will pick up sharply in the third quarter, Vinacas forecast. Additionally, inventories at key cashew producing nations are lower than the average in previous years, so export cashew prices might go up, said the association which declined to elaborate on the specific inventory volume.

Despite slight cashew price hikes from now until the end of the year as estimated by Vinacas, numerous exporting companies prefer spot transactions to avoid losses caused by the market price volatility.

The country exported a combined 115,000 tons of cashew nuts worth US$723 million in the years’ first half, growing nearly 16% in volume and 5.7% in value over the same period in 2012. The five-month export cashew nut price averaged out at US$6,185 a ton, dipping 10.5% year-on-year.

Hanoi to increase affordable housing

Hanoi authorities have announced that they will supply 15,500 apartments for low-income people by 2015, meeting 30% of the estimated demand.

The Director of the Department of Construction, Nguyen The Hung, confirmed this on July 3 during a meeting regarding urban development through 2030.

Between 2000 and 2010, a number of new urban areas were established, including Linh Dam and My Dinh. But most of the real estate projects in these areas focus on the high end sector of the market, practically ignoring the needs of those on limited incomes.

In addition, lax management has led to many abandoned properties because authorities grant land to investors with infeasable plans.

The total cost for the project will be divided into three phrase. The first phrase, from 2013 to 2015, will cost an estimated VND8.4 trillion (USD402 million), the cost of the second phase, from 2015 to 2020 will be over VND7.6 trillion and the phase, until 2030, will be VND8.6 trillion.

Hung also confirmed that they have sufficient funds for this long-term project, saying that "For the first phase, government has already given us VND3 trillion in bonds."

In the meantime, Hanoi authorities plan to place a temporary moratorium on land use rights for many large commercial projects while they carry out inspections on current ones.

"There is a surplus of commercial housing at this time, so we will halt some projects in the inner city." Hung said.

Hanoi has withdrawn approval for 25 projects and plans to withdraw nine others soon.

New steel plants seen causing power shortfall

Southern Power Corporation (EVN SPC) has urged Vietnam Electricity Group (EVN) to soon build the 220kV Phu My 2 Substation, worrying that the existing Phu My station will be overloaded when new steel plants start operations.

Two large steel plants are scheduled for operations in mid-2014 in Tan Thanh District, Ba Ria-Vung Tau, where the 220kV Phu My Substation is located.

One of them is the plant of Posco SS Vina with an annual capacity of one million tons of steel billets and one million tons of finished steel products. The other belongs to Vina Kyoei, which can produce 500,000 tons of steel billets and 500,000 tons of construction steel per year.

All 110kV substations in Tan Thanh District get power supply from the 220kV Phu My station to provide power to the steel plants Phu My, Pomina, Viet Steel, Hoa Sen and Posco.

The total capacity of the existing 110kV substations in Tan Thanh District is over 900 MVA, says EVN SPC in a report on power production in the first six months sent to the Daily on Tuesday.

Some new 110kV substations will begin service in 2014, including the Posco SS Vina station (250MVA), the Vina Kyoei station (110MVA) and the Linde Gas station (25MVA).

In the early months of 2013, as most steel plants operated at 40-50% capacity, the power grid in the area mainly served other consumers.

In case the existing steel plants run at full capacity and new plants start production, the 220kV Phu My Substation may be overburdened. To ensure sufficient power supply to the Posco SS Vina station and the Linde Gas station in 2014, there must be another 220kV substation.

Therefore, EVN SPC has proposed EVN ask National Power Transmission Corp. to soon develop the 220kV Phu My 2 Substation.

Ba Ria-Vung Tau is home to dozens of licensed steel projects.

PetroVietnam misses targets

The Viet Nam National Oil and Gas Group (PetroVietnam) in the first half of this year failed to reach some targets set for oil exploitation.

Oil fields Rang Dong-Phuong Dong, Chim Sao, PM304 Lot in Viet Nam, Nhenhezky in Russia and Junhin 2 in Venezuela fulfil 98, 90, 94 and 42 per cent of targets respectively, the group said.

In addition, the average oil prices in the first half fell by US$11 a barrel from a year ago to $112 per barrel, causing the group's revenues down 2.2 per cent year-on-year.

However, PetroVietnam' crude oil output surpassed 50 per cent of year's plan at the end of the first half.

PetroVietnam was estimated to have exploited 8.3 million tonnes of crude oil in the first half of 2013, meeting 52.1 per cent of the full year plan.

In detail, the group exploited the equivalent of 12.58 million tonnes of oil in Q1/2013, including 8.3 million tonnes of crude oil; 5.3 billion cubic metres of natural gas (up 7.8 per cent year-on-year); 346,900 tonnes of liquefied petroleum gas (LPG) (up 11.9 per cent year-on-year) and 3.26 million tonnes of gasoline and oil (up 27.9 per cent).

Oil and gas discovered in four new oil fields, including Kinh Ngu vang-1X oil field (Lot 01 and 02/10), Dai Nguyet-2X oil field, Nam Du 1Xoil field and SYT-1X oil field (Lot M2 Myanmar).

The group said it also put Hai Su Trang oil field into operation.

In the second half of this year, PetroVietnam will continue its schedule and arrange sufficient capital for its investment projects, continue with tapping projects, develop domestic and oversea mining to meet its targets of oil reserve and exploitation.

Industrial parks up for review

Thirty of 59 provinces that were asked to review their industrial park land use have said they want to expand the area to attract more investment and develop business.

The Government had called for the review in order to deal with situation of redundancy, with many industrial parks in many localities unable to fully use the land they already have.

The new move also sought to ensure compliance with the national master plan, reduce inefficiencies and improve land use by industrial parks.

The 30 provinces that have asked for an expansion instead of reduction have said they want to meet investment criteria for large-scale, modern and environmentally-friendly projects.

The Planning and Investment Ministry has said it will collect opinions from related ministries and departments on the proposals from localities and submit them for consideration to the Prime Minister.

It said priority will be given to the proposals of 29 provinces that have asked to retain or reduce their industrial park area.

This will serve as basic foundation for 2020 national industrial park master plan.

Interest rates stable despite latest SBV cuts

Interest rates have recently tended to be directed by market forces even though deposit rates are still capped, according to industry insiders.

Late last week the State Bank of Viet Nam cut the interest rate cap on deposits for terms of one to six months by 0.5 percentage point to 7 per cent while also removing the ceiling rate on deposits with terms of more than six months.

Unlike previous short-term rate cuts, which often forced banks to adjust their rates for longer terms to ensure business efficiency, this time around, interest rates have remained stable.

The deposit rates for terms of more than six months are hovering around 8-8.5 per cent per year and even lower at some of the major banks.

Banks say that the improved liquidity has enabled them to maintain low rates, even though lending has remained difficult, and setting high deposit rates would be self detrimental.

The deputy general director of HDBank, Le Thanh Trung, told Dau tu Chung khoan (Securities Investment) online that despite the drop in interest rates, deposits at the bank were still increasing with growth rising by over 12 per cent in the first half of the year. But growth in the credit market remains limited.

Deposits at SeABank, Sacombank, Eximbank and Asia Commercial Bank were also reported to show no signs of a decline. Sacombank said its deposit growth had exceeded 15 per cent and outstanding loans expanded almost 8 per cent in the first half of the year.

The chairman of a small bank in HCM City said that letting interest rates become decided by market forces was very important, and with the improved liquidity of banks, some say that now is the right time to remove the interest rate cap.

Small banks would also find it easier to compete, in terms of interest rates, if the cap was removed, he added.

National Financial and Monetary Policy Advisory Council member Tran Du Lich agreed, saying that doing this as well as easing deposit rates could help end the prolonged situation where banks had money lying idle but firms couldn't approach them for capital.

In the last few months, many banks have had to buy bonds at a low interest rate because lending has remained tough, he noted.

Lich said that there was little chance of deposit rates being lowered any further as many businesses have expected, because of difficulties relating to bad debt, rising inventories, low purchasing power and inefficient commercial bank operations.

With inflation expected to reach 6.5-7 per cent this year, the current lending rate of between 4-6 per cent would be too high and this could hamper firms that were trying to stick to the current production levels or looking at expanding their investments.

State Bank Governor Nguyen Van Binh said at a meeting in HCM City late last month that without doubt the ceiling on deposit rates could now be removed as the liquidity of banks had recently improved. However a cap was still needed to generate long-term stability for a banking system that was still in a vulnerable position.

HCM City chases greater GDP growth

HCM City authorities will help businesses accelerate farming, business and production activities to attain a gross domestic product (GDP) growth rate of 9.5 per cent for 2013.

In the first six months of the year, the southern economic hub maintained a stable economy with GDP growth rate of 7.9 per cent.

This was revealed at the 14th meeting of the ninth HCM City Party Committee, which was attended by Le Hoang Quan, deputy secretary of the city's Party Committee and chairman of the HCM City People's Committee, among others.

The figure includes a 9.1 per cent growth rate for the service sector, a 7 per cent per cent for the agricultural sector, and a 6.2 per cent for the industrial and construction sectors.

Quan said that in the first half of the year, the city's economy had been developing on the right track, resulting in a low Consumer Price Index rate and a stable financial market that had helped curb inflation.

The city had also made significant progress in social and cultural areas, while social welfare was ensured, he stressed.

The city had also helped improve other areas that had hurt the economy, including the high number of suspended businesses, the stagnant securities and property markets, large volumes of inventories, the narrow access to bank loans, bad debts, and the slow re-structuring of State-owned enterprises.

To realise targets set for 2013, in the second half of the year, the city will carry out policies on tax reduction, exemption and extension in accordance with the Government's decisions.

The re-structuring of State-owned enterprises will be accelerated together with the rearrangement of the local economy with an aim to improve quality, effectiveness and competitiveness.

The city will also have more investment, business, tourism and service promotions and better provide businesses with information about potential markets. The current market stabilisation programme will also be improved.

Quan said that monetary policies would also be carried out carefully and effectively with concerned ministries.

In addition, efforts will be taken to manage revenues and prevent losses for the State budget.

He added the city would better manage investment funds from the State coffers, while giving priority to major infrastructure projects

Fitch affirms 4 Vietnam banks’ IDR at 'B'

Fitch Ratings has affirmed the long-term issuer default ratings (IDRs) of four Vietnamese bank at ‘B’, according to a statement on its website.

The outlook is stable for Agribank, Vietinbank and Sacombank while that of Asia Commercial Bank (ACB) is negative.

Fitch said that its long-term IDRs, support ratings and support ratings floors of Agribank and Vietinbank reflects its expectation of likely support from the Government as these are two among the most important banks to the economy.

According to Fitch, the negative outlook on ACB indicates a potential further burden on its financial profile from exposure to six companies where Nguyen Duc Kien was chairman or a member of board of management.

Kien, a co-founder of ACB, was arrested last year on allegations of illegal business activities.

Meanwhile the outlook of Sacombank was rated stable due to its lower exposure to companies related to Kien.

FamilyMart to stay in Vietnam

With only one store left after parting company with Phu Thai Group Joint Stock Company, the Japanese retailer FamilyMart is preparing to open three new stores, affirming that it will not withdraw from Vietnam as rumored before.

The FamilyMart convenience store at Sky Garden apartment building on Le Thanh Ton Street in HCMC’s District 1 has been seen to resume operations. However, the store’s location has been moved inside, with fewer products on display in an area of some ten square meters only.

According to an employee, the store is temporarily moved in to meet the demand of people in the building while the old location is being upgraded. The store will operate as usual late this month.

This FamilyMart store is 100% owned by FamilyMart although it was opened when the retailer entered a cooperation deal with Phu Thai. Therefore, after the two sides cut the ties, the store was not renamed B’s mart under Phu Thai like 41 other stores.

There will be three convenience stores bearing the FamilyMart brand to be opened this month and next at Le Thi Rieng Park in District 10, on Phan Van Tri Street in Go Vap District and at Riverside Residence in District 7, said the employee.

Such moves of FamilyMart have indicated that it will surely stay in the Vietnamese market and will not withdraw due to losses as rumored previously. Many suppliers also say the same thing based on information they have.

However, the unanswered point is whether FamilyMart will join hands with a local partner or operate independently in Vietnam.

FamilyMart is a retail brand of Japan and has been present in Vietnam since 2010 via a joint venture with Phu Thai, a distributor of consumer goods in Vietnam. The FamilyMart system had 42 stores in HCMC after three years, but Phu Thai has recently announced to take over the stake of FamilyMart in the joint venture and developed its owned brand-B’s mart.

Petition filed against sturgeon smuggling

Lam Dong Coldwater Fish Farming Association and sturgeon traders nationwide have sent a petition to the Prime Minister, looking for assistance in the fight against illegal sturgeon imports.

Currently, 2-3 tons of sturgeons are smuggled by air into HCMC every day and sold at only VND120,000-130,000 per kilo, much lower than the prices of locally-farmed sturgeons, according to the petition.

Tran Van Hao, chairman of Lam Dong Coldwater Fish Farming Association, remarked sturgeons raised in the north were not enough for sale to other regions, while those raised in the Central Highlands were transported to HCMC by road.

Therefore, he stated: “The sturgeons imported into HCMC every day are not domestic products, but they are imported illegally from China.”

Do Quang Tung, director of the Vietnam authority of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), said only one company had been granted license to import sturgeon eggs and breeds. CITES Vietnam has not licensed any company to import finished sturgeon products, he stated.

“All imported sturgeon available in the local market is contraband,” he said.

Nguyen Trong Cu, director of Viet Duc Trading and Investment Co., specializing in producing and trading sturgeons, said that apart from the 2-3 tons illicitly flown into HCMC, some 4-5 tons of smuggled sturgeons went on sale in the northern market every day.

Due to smuggled sturgeons, Viet Duc’s revenue from sturgeon sales in recent years had dropped by over 60%, he stressed.

“Not only Viet Duc faces such a situation, but many other sturgeon producers and traders are also caught in this situation,” he said.

Cheap sturgeons not only affect the local distribution network and threaten local traders and farmers, but also make consumers confused because it is not easy to distinguish between Vietnamese sturgeon and smuggled sturgeon.

However, at a review conference on the seafood industry in late June, Nguyen Huy Dien, deputy head of the General Directorate of Fisheries, said his agency had not found any proof of sturgeon smuggling from China.

Fragrant rice export turns hectic

Export of Vietnamese fragrant rice has turned more active over the past few weeks thanks to rising demand, limited supply and price advantage over Indian and Thai rice.

Lam Anh Tuan, director of Thinh Phat Co. Ltd. in Ben Tre, said fragrant rice export had recently become bustling. In response to the sales slump in the early months due to low quality, exporters have tightened control on their rice standard, and thus they have recorded better sales and higher prices.

“Hong Kong, Singapore and a number of African countries currently have strong demand for Vietnamese fragrant rice. In comparison with Indian and Thai products, Vietnamese fragrant rice has more competitive prices and thus has attracted more buyers,” he told the Daily.

Pham Thai Binh, director of Trung An Co. Ltd. in Can Tho, a large fragrant rice exporter in the Mekong Delta, said his company had achieved an export turnover of only US$8 million in the first quarter, which had doubled in the second quarter.

Export offer prices of Vietnamese fragrant rice are currently US$525-535 a ton, a rise of US$50-60 over the past 20 days, said the Vietnam Food Association (VFA). However, such prices are still far lower than offer prices of Thai Hom Mali Rice (US$1,065-1,075 per ton) and Indian Basmati Rice (US$1,515-1,525 per ton).

Binh said his company was selling Jasmine rice to Singapore, Malaysia and Hong Kong at US$580-600 per ton.

Ngo Ngoc Yen, owner of a rice outlet named Yen Ngoc in HCMC’s Tan Phu District, who often buys rice at Ba Dac Market in Tien Giang’s Cai Be District, said fragrant rice prices had increased VND400-500 per kilo against a fortnight ago.

Fresh paddy Jasmine and OM 4900 now sell for VND5,000-5,200 per kilo. Material and finished products of these two rice types are priced at VND8,500-8,700 and VND10,000-10,200 a kilo respectively, up VND400-600 over two weeks ago.

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