City eyes bailout for struggling firms

The HCM City People's Committee has made several recommendations to central authorities to enable the corporate sector to overcome their difficulties and contribute to economic growth.

City officials listed the biggest problems as being a liquidity crunch, high interest rates, and forex shortage.

On Monday, at a meeting with officials from central agencies and ministries, City vice chairwoman Nguyen Thi Hong said the State Bank of Viet Nam (SBV) should increase sales of foreign currency to banks so that they have enough for the legitimate needs of businesses as well as individuals.

She also urged the Ministry of Finance to increase the income-tax threshold for individuals.

The Ministry of Industry and Trade should ensure stable power supply to manufacturing companies, she said.

The central bank has capped the dong deposit interest rate at 14 per cent.

"However, some banks still offer interest rates of 15 to 18 per cent," she said, adding that it had resulted in unhealthy competition among the banks. Thus, banks that follow the rule were likely to suffer a liquidity shortage."

Worse still, the high deposit rates would push lending interest rates, which were already at 18 to 22 per cent, even higher, she warned.

Huynh Van Minh, chairman of the Enterprises Association, confirmed that the shortage of funds and high interest rates were the biggest worries for companies now.

The SBV's HCM City branch has said the demand for funds was now greater than supply, which was putting pressure on banks to hike interest rates.

State Bank Governor Nguyen Van Giau said, however, that banks must continue to comply with interest-rate regulations, failing meant they would lose their licences.

He also urged them to revamp lending plans to ensure credit growth is under 20 per cent this year, and channel credit into manufacturing and trading, agriculture, and small firms.

Deputy Minister of Industry and Trade Nguyen Thanh Bien spoke about power supply for production, saying his ministry already has a plan for the dry season.

There would be no power cuts in HCM City in April, he promised.

To support small- and medium-sized firms, the Government has allowed them to defer their income tax payments by a year, Deputy Minister of Finance Do Hoang Anh Tuan said.

HCM City hosts global logistics meet-up

Rapid economic growth and a booming logistics industry would help Viet Nam attract investment in the sector, delegates told a conference being held in HCM City.

Speaking at the four-day 18th International Freight and Logistics Network (IFLN) Network's Membership conference which opened on Sunday, president of the IFLN, Michel Vanlerberghe, said: "The annual conference will provide an excellent opportunity for all participants to educate themselves about the latest economic development in Viet Nam and meet partners coming from all major parts of the world."

Over 200 delegates from 100 nations are taking part in the conference.

According to the Asian Development Bank, the Vietnamese economy grew at 6.7 per cent last year and is likely to achieve 7 per cent growth this year.

The country has 49 seaports and around 1,000 logistics companies to stand in the 53rd place in terms of logistics out of 155 countries.

Its WTO accession in 2007 has enabled many international manufacturers to set up production facilities in Viet Nam and benefit from a low-cost manufacturing base and close proximity to the world's busiest shipping routes. Under commitments it made for the WTO accession, the country will have to fully open the industry by 2014.

Authorities mull ways to ease corporates’ woes

Businesses need reliable sources of credit and stable government policies to survive and grow but both are lacking now, the chairman of the Ho Chi Minh City Union of Business Associations has said.

Speaking at a conference held to discuss economic issues, Huynh Van Minh said lending interest rates have reached 21 percent, forcing many businesses to cut back on production.

“If there is no remedy soon, businesses will not be able to recover,” he said.

“This interest rate will kill them whether or not they get a bank loan.”

Do Phuoc Tong, chairman of Duy Khanh Mechanical Co Ltd, said the high interest rate and foreign exchange bought at negotioated prices have pushed up the cost of his company’s projects.

Nguyen Thi Hong, vice chairwoman of the HCM City people’s committee, said many commercial banks offer deposit interest rates of above 14 percent. This means their lending interest rate will have to be 18-22 percent, causing great difficulty for businesses.

Nguyen Van Lai, director of the HCM City Department of Industry and Trade, said 80 percent of businesses say the rates are too high.

The State Bank of Vietnam should soon adjust the sources of funds for banks in line with the government’s order to ensure production is not affected, Hong said.

Tran Phuong Binh, general director of East Asia Commercial Joint Stock Bank, said it is necessary to ensure businesses sell foreign currencies to banks.

Nguyen Van Giau, the central bank governor, said banks will be inspected in the next few days to make sure they do not breach the deposit interest rate ceiling.

State-owned banks currently lend at fairly low interest rates which will be a stimulus for other banks to gradually drop rates, he said.

He ordered 16 banks in HCM City to cut interest rates and report to the people’s committee.

Hong urged the Ministry of Finance to defer income tax payments for small and medium-sized businesses.

Deputy Minister of Finance Do Hoang Anh Tuan replied that the government has already done that by defrring the tax payments by a year, with around 210,000 businesses, including 70,000 in HCM City, set to benefit.

The government is going to seek National Assembly approval to waive 50 percent of the tax amount, he added.

Gold bullion trading should not be banned: assn

The Vietnam Gold Traders Association has officially submitted to Prime Minister Nguyen Tan Dung a package of measures to stabilize the domestic gold market, including a proposal not to ban gold bullion trading.

It’s necessary to reorganize the market, including gold bullion production and trading, but banning gold bullion trading is not a good idea, Dinh Nho Bang, general secretary of the association told Tuoi Tre.

The association has also proposed the establishment of a national gold trading floor under the monitoring of the State Bank of Vietnam, the Vietnamese central bank.

It also said the country needs a more flexible gold export-import mechanism to level international and domestic prices of the precious metal.

Accordingly, gold import certificates should only be licensed to those who are qualified in business and financial capability.

Gold should not be imported en mass within a short period because this can cause a dollar crunch for the market.

The price of gold bullion in Vietnam Tuesday dropped to VND36.71 million a tael after international prices slipped from $1,440 to $1,434 an ounce (a tael is equal to 1.2 ounces).

Tea exports reach $36 mln in Q1

Thirty four Vietnamese provinces cultivate tea over 131,500 ha with a yield of about 6.5 ton per hectareVietnam exported 26,000 tons of tea for US$36 million in the first three months of the year.

Despite a slight decrease in volume, the value was still close to the amount attained in the same period last year on the back of a rise of 3.7 percent in export price, which averaged $1,437 per ton.

According to the Ministry of Agriculture and Rural Development, Vietnam’s three largest tea importers include Pakistan, Russia and Taiwan.

With export price being equivalent to 60-70 percent of the world’s average level, the Vietnam Tea Association forecast the country would earn an export value of $200 million this year, a year-on-year increase of 10 percent despite facing a decrease in tea harvest due to unfavorable weather.

Vietnam currently ranks fifth in the world in terms of tea production and export.

Vietnamese tea has been exported to 110 countries and territories and the “CheViet” brand name has been registered and protected in 70 markets worldwide.

Steel association calls for import restrictions

The Vietnam Steel Association (VSA) has called for strict supervision to control the volume of steel imported from China and Southeast Asian countries.

The VSA has sent a proposal to the General Department of Customs, Ministry of Finance and Ministry of Industry and Trade to find an urgent solution after the volume of domestically-produced rolling steel strongly reduced in the first two months due to cheaper imported products.

In the first two months, about 700,000 tons of six and eight-inch diameter rolling steel were imported from China and ASEAN, putting a strong strain on domestic steel production, the VSA said.

"Currently, the volume of six and eight-inch diameter rolling steel has dramatically dropped due to increased imports," affirmed the VSA's deputy chairman Nguyen Tien Nghi.

Nghi added that market share on these domestically-produced steel products decreased to 22 percent in northern provinces and 14 percent in the south.

"Previously domestic producers held a 30 percent and 35 percent market share," Nghi said.

To strictly control imports, the VSA demanded that customs and ministries examine the import of steel, to ensure that the foreign steel exporters don't benefit from low import tax duties.

"Some of the steel imported from China and ASEAN are avoiding tax through exploiting loopholes," Nghi added.

In terms of prices, the VSA predicted that steel prices will surely increase due to the high prices of petrol and oil.

Some 40 kilos of mazut is necessary to produce a ton of steel. With new petrol and oil prices, each ton of steel will rise by VND80,000 ($4), said Nghi, excluding transportation costs.

Nghi, however, said that new prices depended on price of imported pig iron on the world market.

Purchase power was also an important factor directly affecting the price of steel, Nghi said.

Plastic exports increase 30 pct year-on-year

Vietnam’s plastic exports from January to March reached US$279 million, or a 30 percent increase compared to the same period last year, said the Vietnam Plastic Association (VPA).

VPA however cautioned that local plastic manufacturers would face an increase of up to 15 percent in input prices as well as fiercer competition from China this year.

To reduce risks of an input price hike, VPA said many plastic manufacturers had decided to sign only short-term export contracts of 1 to 2 months instead of a whole quarter as before.

Vietnam plastic is exported to more than 41 countries and territories including the US, the EU, Japan and the Philippines.

VPA has set a target of $1.2 billion in total export turnover this year, or a 20 percent increase year on year.

Inspectors haul up coal company for wrongdoings

The government Inspection Agency has listed a slew of offences allegedly committed by the state-owned Vietnam National Coal, Mineral Industries Holding Corporation Limited following an audit.

Vinacomin, as the company is known, owes back taxes of nearly VND202 billion (US$9.6 million) it should have paid over the last several years in the form of resources tax, income tax, value-added tax, and export tax.

The coal exploitation and trading inspection report for the 2006-2009 period also says several of Vinacomin’s subsidiaries mined and processed coal without a license before August 2008.

Of the nine companies inspected, seven did not have a wastewater treatment system while eight were unlicensed and discharged wastewater into the environment.

Some of them flouted their license terms by not mining deep for coal, overexploiting, or mining outside the licensed area.

Many Vinacomin officials and employees were found to be illegally transporting, trading, and consuming coal.

The Inspection Agency has recommended to the government to draft laws to regulate the coal industry and “criticize” several company officials.

EVNTelecom, Sky Link team up in roaming service

The Vietnamese CDMA operator, EVN Telecom, will team up with Sky Link, the world’s second largest CDMA 450MHz operator in Russia, to provide roaming service for their subscribers.

An official agreement to this effect, which has been signed recently, will allow the two operators’ CDMA 450MHz roaming subscribers to connect with each other while on trips in Russia and Vietnam.

EVN Telecom, one of Vietnam’s five 3G mobile phone service providers, had over 4 million CDMA 450MHz subscribers in 2010.

Meanwhile, Sky Link, the first provider of 3G mobile services in Russia, had about 1.2 million subscribers in the same year.

PetroVietnam establishes company in Laos

PetroVietnam Oil Corporation (PV Oil) Sunday made debut the Lao PetroVietnam Oil Co (Lao PV Oil) in Laos' capital city of Vientiane.

With the charter capital of US$3 million totally invested by the PV Oil, a subsidiary of the Vietnam National Oil and Gas Group (PetroVietnam), the Lao PV Oil will cover mainly import and trading of petroleum products, and export of timber, coffee, tea and other farm products.

Present at the event, PetroVietnam General Director Dinh La Thang said the establishment of the Lao PV Oil marked a new development in the PVN’s overseas investment plan.

The executive said he believed the Lao PV Oil would contribute to Laos’s socio-economic development and boost its trade activities with Vietnam.

Lao Minister of Industry and Commerce Nam Vinhaketh pledged to create favorable conditions for the company to operate effectively.

Financial investments continue to drown listed firms 

Many listed companies suffered heavy losses from their financial investments this year, which was a similar mistake that they made in 2008. 

The financial investments’ value of seafood producer Minh Phu plunged 4.4 percent to over VND196 billion (US$9.8 million) in 2010.

The firm, which lists on the Ho Chi Minh Stock Exchange with the code name of MPC, had to set aside more than VND12 billion as a provision for its investment worth VND200 billion in the SSI Vision Fund at the end of last year.

The firm also had to set aside nearly 80 percent of its stock investment portfolio as a provision.

Confectionery firm Kinh Do, cable and telecommunication material maker Sacom and rubber producer Dong Phu, which all list on the HCMC bourse with code names of KDC, SAM and DPR respectively, followed a similar pattern.

Sacom invested VND13.5 billion in unlisted property firm Momota and VND3 billion in traveling firm Du Lich Buu Dien, while Kinh Do pumped VND12.5 billion in Vien Thong Insurance. Rubber firm Dong Phu poured more than VND30 billion into the investment fund Viet Long.

Sacom is holding 2 million shares in the securities firm Wall Street. The share price of the Hanoi-based brokerage fell sharply to VND6,000 due to slumping stock market, leaving Sacom incurring heavy losses.

HCMC-listed freight forwarder Gemadept (GMD) said in a financial report that its investment portfolio amounted to nearly VND1 trillion ($50 million) in the last three months of last year.

GMD invested VND4.8 billion in the Prudential Balanced Fund, which lists on the HCMC exchange with code name of PRUBF1. Despite the 8 percent decrease of the closed-end fund so far this year, the freight forwarder has not sold it to cut loss.

GMD last year raised its chartered capital to VND1 trillion from VND475 billion through issues of 52.5 million additional shares on the market, which is equal to a daily average trading volume of both exchanges in HCMC and Hanoi.

The listed firms will likely to accept the losses as the investment portfolios’ value remains low compared to their operation scale, a broker told Dau Tu Tai Chinh Newspaper.

Kinh Do holds 7 million shares in the Vietnam Export Import Bank, of which many shareholders worried the investment incurred losses as the confectionery firm bought the shares at high prices.

Analysts estimated that Kinh Do could make an amount of around VND100 billion ($5 million) from selling the shares in the HCMC-based bank.

However, many shareholders wondered why the firm has not sold the shares to reinvest in other businesses. “The company can earn a interest rate of tens of mls of dong from depositing the amount of VND100 billion into banks,” said an investor in HCMC.

Door opened to Everville project

The Truong Thinh Phat Real Estate Investment and Construction Joint Stock Company (Eci Land) and Military Bank’s Debt and Asset Management Company (AMC) recently have joined hands to launch the Everville high-rise apartment complexes.

The VND1.7 trillion ($82.1 million) project covers more than five hectares in Ho Chi Minh City’s Binh Tan district and consist of nine, 21-storey blocks with 1,600 apartments featuring areas ranging between 47.9 and 100 square metres each.

Everville complexes were competitively prices with harmonious designs suited to the budget of medium and low-income people, according to Eci Land’s general director Le Thuy Huong. Besides, the complexes enjoy a propitious position in proximity to the city’s downtown as well as schools and marketplaces.

Military Bank will support customers to buy these apartments with a credit line of up to 70 per cent of apartment value within 15 years. The project is consulted by Singapore's Ong & Ong and Alinco Co.

Steel association calls for import restrictions

The Vietnam Steel Association (VSA) has called for strict supervision to control the volume of steel imported from China and Southeast Asian countries.

The VSA has sent a proposal to the General Department of Customs, Ministry of Finance and Ministry of Industry and Trade to find an urgent solution after the volume of domestically-produced rolling steel strongly reduced in the first two months due to cheaper imported products.

In the first two months, about 700,000 tonnes of six and eight-inch diameter rolling steel were imported from China and ASEAN, putting a strong strain on domestic steel production, the VSA said.

"Currently, the volume of six and eight-inch diameter rolling steel has dramatically dropped due to increased imports," affirmed the VSA's deputy chairman Nguyen Tien Nghi.

Nghi added that market share on these domestically-produced steel products decreased to 22 per cent in northern provinces and 14 per cent in the south.

"Previously domestic producers held a 30 per cent and 35 per cent market share," Nghi said.

To strictly control imports, the VSA demanded that customs and ministries examine the import of steel, to ensure that the foreign steel exporters don't benefit from low import tax duties.

"Some of the steel imported from China and ASEAN are avoiding tax through exploiting loopholes," Nghi added.

In terms of prices, the VSA predicted that steel prices will surely increase due to the high prices of petrol and oil.

Some 40 kilos of mazut is necessary to produce a tonne of steel. With new petrol and oil prices, each tonne of steel will rise by 80,000 VND (4 USD), said Nghi, excluding transportation costs.

Nghi, however, said that new prices depended on price of imported pig iron on the world market.

Purchase power was also an important factor directly affecting the price of steel, Nghi said.