G-bonds: easy to sell, harder to disburse capital

The state treasury of Vietnam plans to issue government bonds worth 50 trillion VND (2.24 billion USD) in the third quarter of 2016.

The treasury will issue three-year bonds worth 5 trillion VND, five-year bonds worth 22 trillion VND and seven-year bonds worth 10 trillion VND.

It will also issue 10-year bonds worth 2 trillion VND, 15-year bonds worth 7 trillion VND, 20-year bond worth 1 trillion VND, and the longest term of 30-year bonds worth 3 trillion VND.

According to the treasury, the capital mobilisation from G-bonds in the first half of the year was effective, selling bonds worth more than 182 trillion VND, nearly 83 percent of the initial plan for the entire year.

After the first half, the treasury decided to add bonds worth another 30 trillion VND - bringing the total for the year to 250 trillion VND.

While the G-bond mobilisation was considered successful, the process of the G-bond capital disbursement was slow and failed to support the GDP growth in the context of low economic growth in the first six months, according to the Ministry of Planning and Investment (MPI).

The MPI said all ministries, sectors and localities disbursed about 81.8 trillion VND of public investment capital in the first five months of this year, completing 32.6 percent of the disbursement plan for 2016.

The MPI said complicated procedures and slow processes in some ministries and localities caused the problem. Some with the lowest disbursement percentages included the Ministry of National Defence with 9.8 percent, Hanoi with 2.9 percent, Phu Tho Province with 2.6 percent and Tien Giang Province with 2.3 percent, besides Son La Province with 1.1 percent.

On July 7, Prime Minister Nguyen Xuan Phuc asked all relevant agencies and local authorities to fast-track the disbursement of public investment capital to accomplish socio-economic development targets by the end of 2016.

Workshop evaluates Brexit impacts on ASEAN

The Association of Southeast Asian Nations (ASEAN) would enjoy a number of advantages afforded by a British exit or Brexit, which is expected to facilitate the signing of free trade agreements and lure more UK investments to the group, experts said at a workshop in Ho Chi Minh City on August 3.

The workshop, themed “Brexit and ASEAN Economic Community (AEC) from the perspective of integration”, heard that ASEAN-EU trade reached 201.4 billion EUR (roughly 227 billion USD) in 2015, up 21.8 billion EUR or 12.14 percent.

The figures prove that the EU is one of the ten-member group’s important export-import markets.

ASEAN holds great potential for trade cooperation with the EU, as the bloc serves as a market and a gateway for the union to access Asia-Pacific. Most Southeast Asian nations regard the EU as a strategic partner and hope for enhanced economic ties with the union across many fields.

The experts suggested that in the context that Brexit has temporarily lowered the UK’s economic and political positions, the country may turn its eyes towards Asia-Pacific.

Apart from the European market, the UK may pay heed to diversifying its own trade and easing the dependence on its neighbours following Brexit, they forecast, adding that Asia would be a dynamic and promising destination for the country.

This will create optimal conditions for the AEC on its path towards a united market where trade and investment are liberalised in a bid to raise ASEAN’s competitiveness globally, they said.

In the long-run, this is a good opportunity for ASEAN, including Vietnam, to beef up trade and investment ties with the EU, they said, noting that ASEAN member countries could learn how to adapt to economic and political changes through the event.

Associate Professor, Dr. Luu Ngoc Trinh from the Institute of World Economics and Politics said that Brexit has exerted indirect impacts on Vietnam’s export activities, explaining that although the country’s export to the EU makes up only 0.14 percent of its total export value, the devaluation of the Pound and the Euro has resulted in fiercer export competition, especially when Vietnam’s rivals also devalue their currencies.

Vietnam fisheries International exhibition opens in HCM City

The Vietnam Fisheries International Exhibition – Vietfish 2016 – opens in HCM City at the Saigon Exhibition and Convention Centre on August 3.

With the theme of “Asia’s Home of Seafood”, Vietfish 2016 is being attended by nearly 200 big local and foreign enterprises from 14 countries and territories like Malaysia, Thailand, Japan, Germany, the United States, Turkey and the Republic of Korea.

There are more than 350 booths at the exhibition, with a number of workshops organised as well.

According to Ngo Van Ich, Chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam is currently the world’s third largest farmed fish producer and the world’s fourth largest seafood exporter.

The event will last until August 5.

Hanoi’s economy achieves 7.3 percent growth

Hanoi enjoyed relatively high economic growth in the first half of the year with good performances in the service and industry-construction sectors, officials said at a municipal People’s Council meeting on August 1.

Vice Chairman of the municipal People’s Committee Nguyen Doan Toan reported to the meeting that gross regional domestic product (GRDP) increased by 7.3 percent, in which the service and industry-construction sectors grew 7.5 percent and 7.8 percent, respectively, while the agricultural sector recorded a modest increase of 2.1 percent.

Toan said the GRDP growth rate was “relatively high”, even though it was lower than the targeted annual growth of 8.5-9 percent.

A report by the Economics-Budget Committee of the municipal People’s Council said that in order to meet the annual target, the city would have to achieve a growth rate of 10-11 percent in the remaining months of the year, which would be difficult.

Budget collection in the first six months was about 85.8 trillion VND (3.8 billion USD), a 16.3 percent year-on-year increase.

This period also saw significant improvements in attracting investment capital, with a more than fourfold year-on-year increase in investment capital in industrial zones, according to Toan’s report.

The city authority approved most planning schemes at subdivision and district levels, which paved the way for appropriate investment to be carried out.

The application of information technology in administrative reform was boosted, resulting in considerable changes to the procedures of business registration, tax filing and the issuance of land right certificates. In the first six months, 98 percent of tax filing and 95 percent of tax payments were done online, according to the report.

However, the growth rate of export turnover was only 0.1 percent, much lower than the expected range of 7-8 percent.

The Consumer Price Index (CPI) increased 2.8 percent year-on-year, which was higher than the average rate of the whole country.

Members of the municipal People’s Council also pointed out other areas that need improvement.

Deputy Ho Van Nga from Quoc Oai District said the city risked falling short of its targets for enterprise equitisation and State capital withdrawal from enterprises.

“The city aims to equitise three enterprises and lessen State capital in 60 others in 2016. But up to now, none were equitised, and State capital was only lessened in seven enterprises,” Nga said.

Nga asked the city authority to clarify their solutions to the problem and answer whether the targets could be fulfilled or not.

Toan acknowledged the slow speed, attributing it to the fact that the city had to deal with many equitisation plans for the 2016-20 period, in addition to plans for an earlier period.

He said the Department of Finance, which was in charge of the issue, was accelerating the pace.

Deputy Pham Dinh Doan from Hoang Mai District raised the issue of local enterprises’ weakening competitive capacity amidst a rising number of foreign-invested companies as a result of various free trade agreements the country recently signed.

Doan suggested the city authority work with local professional associations to discuss measures to help local enterprises increase their competitiveness for better integration.

He said the city should take the lead in promoting start-ups and providing favourable conditions for them to thrive.

Deputy Pham Thanh Mai from Dong Anh District urged the early completion of wastewater treatment facilities in industrial zones.

Toan responded by saying that 14 wastewater treatment facilities would be completed and operating by the end of this year. The construction of other treatment facilities, which are slated for the 2017-2020 period, would also be accelerated, he said.

Vietnamese processing industry lures ASEAN investors

The processing and manufacturing industry in Vietnam has become very attractive to investors from the Association of Southeast Asian Nations (ASEAN).

ASEAN investors have pumped as much as 27.68 billion USD into 1,176 projects in the field, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

As of July 20, the country had 3,040 valid investment projects from ASEAN capitalised at over 64.47 billion USD.

In the first seven months of 2016, Vietnam attracted 181 new projects and saw 79 existing ones from the bloc increase capital, worth 2.49 billion USD, accounting for 19.26 percent of the nation’s total investment.

In addition to processing and manufacturing, ASEAN investors are interested in real estate, electricity production and distribution, and construction.

Singapore tops the association in investing in Vietnam with 1,663 projects worth 38.1 billion USD, followed by Malaysia (13.8 billion USD) and Thailand (9.4 billion USD).

Singapore and Thailand have continuously increased investment in Vietnam in recent times.

The Ministry of Planning and Investment praised investment projects from ASEAN businesses, especially those from Singapore .

The ministry said Singaporean firms observe Vietnamese law and projects carried out at the Vietnam – Singapore Industrial Park (VSIP) are significant to development.

Attractive destinations include Ho Chi Minh City, Hanoi, and southern Binh Duong and Dong Nai provinces thanks to good infrastructure.

HCM City and Hanoi took the lead, drawing 17.33 billion USD and 8.39 billion USD respectively from ASEAN investors, making up 26.8 percent and 13 percent of the bloc’s total investment in Vietnam.

PV Drilling to expand markets abroad

The PetroVietnam Drilling and Well Services Corporation (PV Drilling) plans to expand its coverage in rig and drilling related services provision, to Myanmar, Malaysia and the Middle East, according to General Director Pham Tien Dung.

The plan is part of the firm’s efforts to overcome its current difficult period and grasp future opportunities in these markets, said Dung, adding that PV Drilling is also taking measures to cut costs, especially in unused rigs.

The firm is also seeking measures to make the full use of its equipment to provide new services in the areas of exploring and exploiting oil and gas, he said.

At the same time, PV Drilling will also streamline its organisation and improve its management efficiency.

According to the PV Drilling official, PetroVietnam plans to drill new oil wells in 2016, to reach its target of exploiting 1 million tonnes more of crude oil than the goal assigned by the Government. This is considered a chance for PV Drilling to become busier.

A financial report by PV Drilling for the second quarter of this year reveals that the total revenue of the firm was only 1.77 trillion VND, a decrease of 53.5 percent over the same period last year, with the highest drop being in drilling and well technique services.

Meanwhile, its after-tax profits reached more than 34.2 billion VND, a plunge of 94 percent over the same quater in 2015.

PV Drilling leaders attribute the situation to the global plummeting oil prices. On average, only 2.7 of the firm’s rigs were operational in the second quarter of this year, much lower than the average five rigs in operation for the same period last year, with rig rentals down by 35-40 percent. In the second quarter, the active rigs it was leasing decreased to one, from three the year before.

PV Drilling’s service portfolio includes oil rigs, rig and well technology and human resources supply in the areas of oil drilling and oil well operation, both offshore and inland.

Binh Phuoc attracts over 25 million USD in foreign investment

The southeastern province of Binh Phuoc has attracted 25.17 million USD in foreign direct investment (FDI) in the first seven months this year, according to the provincial Department of Planning and Investment.

Of which, the Republic of Korea has six projects with a combined capital of 10.36 million USD, followed by China with four projects and a total investment of 6.65 million USD and the United Kingdom with one 6.66 million USD project.

As of now, the province has 149 FDI projects still in validity with a combined investment capital of 1.12 billion USD, 114 of which with a total capital of 906 million USD are in industrial parks and 35 projects worth a total of 212 million USD are outside industrial parks.

FDI projects have used 1,100 new labourers and contributed 2.4 million USD to the province’s budget in the first half of this year.

They are estimated to earn a combined revenue of 1.66 million USD in 2016, which shows a 6-percent rise from 2015 and add about 5.7 million USD to the local coffer.

According to the department, the province will continue creating favourable conditions to attract more foreign investments.

VEAM to launch IPO in August

The Vietnam Engine and Agricultural Machinery Corporation (VEAM) plans to sell more than 167 million shares at its initial public offering on the Ha Noi Stock Exchange on August 29.

After equitisation, the corporation expects to have total registered capital of nearly VND13.3 trillion (US$595.3 million).

The shares, equal to 12.57 per cent of the registered capital, will be offered at a starting price of VND14,290 each.

The corporation aims to earn more than VND10.5 trillion in revenue this year, a six per cent increase compared with last year.

VEAM, established in 1980, mainly produces agricultural equipment and machines, tractors, trucks and buses, as well as motorbikes and spare parts.

Bao Viet Holdings' H1 profit rises 8%

Bao Viet Holdings (BVH) has reported higher six-month revenues and profits as the domestic insurance market saw a six-year high in the first half of this year.

The insurance company earned VND11.7 trillion (US$525 million) in revenue and VND789 billion as profit in the first half of 2016, a rise of 20.2 per cent and eight per cent, respectively, over the same period last year.

Insurance continued to provide the largest support for the company's takings. Life insurance revenue reached nearly VND6.1 trillion, up 31.9 per cent year-on-year, while non-life insurance proceeds amounted to more than VND3.2 trillion, up 5.6 per cent.

Viet Nam's insurance industry grew nearly 26 per cent in the first six months of this year, the highest growth rate since 2011, the finance ministry said.

Among its subsidiaries, Bao Viet Life Corporation saw the largest expansion with total revenues hitting almost VND7.8 trillion, a year-on-year increase of 27.7 per cent, of which insurance premium comprised VND6.1 trillion, up 31.9 per cent year-on-year.

Bao Viet Life continued to be the market leader with its new business premium taking in more than VND1.2 trillion, a year-on-year rise of 40.3 per cent. The company's net profit touched VND389 billion.

Bao Viet Insurance Corporation also saw a six-per-cent rise in revenues in the first six months, amounting to VND3.5 trillion. Its net profit was VND160 billion, equivalent to 53 per cent of the company's yearly target.

In its financial and investment arms, Bao Viet Fund saw encouraging figures with revenues rising 78.9 per cent year-on-year to reach VND44 billion and net profit soaring 93.6 per cent to touch VND14 billion. The fund is managing total assets worth almost $1.6 billion.

Bao Viet Securities Co reported total revenues of VND150 billion in the first half, up 2.6 per cent year-on-year, and net profit of VND56 billion. It is the second largest brokerage in terms of market shares on the HCM Stock Exchange, at 33.5 per cent.

Bao Viet Holdings spent more than VND544 billion, equivalent to 54.3 per cent of its 2015 net profit, to pay cash dividend.

Its share price has climbed more than 11 per cent since the beginning of this year. BVH is being traded at VND59,000 per share this morning.

Local cobblers fail to shine in global market

The Ministry of Industry and Trade (MoIT) has said local shoemakers in Vietnam are failing to adapt to the competitive world and meet with the strict quality demands of European customers.

Inexpensive eye-catching fashionable footwear from China and other Asian countries is flooding the European marketplace, said Pham Anh Tuan, deputy director of the MoIT Light Industry Department, at a recent conference in Hanoi.

As a result, Chinese and other foreign made shoes have been outshining those locally produced, making it extremely difficult for local cobblers to get any traction in the markets of any of the EU 28 member states.

Currently the foreign sector accounts for 79% of the Vietnam footwear industry with the domestic sector accounting for the balance of 21%, said Mr Tuan. He noted there are roughly 600 local companies in the segment, employing an estimated one million workers.

Roughly three-fourths of the domestic sector does outsourcing work for foreign companies using designs and materials supplied to them, he continued, adding that only about one-fourth of the industry uses their own designs and purchased materials.

Most of the latter companies purchase their leather and textiles from China, the Republic of Korea or Taiwan. Although there is some limited domestic textile production that takes place within Vietnam, only about one-fourth of it is considered export quality.

Vietnam needs to develop the tanning segment of the economy, said Mr Tuan. However, the industry emits a lot of pollutants into the environment. The disposal of industrial wastes requires expensive modern waste systems that are well beyond the financial capacity of the domestic sector.

In addition, the laws related to pollution lack clarity. As a result, foreigners are reluctant to commit foreign direct investment in the tanning segment to upgrade waste treatment infrastructure and technology.

Foreigners, principally China, also dominate the domestic retail footwear market, controlling a 60% market share, said Mr Tuan. He said the best estimates put the total number of pairs of shoes sold in Vietnam annually on average at 150 million.

Although Chinese shoes are trendy, they are not durable, he said, adding that Vietnamese customers buy them because they are less expensive than those locally made.

Local manufacturers dominate only the low-cost segment, mainly sandals. They have a competitive edge over imports with mainly poor and rural people whose number one concern lies with the cost, said Mr Tuan.

We’ve been urging local shoemakers to get organized and increase sales in the EU member states, but they have just had to many difficulties keeping up with the competition in innovativeness, quality and price, he underscored.

Pursuant to the Vietnam-EU Free Trade Agreement (FTA) signed late last year, the industry segment could see benefits from preferential tariff reductions but those won’t happen until at least 2018.

Even then, due to complex rules of origin ‘yarn-forward rules’ stating that every piece of a shoe will have to come from EU signatory states to qualify for the tariff exemption, there may be little to no benefit.

Meanwhile other countries such as the Philippines, Pakistan and Bangladesh currently are more price competitive than local shoemakers in the EU as they benefit from preferential trade arrangements.

In particular, they currently have lower tariffs on their exports under the European Union’s Generalized System of Preference Plus (EU-GSP+) scheme that benefits developing countries.

The shoe market in Europe has been improving, noted Mr Tuan. It’s just very frustrating for local cobblers who haven’t figured out how to effectively compete in it.

Amata to build second IZ in Vietnam

Amata Vietnam, a subsidiary company of Thai Amata Group, plans to invest US$200 million in constructing the second industrial zone, Vietnam-Amata City Long Thanh in Dong Nai province in 2016-2018, according to Deal Street Asia.

The company says the project will be built on nearly 1,300ha, 40% of land will be an industrial estate and 60% will be accommodations and commercial buildings.

Amata chief executive officer Somhatai Panichewa said total investment for the project is estimated at US$800 million.

Amata VN is one of top three foreign-owned industrial estate developers in Vietnam. It invested in its first project – Amata City Bien Hoa – about 22 years ago and has injected around US$800 million into the development there.

Besides, Amata VN is applying a licence for building another IZ in the north, which will comprise both an industrial park and accommodations like Long Thanh with a larger size on a strategic location near a deep sea port.

IFC media workshop fosters corporate governance awareness

IFC, a member of the World Bank Group, hosted a two-day corporate governance workshop last week to update regional media on effective practices among public companies. The event helped equip journalists with sufficient skills to identify red flags and unearth deficiencies in business activities.

Two dozen business editors and reporters from Cambodia, China, Indonesia, Lao PDR, Mongolia, Myanmar, the Philippines, Thailand, and Vietnam took part in the workshop in Bangkok to address key corporate governance issues, including state-owned enterprise and family-owned business structures, board leadership, risk management, as well as environmental and social standards.

“Having a deeper understanding of what constitutes good and bad corporate governance practices will improve journalists’ ability to spot red flags and uncover stories that are of public importance,” said Chris Razook, IFC Corporate Governance lead for East Asia and the Pacific. “The media can help champion transparency and accountability in public companies. Well-run companies are more profitable, sustainable, and are able to attract more foreign investment.” 

Last year’s establishment of the Association of Southeast Asian Nations (ASEAN) Economic Community is expected to boost regional economic integration. Companies in ASEAN countries thus see an urgent need to improve market transparency and corporate governance practices, while raising their performance and competitiveness. 

IFC is also meeting with representatives from the China Securities Regulatory Commission and stock exchanges in Hanoi, Ho Chi Minh City, and Shenzhen to discuss the challenges of promoting good corporate governance at their home markets.

“Recently, corporate governance reform has been at the top of the agenda for both regulators and companies in Vietnam, as businesses are seeking to improve their competitiveness amidst closer economic integration in the region,” said Nguyen Vu Quang Trung, deputy chief executive officer of the Hanoi Stock Exchange. “We appreciate opportunities to share knowledge with IFC and regional peers to catch up on new developments in corporate governance and discuss further collaboration.”

IFC works with the private sector in developing countries to build sustainable business lines. IFC’s East Asia Pacific Corporate Governance Program helps businesses to adopt good practices and standards to mitigate risks, prevent mismanagement, and attract the investment and capital needed to fuel their growth. The program is delivered in partnership with the Australian Department of Foreign Affairs and Trade, the Swiss State Secretariat for Economic Affairs, and the UK Department for International Development.

Kolon Group goes into investment frenzy in Vietnam

Kolon Group, a leading Korean manufacturer, aims to grow its presence on the Vietnamese market after being licensed for a $14.1 million airbag manufacturing facility in the southern province of Binh Duong earlier this year.

According to a source with knowledge of the matter, the group is now in the negotiation process to license its new project, probably also located in Binh Duong province. 

The source also revealed that this would be a hi-tech manufacturing project with a fair investment capital. 

Since earlier this year, Kolon Group representatives have been conducting field surveys at several northern locations, such as Haiphong city and Ha Nam province, to learn about the local investment environment. 

They also filed proposals on building plants manufacturing chemical fibres or industrial fabrics used for auto tyres. 

Kolon is Korea’s leading diversified group operating in a variety of fields, such as industrial materials production and fashion. 

Currently, it is named among the world’s top three Aramid fibre manufacturers. The group is also the top player holding the largest market share of the Korean airbag manufacturing segment. 

Recent statistics released by the Binh Duong Department of Planning and Investment show that as of June 2016, South Korea was the third largest foreign investor in the province, with 569 projects valued at $2.25 billion in total committed capital. 

In the first half of this year alone, Binh Duong granted licenses to 27 new investment projects from Korea and registered 13 existing Korean projects for supplemental capital. The total committed value surpassed $155 million, putting South Korea in the second place in terms of capital value among countries and territories doing business in the province.

Saigon Centre mall brings out the big guns

On August 1, Keppel Land Limited opened its retail mall in Saigon Centre in Ho Chi Minh City, anchored by the country’s first Takashimaya department store.

With a wide and exciting array of fashion, lifestyle, and food and beverage offerings, Saigon Centre is poised to be the shopping and lifestyle destination in Ho Chi Minh City.

According to Keppel Land’s CEO Ang Wee Gee, as a pioneer foreign real estate investor that has grown to be one of the largest players in Vietnam, Keppel Land has been privileged to play a part in transforming the country’s cityscape.

“Today marks an important milestone, as we open our retail mall in Saigon Centre, which has become a landmark of Ho Chi Minh City’s central business district,” Gee said.

He added that the company will build on its experience and expertise to develop iconic mixed-use developments, creating vibrant and sustainable live-work-play environments of enduring value in Vietnam.

Integrated with the revamped first phase of the mall, the new seven-storey retail unit forms part of the second phase of Saigon Centre and is 100 per cent committed, with a total gross floor area of 55,000 square metres.

The mall houses more than 400 international and local brands, as well as leading Japanese retailer Takashimaya Department Store’s 15,000 square metre flagship outlet.

Tatsuo Yano, managing director of Takashimaya Singapore, said that Ho Chi Minh City is the group’s fourth overseas department location.

“This development has come about through years of cultivated retail experience between Japan and Singapore. We aim to create a store that will become a sought-after shopping destination for our customers in Ho Chi Minh City,” said Yano.

About 25 per cent of the tenants in Saigon Centre’s retail mall are entrants to the market. Such onternationally renowned brands debuting in Vietnam include luxury and fashion labels Carolina Herrera, Kenzo, Moschino, Stuart Weitzman, and Armani Exchange. 

Close to 30 per cent of Saigon Centre’s retail mall has been set aside for F&B, presenting diners with a wide selection of about 50 restaurants, cafes, and food kiosks.

Shoppers can look forward to exciting upcoming events and promotion events at the 500-square metre atrium, as well as relax at the rooftop garden above the retail podium once Phase Two of the office tower, currently progressing on schedule, is completed by the end of 2017.

Saigon Centre Phases One and Two are jointly owned by Keppel Land, Toshin Development Co., Ltd., and Vietnamese partners Southern Waterborne and Transportation Corporation and Saigon Real Estate Corporation. Keppel Land holds a 45.3 per cent stake in the development.

HCM City to foster manufacturing

HCM City will undertake activities this year to boost manufacturing and supporting industries, according to the local Department of Industry and Trade.

Speaking at a seminar in the city yesterday, Nguyen Phuong Dong, the department's deputy director, said his agency would create a database of businesses in supporting industries and offer training programmes based on businesses' needs.

City authorities would periodically meet with business executives from these sectors to resolve the difficulties they face, he said.

The city would continue to implement its investment stimulus programme that provides preferential loans to firms in key sectors, including manufacturing and supporting industry.

The programme also sought to encourage domestic firms to invest in technology to improve their capacity and competitiveness, he said.

Eligible firms would have 50-100 per cent of their loan interest subsidised for up to seven years, he said.

Twenty six companies have applied for loans since the programme was launched last October, with three getting them.

Pham Ngoc Anh, deputy director of the department's Centre for Supporting Industries Development, said the city has a programme to select typical manufacturing and supporting industry products to gradually create a list of such products.

Organised every two years, it focuses on the mechanical engineering, rubber and plastic, food and foodstuff, electronic, garment and textile, and footwear sectors, he said.

Businesses participating in the programme would enjoy benefits like being part of the city's trade promotion programmes both at home and abroad, he said.

Dong said the department would organise an international supporting industries exhibition in September to help businesses promote their products and production capacity and enable them to link up with local and foreign partners and enter the global supply chain.

Hoang Tho Vuong, director of the Centre for Supporting Industries Development, said the third Viet Nam International Supporting Industries Exhibition would feature more than 10,000 products from 150 exhibitors.

It would also include seminars and business-matching programmes to enable local business executives meet potential customers, he said.

At the seminar yesterday, Jabil Viet Nam Co.,Ltd., a subsidiary of the US-based electronic product solutions company Jabil Circuit Inc., displayed products and items the company wants to source locally.

Raymond Ngang, regional commodity manager at the company, said last year the company bought US$35 million worth of mechanical products (imports and local), including plastics, cables, keypads, metal, packaging materials, die cut materials, lens, printing materials and others. With the company expected to enjoy a 30 per cent growth rate this year the purchasing could reach $45 million, he said, adding that he encouraged local suppliers to make contact.

BIDV's bad debts up 30% in 1H

Total bad debts held by Vietnam’s largest bank, the Bank for Investment and Development of Vietnam (BIDV), have increased over the last six months and now pose a greater risk for the bank, its first half report reveals.

Its bad debts stood at VND13 trillion ($582.79 million) by the end of June, VND3 trillion ($134.44 million) higher than on December 31, 2015. “The figure has increased 31 per cent since December,” the report stated.

Of this, about half have been classified as non-performing loans, totaling VND6.3 trillion ($282.42 million), which are “unable to be retrieved”. Another VND2.3 trillion ($103.1 million), or 18 per cent, was classified as “doubtful” and may become bad debts at some point in the future.

BIDV’s risk provision was therefore reported at VND4.52 trillion ($202.63 million), an increase of 30 per cent against December 31.

Total assets reached VND930 trillion ($41.7 billion), 9.3 per cent higher than December 31, remaining unchanged as the highest in Vietnam’s banking sector.

Pre-tax profit in the first half was VND3.31 trillion ($148.38 million), up 6.3 per cent year-on-year.

Banking services earned the most profit, of VND1.15 trillion ($51.55 million), 10 per cent higher than in the same period last year. Its foreign currency trading also saw impressive results, with profit at VND205 billion ($9.19 million), an increase of 300 per cent year-on-year.

Net profit from securities trading reached VND222 billion ($9.95 million), compared to a loss of VND134 of billion ($6 million) in the first half of last year. Net losses from securities investment were VND85 billion ($3.81 million) while it turned a profit of VND46 billion ($2.06 million) in the same period last year.

Net profit from other business activities fell significantly, standing at VND757 billion ($33.93 million) in the first half, down 37 per cent year-on-year.

Ratings agency Moody’s said in May that BIDV was among a number of Vietnamese banks that could be exposed to risks after providing loans to the Hoang Anh Gia Lai Group (HAGL). “BIDV has the largest exposure to HAGL among Vietnam’s banks, with loans and bonds comprising a high 27 per cent of the bank’s tangible common equity (TCE) at the end of March 2016,” Moody’s said. 

Short-term outstanding debt at BIDV in the first half reached VND362.48 trillion ($16.24 billion), 6 per cent higher than on December 31, while long-term outstanding debt reached VND209.92 trillion ($9.41 billion), 20 per cent higher.

In the first half BIDV set credit risk provisions of VND4.52 trillion ($202.63 million), 30 per cent higher than in the same period last year.

Its outstanding credit at the end of the second quarter totaled VND680 trillion ($30.48 billion), an increase of 8.3 per cent against the beginning of the year. Total capital mobilization from customers in the first half reached over VND747 trillion ($33.48 billion), up 13 per cent compared to December 31.

BIDV recently received some positive news, with its share being added to the VN30-Index in late July, while the Myanmar Government approved it opening a branch in the country with initial investment of $85 million.

Green urban park complex worth US$ six billion vivifies city

The country’s leading property developer Van Thinh Phat Group Corporation today held a signing ceremony of the cooperation agreement on developing an ecological urban park project with its foreign partners Pavilion Group and Genting Group at Reverie Saigon Hotel inside Times Square Building.

Representatives of the investors sign the cooperation agreement on developing the ecological urban park complex Red Light Cap at the Reverie Saigon Hotel on August 3rd, 2016.

The project Saigon Peninsula covering a total area of nearly 118 hectares at Phu Thuan Ward of District 7 in HCMC consists of a multi-functional park, an international cruise terminal port, office towers, resort villas, apartment blocks, hotel and other functional areas… The complex of unique architectural constructions will create sparkling and fascinating beauty of the urban area named the Red Light Cap.

The project has been approved by the Ho Chi Minh City People’s Committee and Saigon Peninsula Group Corporation which is one of the members Van Thinh Phat Group was recognized as the project’s major investor by the committee.

With the total investment capital of US$ 6 billion the investor will turn the barren land into an ecological park including a cluster of world class unique architectural constructions and “green lung” blending into a wonderful, fresh space at the confluence of Saigon River and Nha Be River. 

Pavilion Group is a Malaysia-based world class property developer. Its Executive Chairman Desmond Lim who is the founder and also the owner of the shopping mall Pavilion Kuala Lumpur, is appreciated for successful achievements in multi-sector development, project management and long-term investment.

Pavilion Group will lead in the master planning and landmark development consisting of a luxurious shopping mall combined with a 5-star hotel, high standard apartment blocks, deluxe resort villas and class A office towers in the Saigon Peninsula Project.

Genting Group, under the leadership of Tan Sri Lim Kok Thay, will build the 200,000GRT international cruise terminal port which will be the largest passenger cruise port in Viet Nam.

Two other Korean leading E&C companies, Posco E&C and Hyundai E&C, are ready to participate as EPC contractors of the project.

The parties will contribute their experience, potential and finance to every important work items of the project and share the same objective of developing the project comprehensively.

The investors pledged to join hand to change the large barren land but unique location in Ho Chi Minh City into an ideal destination for those who like to soak up the gentle river space, greenery and freshness and enjoy the sun as it rises above the horizon or watch the sun peacefully goes down at the confluence of rivers looking charming and gliding. At night magnificent light colors of the Red Light Cap reaching out wetland South Saigon create a magical nature space which looks like a captivating painting.

Beside the Saigon Peninsula Project, the investors also eye on several multi-billion infrastructure projects in Ho Chi Minh City.

The cooperation will contribute to boosting the country’s tourism industry as well as create over 30,000 job opportunities for local people and attract more potential foreign partners to invest in Ho Chi Minh City in particular and Vietnam in general.

HCMC invests US$134 million in startup, technology renewal projects

The Ho Chi Minh City People’s Committee will set up a startup fund with the initial capital of VND1 trillion (US$44.6 million) as a part of its action plan to implement the Government’s Resolution 35 on business assistance and development by 2020.

In an announcement yesterday, the committee’s office chief Vo Van Hoan revealed one more fund worth VND2 trillion ($89.2 million) will be set up to finance technology and equipment innovation and establishment of a startup assistance center.

The funds just provide initial capital, said Mr. Hoan , promoting universities, enterprises and associations to establish startup funds on their own.

Districts and agencies will start building specific works to sponsor businesses next week.

According to the plan, the city targets 500,000 businesses in the next four years, it is 281,000 now. Private sector will contribute to about 65 percent of the city’s Gross Regional Domestic Product (GRDP) and 64 percent of social investment capital which is 61 percent at present.

To obtain these targets, HCMC has put forward measures, for instance it will improve the publicity and transparence of procedures, plans and projects and build a mechanism to transfer individual business households into enterprises.

Director of the Department of Planning and Investment Su Ngoc Anh said that the department would work with districts on measures to link up and help businesses attend in value chains in the following week.

Tax arrears amount to US$1.03 billion in Hanoi

Tax and fee arrears have amounted to VND23 trillion (US$1.03 billion) accounting for 13 percent of 2016 budget revenue estimates in the capital city of Hanoi, reported chairwoman of the city People’s Council Nguyen Thi Bich Ngoc on Tuesday.

At the second session of the council yesterday, head of the Hanoi Taxation Department Nguyen The Manh said that they had transferred 15 cases with large tax debts to the investigation police agency in the city last year.

This year, two firms have showed signs of running away leaving VND31 billion ($1.39 million) debts.

Director of the Hanoi Police Department Doan Duy Khuong said that tax debt and evasion have been complicated in Hanoi. Loopholes in the legal system are a very important reason for businesses to evade taxes.

At the meeting, director of the Department of Planning and Architecture Le Vinh revealed that all polluting production establishments will be removed out from the center of the city.

Loan-to-deposit ratio at State-owned banks higher than permitted

By end-May, the loan-to-deposit ratio (LDR) at many banks which are wholly and majority owned by the State had stood at 95.67%, much higher than the ceiling of 90% set by the central bank.

According to data of the State Bank of Vietnam (SBV), the LDR at credit institutions had been 86.74% by end-May, which was considered a high level. This is because finance and finance leasing companies whose operations are not regulated as strictly as banks reported the LDR of a staggering 296.7%.

The banks which are wholly and majority owned by the State recorded the LDR of 95.67%.

They include the Vietnam Bank for Agriculture and Rural Development, Bank for Investment and Development of Vietnam, Vietnam Bank for Industry and Trade, Bank for Foreign Trade of Vietnam, Vietnam Bank for Social Policy, Vietnam Construction Commercial One Member Limited Liability Bank, Global Petroleum Commercial One Member Limited Liability Bank and Ocean Commercial One Member Limited Liability Bank.

Cooperative credit institutions came second. Joint stock banks came third with the LDR of 77.65%, and joint venture and foreign banks took the fourth position with 62.66%.

Under the SBV’s Circular 36, which was issued on November 24, 2014 and came into force on February 1 last year, the LDR is capped at 90% at State-owned credit institutions and foreign bank branches, and 80% at cooperative, joint stock, joint venture and 100% foreign-invested banks. 

The circular says credit institutions that do not comply with safety regulations and ratios must take measures to meet requirements in six months.

The LDR at commercial banks majority owned by the State has been higher than the ceiling over the past two years.

Some of the banks told the Daily that bank loans increased strongly in the first six months of this year and that they are optimistic about the credit growth target of 18% this year.

The LDR is a tool used to manage and monitor banks’ operations to ensure stability and safety of the financial system.

If the LDR increases, liquidity in the banking system will fall correspondingly. A high level of LDR will prevent banks from achieving higher credit growth and from being affected by unexpected massive cash withdrawals. High LDR also affects banks’ investment and lending decisions.

In almost nations, the LDR usually stands at 75-80%, such as 75% or less in China and 80% in the Philippines.  

According to statistics of the State Bank of Vietnam, total assets, equity and chartered capital at local banks have risen significantly. Commercial banks majority owned by the State have taken the lead, followed by joint stock banks.  

Despite rising total assets, the capital adequacy ratio (CAR) in the banking system had plunged to 12.68% by the end of May, lower than the minimum of 13% in other countries.

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