Bold SOS credit growth move to right listing ship

With no signs of a let-up in inflation, the State Bank is again putting the squeeze on the banking sector credit growth.

The consumer price index (CPI) rose 3.32 per cent in April, driving year-on-year inflation to 17.5 per cent, the highest level since December, 2009.

In February, the State Bank responded to this upward inflationary pressure by adjusting the banking system’s credit growth target to lower than 20 per cent for this year.

Then in mid-April, the State Bank issued the Document No.2956/NHNN-CSTT, asking local credit institutions and foreign bank branches to  keep credit growth rate at below 20 per cent in 2011. This means there is no differentiation between banks regardless of their size.

“We haven’t seen such a low credit growth target in the past few years, this demonstrates the authority’s determination to control inflation this year,” said Duong Thu Huong, general secretary of Vietnam Banking Association.

“Designing a specific credit growth target for each of the over 40 banks nationwide is a too difficult task for the authority, thus, a uniform cap of 20 per cent has been applied,” said a BIDV official.

For a large-scale bank like Vietcombank, 20 per cent credit growth represents a VND35 trillion ($1.7 billion) increase in total outstanding loans against the end of 2010.

Meanwhile, for a small bank such as Ficombank, the increase allowed was a mere VND549 billion ($26.5 million), far lower than its raised charter capital of VND1 trillion ($48.3 million) in 2011.

The authority also reiterated that local credit institutions needed to cut credit extension to the non-productive sector to 22 per cent of total outstanding loans by June 30 and 16 per cent by the end of 2011.

This non-productive credit includes loans to discount valuable papers for securities investment, real estate investment and personal loans.

The authority stipulated that any violation would see credit institutions paying twice the reserve requirement against the common reserve requirement ratio.

On the interest rate front, the mobilising rate remains high with the State Bank having set the mobilisation cap at 14 per cent, per year.

Nguyen Hoa Binh, head of Vietcombank’s board of directors, said that with fierce competition raging in the sector, some banks were still offering deposit rates higher than 14 per cent, per year.

“This hurts lenders like Vietcombank which are not breaking the rules,” said Binh,  adding that the State Bank should reconsider the 14 per cent, per year cap on deposit rates as inflation continued to rise.

Vietnam firm launches e-wallet WebMoney

Vietnam Online Trading Services Joint Stock Co. (VNO) on Thursday introduced e-wallet WebMoney Vietnam (WMV) to help customers access online payment services globally.

The product allows customers to pay electricity and telephone bills, do the online shopping and transfer money. Customers can also use the product to withdraw money at banks associated with VNO or WMV agents.

VNO managing director Nguyen Thieu Quang said the product plays an intermediary role in transactions and does not solve disputes between the buyer and the seller.

“To protect buyers, WMV will freeze buyer accounts for three days and transfer money to seller accounts if no disputes occur,” Quang explained.

Customers can put money into the e-wallet via bank accounts or scratch cards. However, they will be subjected to 1-2 per cent charges for scratch cards and transaction fees of around 0.8 per cent for online shopping.

VNO has cooperated with service providers to give 5 per cent to 10 per cent discounts for customers using the product, Quang added.

During the introduction ceremony, the enterprise signed cooperation deals with five companies – Toc Do Trading, GaPit Communication, Brilliant Chip, Green Mobile and Naiscorp – to connect to their websites.

VN, France to sign grant agreements in May

The Vietnamese Ministry of Planning and Investment and the French Development Agency (AFD) will sign two grant agreements to finance technical assistance for Vietnam’s medical sector and preparatory works for the next generation of AFD’s financing in the country.

The 1 million EUR and 1.5 million EUR agreements will be inked by Minister of Planning and Investment Vo Hong Phuc, General Director of AFD Dov Michel Zerah and French Ambassador to Vietnam Jean-Francois Girault on May 5 in Hanoi .

Accordingly, the 1 billion EUR grant agreement aims to finance the technical assistance dedicated to the setting up and the modernisation of Hanoi University Medical Hospital (CHU). The second grant renews the expertise and capacity building fund (FERC No.2)

The CHU project is part of traditional cooperation activities between France and Vietnam in the medical sector. AFD has forecast a 1 million EUR grant that aims at financing technical assistance at a medical university ò Hanoi Hanoi for the establishment and development of the CHU .

The ambition of the project is high, with improvements the medical training system, as well as research capacities. Especially, an international technical assistance will be financed for three years in order to support Hanoi medical university hospital for this project.

The FERC No.2 is designed to prepare future projects financed by the AFD in Vietnam as well as to monitor the projects, thanks to the technical assistance. This new FERC meets many needs that have already been identified in many fields such as finance, infrastructure and rural development.

With these new financing agreements, the total net commitment of AFD for official development assistance (ODA) in Vietnam will amount to about 1,050 billion EUR.

Solar project gets to work

The Indochina Energy & Industry Company Limited (ICE) will start work on building a solar modules manufacturing plant at Chu Lai Open Economic Zone this month.

The $390 million plant’s key products will be thin-film solar modules with an annual production capacity of 120 megawatts. ICE’s solar modules will be tested and certified by global standard laboratories following stringent requirements applicable in the solar energy industry.

In the first phase, the plant will have an annual capacity of 30MW which will be tripled to 90MW. All the products will be exported to Hong Kong with an estimated export value of $60 million for 30MW annual capacity.

IC Energy is a subsidiary of IC Holding (Vietnam), having expanded to solar energy sector in 2009. By contribution to clean and renewable sources of energy, IC Energy is aiming to provide the sustainable alternative solutions to conventional energy sources.

IC Energy is racing to be the first manufacturer of solar modules in Vietnam.

Earlier, US-based First Solar Group also broke the ground to build its thin-film solar panel plant in Ho Chi Minh City at a cost of $300 million and estimated production capacity of over 250MW per annum. With a relatively high cost of around $100-$150/panel, most of the plant products will also be exported to Europe and America.

Vietnam puts fizz into alcohol quality control solutions

Vietnam Beer, Alcohol & Beverages Association (VBA) is coordinating with relevant ministries to develop a project to strengthen beer quality controls.

It is coordinating with the Ministry of Industry and Trade (MoIT) to research and implement the Switzerland-based security inks and solution SICPA project to reduce the illicit trading of beer.

The MoIT and VBA will lodge motions from local beverage enterprises in Vietnam at conference on May 6 in Hanoi before the MoIT collects the motions and submits the proposal again to the government. The first proposal was submitted to the government in December, last year.

The initiative was presented at a VBA conference in southern Binh Duong province recently for introduction of quality control solution of beer and alcohol.

By using SICPA technology, every beer and alcohol product will be coded. The producer’s name will be recognised as well as the production line and production time.

This will help to control and monitor the source, the quality and the hygiene of each produced item preventing illegal beer and alcohol production and distribution.

VinaCapital wins Asian property awards

VinaCapital, an asset management and real estate development group, says its Ocean Villas luxury residential villas project underway in the central coast city of Danang has won two categories in the 2011 Asia Pacific Property Awards.

The group says the category of ‘Best Golf Development’ award recognized the Ocean Villas as an integrated beachfront golf course development.

Meanwhile the other category of ‘Best Marketing’ award is given for the launch of the VinaLiving residential brand, and the Ocean Villas was the first VinaLiving project to reach the market.

The 21-hectare villas project has 115 housing units and is part of the 260-hectare Danang Beach Resort project, which includes an 18-hole Dunes Golf Course designed by golf legend Greg Norman.

The presentation of the awards will be held in Shanghai on May 30 and 31, and later this year, top scoring winners from the Asia Pacific Property Awards will compete against other winning companies from Europe, Africa, the Americas and Arabia to find the world’s best in each category.

The fund manager last week announced the appointment of new members to its board of directors and advisory committee.

Terence Mahony has succeeded Horst F. Geicke as chairman of the group and Pham Phu Ngoc Trai has been appointed to the post of co-chairman of the group’s advisory committee.

Meanwhile Stephen O’Grady has resigned from VinaCapital after nearly five years working as a managing director of the company’s hospitality division.

In related news, the fund manager said it saw a strong business performance in the first quarter of this year with a total of 264 sale and purchase and capital contribution contracts being signed, with a value of nearly US$21 million.

VinaCapital says the sales figure for this year’s first quarter was higher than the US$7.4 million in sales recorded during the same period in 2010.

HCMC sees plunge in first quarter's lending

Compared to the third quarter of 2010, total lending for non-production activities in the first quarter in Ho Chi Minh City dropped significantly.

A big chunk of the total VND138 trillion (US$6.7 billion) of non-production loans, VND97 trillion were lent for real estate activities, VND34 trillion for consumption and VND7 trillion for stocks.

Compared to the last quarter of last year, consumption lending saw the deepest drop, 7.4 percent. Stock loans decreased by 2.8 percent, and real estate lending, by 1.3 percent.

Meanwhile, credit lending citywide saw an modest increase of  VND2.2 trillion, which was due to high interest rates (some are as high as 26 percent per year), as well as banks’ race to call in non-production loans in order to meet the State Bank of Vietnam deadlines.

VND deposits at banks in the first quarter continued to drop though these interest rates have actually exceeded the ceiling imposed by the state bank.

Compared the last quarter of 2010, dong deposits in HCMC went down by 7 percent, reaching about  VND572 trillion.

After the state bank set the interest rate ceiling for foreign currency deposits at 3 percent per year, deposits in foreign currencies only increased by 0.06 percent, reaching only VND100 billion in the first quarter of this year.

HCM City inward remittances slump by almost 20 %

Foreign remittances to Ho Chi Minh City topped US$367 million in April, a 19.6 percent fall from the previous month, according to the State Bank of Vietnam.

The decrease was due to the global economic downturn and the return of many Vietnamese workers from countries facing political instability, the central bank’s branch in the city said.

Banks also blamed it on the cut in dollar deposit interest rates to 3 percent or less.

In related news, the central bank said that the licenses of two moneychangers were revoked in the first four months for failure to sell a contracted amount of foreign currencies to banks.

There are 74 forex agents in the city, most of them in hotels and tourist resorts.

Vietnam’s paper import surges as prices up

Increasing prices pushed the total value of paper imported in Vietnam in the first quarter to US$347 million, or a 36 percent increase compared to the same period last year.

This is equal to a total volume of 261.000 tons of paper, or a 25 percent increase year-on-year.

The Vietnam Pulp and Paper Association said these increases were caused by a 10 percent hike in raw material prices in the world market earlier this year.

Currently, the price of writing paper is VND22.5 million (US$1125) per ton and that of newsprint is VND16 million (US$800) per ton.

Afraid these prices may go up further, many local paper suppliers are also increasing their import, the association said.

Air Mekong cuts Hanoi – Phu Quoc service

Air Mekong, which began flying between Hanoi and Phu Quoc Island just before the April 30-May 1 holidays, has announced a cut in the service from seven to four flights a week during May.

From June 1 it will again become a daily service, the private carrier said.

The Hanoi departure time has been changed to 8:40am from 6:00am while in Phu Quoc the new departure time is 4:00pm instead of 3:40pm.

The carrier has announced promotional fares until May 31 of VND1.95 million (US$97) for an economy ticket against the normal VND2.3 million.

Air Mekong also plans to expand the Ho Chi Minh City-Phu Quoc service from three to five flights a day and from four to seven during weekends.

PNJ breaks ground for Vietnam's largest jewelry plant

Phu Nhuan Jewelry Joint Stock Co has started work on Vietnam's largest jewelry production plant with an annual capacity of 4 million products in Ho Chi Minh City.

The VND100 billion ($4.8 million) plant, designed by DongALand Real Estate Joint Stock Co, covers 12,500 square meters in Go Vap District. It is expected to finish by January 2012.

Another HCMC-based jewelry firm, Saigon Jewelry Company Limited (SJC), in March kicked off the construction of its VND76 billion plant in Tan Thuan Export Processing Zone in HCMC’s District 7.

The three-story factory covering 4,500 square meters is scheduled to be completed within six months. It will be operational from early next year with annual output of some 350,000 jewelry products.

Vancouver hosts Canada-VN trade forum

A total of 107 delegates representing Canadian businesses and socio-economic organizations attended a recent Canada-Vietnam trade and investment forum in Vancouver.

At the event, Vietnamese Ambassador to Canada Le Sy Vuong Ha spoke of Vietnam’s nation and people as well as its trade, investment and tourism potential.

Trade counselor Ha Ke Tuan briefed the participants on the two countries’ trade figures, bilateral cooperation agreements in trade, economics and investment, Canada’s direct investment in Vietnam and Vietnam’s projects calling for investment.

Former Canadian consul general in Ho Chi Minh City Bill Johnston spoke of Vietnam’s opportunities and the challenges of doing business in the country.

The forum was expected to meet the Canadian business sector’s desire to expand business relationships and export markets.