VN forex reserves predicted to top $15.8 bln

Vietnam’s foreign reserves this year will reach US$15.81 billion from the $12.56 billion recorded last year, forecasted JPMorgan Chase Bank in its recent report on the country’s macro-economy.

“Despite the surge, the country’s forex reserve still remains at a low rate, equal to only 1.5 months of imports,” the report stated.

If the country’s inflation cools down as predicted, the reserves will rise as local people will switch to depositing in their local currency, said the global financial services firm.

JPMorgan experts also said that Vietnam’s economy this year is likely to reach a higher level of stability than last year, and it is inflation that exerts the strongest impact on the balance of payment, rather than the trade deficit.

Vietnam is estimated to enjoy a balance of payment surplus of $1.8 billion in 2011, JPMorgan said, predicting the figure to amount to $3.25 billion this year.

“With the country’s inflation expected to decelerate, and the government prioritizing economic stabilization rather than the ‘grow at all costs’ policy, it is expected that the basic economic factors of Vietnam will be improved,” the report said.

However, the bank said bank asset quality still remains a major threat to the country’s economy, though it is not likely that the banking sector will be hit by a crisis.

In 2012, foreign direct investment (FDI) to the country is expected to reach $10.5 billion, and foreign indirect investment (FII) will rise to $500 million from negative $5.6 billion in 2011, JPMorgan predicted.

Ministry to build fund to assist enterprises

The Ministry of Planning and Investment is seeking government approval to develop a fund to assist the small- and medium-sized enterprises (SME) to get through tough spots, a ministry official told Tuoi Tre.

Nguyen Trong Hieu, deputy head of the Enterprise Development Agency under the ministry, said that given the current exorbitant lending interest rates, many SMEs are on the brink of bankruptcy, let alone making profits.

The private economic sector has to spend VVN220 trillion (US$10.56 billion) annually on paying interest from bank loans, while their total post-tax profits are only VND25 trillion, Hieu said, citing statistics from the Ministry of Finance.

“It is obvious that businesses operate mainly to feed the banks,” he said.

Hieu said that with what is said to be the world’s highest lending interest rate of 20 percent a year, many SMEs will be driven to insolvency should the rate remain uncut.

Earlier, the government had green-lighted a corporate income tax deferral for SMEs and labor-intensive businesses, in a bid to help them in these hard economic times.

Though speaking highly of this government aid, Hieu said it was not of great help to those in need.

“Businesses have to borrow bank loans worth VND1,100 trillion annually, but the deferred amount of taxes in the whole of 2011 was only worth VND9.46 trillion,” Hieu said, citing figures from the finance ministry.

Thus, Hieu urged the Ministry of Finance and other relevant authorities to propose stronger assistance, such as a value added tax exemption for SMEs.

“Corporate income tax deferrals or cuts will not help SMEs much at a time when they cannot access bank loans, while interest rates are still high.”

Hieu said the Ministry of Planning and Investment has developed a plan for the SME Development Fund, and is waiting for the government’s go-ahead.

The fund is expected to be instituted this year, and is intended to provide loans to SMEs with preferential interest rates of only 80 percent that of the rates charged on the market, Hieu elaborated.

It will target SMEs with effective operations, and those operating in the supporting industries, most importantly the agricultural production and exporting sectors, he said.

“We have proposed that the government provide the initial capital, worth around VND3 to 5 trillion for the fund, while in the longer term, it will be capitalized by foreign development assistance funds,” he said.

Delta flower farmers concerned by late blossoming

While apricot farmers in Ho Chi Minh City are greatly concerned by their trees’ early blossoming, their counterparts in some Mekong Delta provinces are worried their flowers will not bloom in time to celebrate the Lunar New Year.

Even worse is the fact that the ratio of flowers damaged during the planting process due to bad weather is also high.

Nguyen Thoi Nhiem, a resident of the My Phong flower village in My Tho city of Tien Giang Province, said 30 percent of the flowers he is growing are likely to bloom long after the Tet holiday, which falls on January 23rd.

“This is because of the continual rains, hot sunlight, and light force of the northeast wind,” Nhiem explained.

Nhiem is tending a field of 6,000 flowerpots of mums, chrysanthemums and marigolds.

My Phong flower village is expected to supply local and HCMC markets with 700,000 flowerpots of different kinds for the Lunar New Year.

Meanwhile, Nguyen Hoai Phong of Ben Tre said as much as 50 percent of his flowerpots will not flourish on time, with disadvantageous weather remaining the main culprit.

Many traders have thus forced him to sell at low prices, Phong said.

“They charge me only VND50,000 (US$2.3) for a pot of mums.”

In Dong Thap, flower farmers are also worried, since the ratio of late-blossoming flowers in this locality is expected to be as high as 50 percent.

The province will market 2.5 million flowerpots for the Tet holiday this year, local agricultural authorities said.

Mekong Delta lures nearly US$10 billion in FDI

Mekong delta provinces have attracted an additional $126 million in foreign direct investment (FDI), raising the total FDI capital poured into the region to nearly $10 billion.

According to the Planning and Investment Ministry’s Foreign Investment Agency, there are 611 operating FDI projects in the region. Long An province takes the lead in the region in terms of FDI attraction with 371 projects, capitalized at over $3.56 billion. It is followed by Kien Giang province with projects worth more than $3 billion. Investors inject money mainly into processing and manufacturing industries.

The agency said provinces in the region are paying attention to improving infrastructure developing services and supporting industries and boosting administrative reforms and human resource training.

They have also focused on boosting investment promotion to lure more investors.

Dung Quat oil refinery set to produce 6 mln tons of products

The Dung Quat Oil RefineryThe Dung Quat Oil Refinery in the central province of Quang Nam plans to turn out and sell around 6 million tons of products this year.

The country’s first oil refinery has set to earn more than VND108 trillion in revenues and contribute over VND15 trillion to the state budget.

Since the refinery’s overall maintenance in mid Sept. 2011, the refinery has run at its full capacity. Last year, it produced almost 5.5 million tonnes of petroleum products and sold more than 5.4 million tons of products for almost VND110 trillion.

Eight petroleum and gas products produced by the refinery have received ISO 9001-:2008 certificates from Norway-based Det Norrske Veritas (DNV), a leading international provider of risk management services.

The products include liquefied petroleum gas (LPG), propylene, unleaded petrol, Jet A1 fuel, kerosene and diesel oil.

The refinery’s developer, PetroVietnam, and its foreign partners are studying a possibility to raise the refinery’s yearly capacity to 10 million tons.

They plan an additional investment of US$1 billion for the capacity expansion scheme, which is expected to be completed in 2016.

ANZ to sell its Sacombank stake to Eximbank

Australia and New Zealand Banking Group said on Thursday it will sell its entire 9.6 percent stake in Vietnam's Sacombank to Eximbank, another Vietnamese lender as it expands its own business in the Southeast Asian nation.

The divestment is the first by a foreign bank in Vietnam, where 11 other domestic banks still have shares of up to 20 percent of their registered capital owned by foreign lenders.

ANZ was expected to complete the sale early this month, ANZ said in a statement sent to Reuters.

It came after Sacombank Chief Executive Officer Tran Xuan Huy was quoted by a state-run newspaper as saying the approval was granted by the State Bank of Vietnam, the country's central bank.

The transfer would raise Eximbank's total stake in Sacombank to 9.73 percent, Huy was quoted as saying, without giving any value of the sale.

"The transaction is not material to ANZ and the sale terms are confidential," the ANZ statement said.

Shares in Sacombank ended 1.25 percent lower at 15,800 dong ($0.75) each on Thursday and Eximbank shares lost 1.38 percent to end at 14,300 dong. The VN Index closed down 2.26 percent at 340.94 points on Thursday due to sales under pressure of margin calls.

Sacombank was valued at $807 million going by its share's closing price on Thursday and the transfer would therefore be worth at nearly $77.5 million.

ANZ became a strategic investor in Sacombank in 2005. In 2008 it was licensed to establish a 100 percent-owned lender in Vietnam.

The bank, now with 10 outlets in Vietnam offering a full range of banking services, has extended its automated teller machine network, opened a call centre and launched internet banking for Vietnamese customers, ANZ CEO Asia Pacific Europe and America Alex Thursby said in the statement.

"Given this, it makes sense to give greater focus to the growth of our ANZ-owned business in Vietnam and to sell our stake in Sacombank," Thursby said.

Sacombank's gross profit last year reached an estimated 2.74 trillion dong ($130.3 million), Huy said in the interview with the newspaper, above the annual target that aimed to raise the bank's gross profit in 2011 by 12 percent to 2.7 trillion dong.

Both Sacombank and Eximbank are based in Ho Chi Minh City, Vietnam's commercial centre. ($1=21,026 dong)

Banks offer promotions to attract VND deposits

At a time when depositors’ demand for withdrawing their savings is high, many banks are now seeking ways to attract dong deposit in order to solve the liquidity problem.

Banks now face a dong liquidity shortage since depositors have drawn money for clearing debts, paying wages, or granting Tet bonuses, the Saigon Times Online reported.

Experts said some small banks have thus offered high interest rates for deposits in gold and foreign currencies in an effort to ease the shortage.

Banks will mortgage the mobilized gold, or exchange the foreign currencies, for the dong in the interbank market to solve the liquidity problem, they said.

Thus, the interest rate for gold deposits has steadily risen over the last three months. From the low rate of less than 1 percent a year last September, the rate recorded at most banks is now more than 2 percent a year.

Specifically, Saigon Commercial Bank (SCB), the first merged bank to be created under the State Bank of Vietnam’s restructuring plan, offers a rate as high as 3.5 percent a year.

High deposit interest rates can also be observed in foreign currencies. The rates for the euro, US, Australian, and Canadian dollars have been increased to 4 percent a year at most banks.

Meanwhile, some institutions have even breached the deposit interest rate cap of 14 percent set by the central bank, in order to attract more savings.

An executive of a food business revealed that a bank has offered an interest rate of more than 14 percent for a one-month deposit worth VND500 million and above.

A salesperson of a major bank based in District 5 said most banks now have promotional campaigns to keep depositors from withdrawing their savings, while attracting more customers.

Besides offering promotions, many banks have chosen to offer better customer care services to keep depositors.

An employee of Maritime Bank said that customers wishing to open saving accounts at his bank will not need to physically come to the bank, as its employees will come to customers’ home to complete all necessary procedures.

Meanwhile, Oriental Commercial Bank said its CEO will personally visit major depositors to hand over Tet gifts to them, as well as invite them to a New Year Eve’s party with the bank.

Hanoi to host Vietnam Summit on foreign economic relations

The third Vietnam Summit on foreign economic relations, titled “A new path into a new world,” will be held at Sheraton Hotel in Hanoi on January 11, 2012.

The summit co-organised by the Ministry of Foreign Affairs and the UK Economist Group, is expected to attract around 300-400 delegates, including leaders from the Government, ministries, large domestic and international economic groups, transnational companies, foreign representative offices and financial organizations in Vietnam.

The summit, which comprises eight sessions will focus on Vietnam’s role in Asia and the world, identify Vietnam’s new path and examine its prospect for economy and finance.

Delegates will also identify opportunities to develop industry, make the most of its huge market of nearly 90 million consumers and challenges to address environmental issues.

On the sidelines of conference, there will be exchanges between domestic and foreign businesses.

Vegetable oils exports up 51 pct

In 2011 Vietnam’s vegetable oils industry increased its export volume by 50 percent and its export value was up by 51 percent compared to the previous year, announced the Ministry of Industry and Trade.

The country exports vegetable oils mainly to Cambodia, China and Australia.

To gain this result, businesses dealt with numerous challenges such as fluctuated prices of input materials and difficulties forecasting production trends, noted the Vietnam Vegetable Oils Industry Corporation.

Besides, the packing price increased 32 percent, driving up export prices, and high interest rates also effected businesses’ profits.

Gas prices rise twice in one month

The domestic gas retail price increased by VND8,000 (US$0.38) per 12kg canister yesterday, hitting VND383,000 ($18.20).

Le Phuc Dai, general director of the Vinagas Dai Viet Energy JSC, attributed the rise to the increase in the fuel import tax rate from 2-5 per cent earlier this month.

The increase in the retail price was the second in five days after it rose by VND24,000 ($1.14) per 12kg canister on January 1.

HCM City leads country in industrial production

HCM City held its leading position in industrial development last year in both production size and development level, the municipal Department of Industry and Trade director Nguyen Van Lai said.

The city's production value last year reached VND740 trillion (US$32.5 billion), contributing to 42 per cent of the south's main industrial zone production value and 27.4 per cent of the country's industrial production value.

This year, the city has set an industrial production value target of VND881 trillion ($42 billion), equivalent to a 19.2 per cent year-on-year increase.

30,000 tonnes of sugar to be exported

The Ministry of Agriculture and Rural Development on Wednesday asked the Ministry of Industry and Trade to allow domestic enterprises to export 30,000 tonnes of sugar.

The move was made after the Viet Nam Sugar Association reported a high sugar output of 1.4 million tonnes in the 2011-12 crop and low sugar consumption demands in the domestic market.

Baskin-Robbins ice cream launched

The world largest ice cream chain, US-based Baskin-Robbins, will launch three shops in the city today.

The shops will be managed by Blue Star Food Corporation under a franchised agreement between the two sides.

Blue Star Food Corporation general director Nguyen Thanh Nam said the corporation planned to increase the number of shops to 50 in the next five years.

Ha Noi expands price stabilisation
 
The capital city would expand its price stabilisation programme to limit the impact of price increase on the people's living standards, Ha Noi Industry and Trade Department deputy director Nguyen Van Dong said.

Ha Noi would increase the number of fixed and mobile outlets of goods at stabilised prices, especially in suburban areas and industrial zones, and continue bringing rice, meat and eggs to schools and kindergartens.

The department would open nine mobile markets to sell goods in nine districts in the city for farmers.

Relevant offices would closely follow the supply and demand of goods and services in Ha Noi, Dong said. The offices would also promote a "market watch", to prevent trade fraud and smuggling, and penalise violations, he said.

Additionally, enterprises that get zero-interest loans under the price stabilisation programme must store goods and expand the distribution system for goods at stabilised prices to avoid escalation, he said.

Dong said that to meet increasing demand on consumption goods for Tet, large companies such as Hapro, Fivimart and BigC, had begun stocking up three months ago.

Deputy Minister of Industry and Trade Ho Thi Kim Thoa said that Ha Noi should attract more production enterprises into the stabilisation programm to create a stable supply.

Last year, a number of enterprises based in Ha Noi that were not eligible to get loans from the programme still kept products at stabilised prices to reduce difficulty for consumers.

In 2011, Ha Noi spent VND560 billion (US$26.8 million) in total from its budget for the programme. The city last year opened 665 outlets selling price stabilised goods, double the number in 2010. The programme also organised six outlets selling price stabilised goods in industrial zones and provided price-stabilised food to canteens at schools and companies with low-income workers.

HCM City to promote Vietnamese goods

The city will continue its campaign to promote consumption of Vietnamese goods this year, according to Duong Quan Ha, chairman of the HCM City Fatherland Front.

He said that public agencies, enterprises and local residents had strongly supported the campaign.

Speaking at a meeting in HCM City yesterday to review the "Vietnamese People use Vietnamese Products" campaign, he said that many local companies considered it a good opportunity to capture a bigger market share of the home market and improve their brand's reputation here and abroad.

As a result of the campaign, consumers have come to trust the products and service quality of local goods. The consumption ratio of domestic goods has been increasing in both traditional markets and supermarkets.

Bui Hanh Thu, deputy general director of Sai Gon Co.op, said local goods now accounted for 90 per cent of the total stock at her chain compared to 40-45 per cent in 1996, when Co.opMart first opened.

More and more goods produced by local companies satisfy consumer demand both in quality and price, she said.

Sai Gon Co.op this year plans to widen its distribution system by opening nine to10 new Co.opMart supermarkets and 15 Co.opFood shops to distribute Vietnamese goods to all of the country's regions.

Trinh Chi Cuong, general director of Dai Dong Tien Corporation, said his company would build new factory equipped with modern technology to improve product quality.

In addition, Cuong said the company would focus more on expanding its distribution systems both in modern and traditional distribution channels.

The company also plans to penetrate other neighbouring countries as Cambodia, Laos and Myanmar.

But attendees at the meeting cautioned that smuggled and poor quality goods as well as fakes were still available in markets, especially in rural areas, causing difficulties for local producers.

They said that authorised agencies should strengthen inspection of markets and strictly punish violators to protect the local producers' legitimate interests.

India, Viet Nam set out ambitious two-way trade plan

Viet Nam and India target doubling bilateral trade to US$7 billion by 2015, the visiting Indian Minister of State for External Affairs and Human Resources Development Indian E. Ahamed has said.

Speaking to the media in HCM City yesterday after arriving on a three-day visit, he said trade and economic relations have been on the upswing between India and Viet Nam that have for long enjoyed close and cordial ties in many areas.

He is in Viet Nam on the occasion of the 40th anniversary of the establishment of diplomatic relations, January 7, and the fifth anniversary of the establishment of the strategic partnership between the two nations.

Following India's adoption of its "Look East" policy, Viet Nam always figured high in its foreign policy priorities, and the two sides had exchanged many high-level visits in the last five years, he said.

Trade between the countries has surged in recent times from US$200 million in 2000 to more than $3.5 billion in 2011, after growing at over 48 per cent in the first 10 months.

Considering investment in Viet Nam as a first step to penetrating other ASEAN member countries, Ahamed said many Indian businesses have been showing increasing interest in many fields like farm produce processing, mineral oils, steel, black carbon, and IT training.

Indian investment in Viet Nam tops $400 million and seemed set to continue to rise, he said.

Huynh Thanh Lap, chairman of the Viet Nam-India Friendship Association, said despite the economic recession, last year's bilateral trade rose sharply.

Trade between HCM City and India had been worth $592 million in the first nine months of last year, he said.

Investors show interest in hotel projects in HCM City

More local investors, especially private ones, are now seeking investment opportunities and showing interest in building luxury hotels in HCMC.

Truong Vinh Tho, head of the Hotel Division under the HCMC Department of Culture, Sports and Tourism, said that there were more local private investors wanting to invest in hotel projects while the number of foreign ones was fewer.

“We do not have detailed figures, but the number of investors who said they may invest in big projects was on the rise,” Tho said.

Some investors planned to invest in housing projects at first, but then turned to hotels due to greater potential, he added.

According to the HCMC Department of Culture, Sports and Tourism, the city has 910 one- to five-star hotels with nearly 26,850 rooms.

The room occupancy of three- to five-star ones which attract mostly foreigners was around 71% last year, up five percentage points from the previous year. Besides, the average room rate of such hotels was US$94 per night, up 2%.

The growth of hotel rooms in the city is currently lower than the growth of international arrivals, the main source of income for the city’s tourism, Tho said. Therefore, the potential for hotel investments is quite high, he added.

“The tourist volume rose by 12.9% last year while the number of three- to five-star hotel rooms was up by nearly 5%. The room growth has not gone up much in recent years, and thus more investors want to enter the market,” he said.
 
Leather-shoe exports looking forward to TPP

The Trans-Pacific Partnership (TPP) agreement is expected to make the path wider for local footwear and leather products to enter the U.S than for other industries, said Vietnam Leather and Footwear Association (Lefaso).

Chairman Nguyen Duc Thuan of Lefaso told the Daily at a recent meeting with the media that TPP would offer a wider trade zone for Vietnamese shoe and bag makers, especially the U.S. market. As one of the nine nations joining in the negotiation for TPP, the U.S. may cut half the import tax rates imposed on Vietnamese footwear and leather products when TPP is translated into reality.

However, Thuan stated the advocacy campaign and negotiation of the Vietnamese side would be the decisive factor to the specific benefits for the industry.

An American expert previously informed the market share of Vietnamese footwear in the U.S. is usually some 5-6%, while China holds a hefty 87%.

According to Lefaso, the U.S. market is the main target of Vietnam when joining in TPP negotiation, since Vietnam has already signed bilateral or multilateral free trade agreements with most of the other parties involved in the TPP talks.

Vietnam has signed a bilateral trade agreement with the U.S., but it has signed free trade agreements with Australia, Brunei, Chile, Malaysia, New Zealand, and Singapore, which are also in the negotiation for the TPP.

Compared to other free trade agreements, TPP is considered a new stage of development with its quality of commitments and strict regulations on environment, labor and intellectual property.

Lefaso estimated TPP would offer more opportunities for Vietnamese leather and footwear sector to tap the U.S. market than other industries like textile and garment.

Under the criteria for product origin in the trade agreements, the U.S. usually requires export apparel products to be made of fibers produced by the U.S. or by the exporters themselves to enjoy preferential tariffs.

However, there may be easier requirement for shoe and bag products to enjoy preferential taxes because the U.S. does not produce materials and components for such products.

With the expectation of lower tax rates for local footwear products thanks to TPP, many shoe and bag exporters to the U.S. are eyeing Vietnam.

The U.S. market is currently accounting for 30% of the total export of Vietnam’s leather and footwear industry. The total export turnover of the industry reached US$7.5 billion in 2011 and is estimated at US$8.5 billion this year.

According to the Office of the United States Trade Representative (USTR), the tenth negotiation round for TPP in Malaysia concluded in early December 2011.

The U.S. will have bilateral meetings with the other TPP members in January and February this year to further discuss the legal documents and tax packages before the next negotiation round to be held in Australia this March.