70 pct of Vietnam’s adults set to have current accounts by 2020

A recently-approved blueprint for improving access to banking services aims for 70 percent of adults in Vietnam to have bank current accounts by 2020. 

The plan, signed off by Prime Minister Nguyen Xuan Phuc, also aims for at least 20 branches or transaction offices of commercial banks per 100,000 adults. 

While 35-40 percent of rural adults are expected to have savings at credit institutions, the plan also looks to have 50-60 percent of small- and medium-sized enterprises (SMEs) get credit from these organisations. 

Under the blueprint, banking services access in the economy will be improved alongside restructuring banks. 

The State will create a favourable legal framework for organisations to diversify banking services, especially non-credit services. Credit institutions will be encouraged to provide banking services for remote areas and SMEs. 

The use of information technology will also be stepped up to ensure the services’ convenience for rural and low-income clients.

Vietnamese, French firms forge stronger partnership

Vietnamese and French enterprises gathered at a business forum in Ho Chi Minh City on September 7 to seek measures to boost their partnerships, contributing to the sustainable development in Vietnam. 

Addressing the event, Chairman of the French Chamber of Commerce and Industry in Vietnam Nicolas Du Pasquier spoke highly of recent improvements of Vietnam’s investment environment. 

He said Vietnam is a dynamic country with striking growths through three decades of renewal and has become an attractive destination of foreign investors, including those from France. 

The country should continue speeding up its reform and restructuring of the economy and the banking and financial systems to tap its development potential, he said, expressing belief that the Vietnam-France future cooperation will thrive across sectors. 

France is currently one of the largest European investors in Vietnam with a total investment of 3.4 billion USD. The country is the 10th biggest investor in Ho Chi Minh City with 185 projects totalling 848 million USD. Two-way trade between France and the city in the first seven months of this year reached 423 million USD. 

Meanwhile, Martine Pinville, French Minister of State for Commerce, Small-Scale Industry, Consumer Affairs and the Social and Solidarity Economy, asserted that Vietnam is a country recording the strongest growth in the region.

Once the Vietnam-EU takes effect, businesses of both sides will enjoy more favourable conditions and opportunities to boost their partnerships, especially in pharmaceuticals, agriculture and food, she stated. 

Pinville highlighted the high potential of bilateral affiliation, pointing to tourism and creative medical products. 

According to Nguyen Thanh Phong, Chairman of the municipal People’s Committee, the city is the economic hub of Vietnam and an attractive investment destination for foreign businesses. 

He pledged that the municipal government will facilitate investments, including those from France. He also called for French businesses to deepen their ties with local firms in the city. 

Within the forum’s framework, a number of trade deals on agriculture and health care were signed by enterprises of both sides, including the one between French medical Sanofi Group and the Vietnam Pharmaceutical Corporation, and the other on sustainable pig breeding in the Mekong Delta region.

Hoa Sen gets overwhelming yes from shareholders for giant steel plant

Hoa Sen Group (HSG)'s shareholders have almost unanimously approved construction of a mammoth steel plant in the central province of Ninh Thuan.

At an extraordinary shareholders meeting held on Tuesday to seek approval for the project, 97.26 per cent voted for it.

The shareholders also unanimously left it to the board of directors to decide how to mobilise and use funds for the new plant and approved the incorporation of companies to carry out the project.

Five will be set up to carry out individual pars of the project.

To cost US$10.6 billion, the Hoa Sen Ca Na – Ninh Thuan Steel-making Complex will be built in Thuan Nam District with an annual capacity of six million tonnes in the first stage.

After it is fully completed in 2031 its capacity will rise to 16 million tonnes.

Gold prices soar in the market

Local gold prices followed the international trend, soaring on September 7.

Gold rose early on Wednesday to a fresh two-and-a-half-week high after gaining nearly two per cent in the previous session, as disappointing US economic data reinforced expectations that the US Federal Reserve will keep rates on hold in September.

On the global gold trading floor kitco.com, gold increased by US$9.5 to reach $1348.9 per ounce (or $1,625 per tael).

In the local market, Sai Gon Jewellery Joint Stock Company added VND220,000 to each tael of SJC gold to reach VND36.56 million ($1,637), while gold companies Bao Tin Minh Chau and DOJI in the north and Phu Nhuan Jewellery in the south also added between VND280,000 and VND300,000 per tael.

In Ha Noi, DOJI saw more gold buyers in the day, who believed the yellow metal was gradually regaining the attention of local investors in Viet Nam.

Meanwhile, although the dollar tumbled in the global market, the greenback rate in the local market was stable. The buy/sell rates of the greenback in Vietcombank were VND22,260/VND22,330. In other commercial banks, such as BIDV, Vietinbank, Techcombank, ACB and Eximbank, the buying rates were between VND22,255 and VND22,280 and the selling rates were between VND 22330 and VND22,380, respectively.

HCM City boosts cooperation with Canada’s Toronto

Ho Chi Minh City and the Canadian city of Toronto will intensify their cooperation in economics, culture, environment, smart cities and start-up. 

Chairman of the Ho Chi Minh City People’s Committee Nguyen Thanh Phong informed the plan to Canadian Foreign Minister Stephane Dion at a reception for the guest on September 7. 

The two sides expressed their delights at the thriving and practical cooperation between Vietnam and Canada. 

They shared the view that the cooperation between the two nations and their localities has not yet met their potential. 

Vietnam in general and Ho Chi Minh City in particular, and Canada need to identify key sectors for cooperation, thus contributing to the win-win relations. 

Phong expressed his hope that the Canadian Government will build on the positive momentum of the fruitful relationship between the two nations, facilitate the cooperation between Canadian localities with the city in infrastructure facilities, tertiary education, and green technology. 

For his part, the Canadian Minister spoke highly of the role of Ho Chi Minh City in the socio-economic development of Vietnam, reiterating that his country is willing to work with Ho Chi Minh City and considers the city the key part when building cooperation programmes between the two nations in the future. 

The same day, the guest visited several local enterprises and attended the ceremony to inaugurate the Visa Centre under the General Consulate of Canada in Ho Chi Minh City.

Turkey may slap high anti-dumping duty on Vietnam yarn

Turkey may impose a high anti-dumping duty of over 72% on polyester textured yarn imports from Vietnam, the Vietnam Competition Authority under the Ministry of Industry and Trade has said.

The General Directorate of Imports under Turkey’s Ministry of Economy has released results of its anti-dumping investigation into polyester textured yarn imports from Vietnam and Thailand, the authority said, citing the trade section of the Vietnamese embassy in Turkey.

The Turkish agency plans dumping margins of 34.81-72.16% for Vietnamese products with code HS 5402.33 and 8.48-37.69% for Thai products.

The Turkish Ministry of Economy is expected to make a final decision on the dumping margins in the first week of October after the directorate reviews complaints lodged by exporters and submit final results to the ministry by the end of this month.

Turkey initiated a probe into polyester textured yarn sourced from Vietnam and Thailand in May last year after Korteks Mensucat Sanayi ve Tic. A.S., which manufactures and sells polyester yarn products in Turkey, filed a lawsuit against polyester textured yarn imports.

Turkey opened an anti-dumping probe into man-made yarn or synthetic staple fibers with HS codes 55.08, 55.09, 55.10 and 55.11 imported from Vietnam, Malaysia, Greece, Pakistan and Thailand. The country decided to levy duties of 19.48-25.25% on Vietnamese products in five years from August 2014.

Due to the high tariffs imposed by Turkey, Vietnamese yarn exporters have turned to China, said Nguyen Van Tuan, chairman of the Vietnam Cotton and Spinning Association (VCOSA), told reporters in July. Turkey used to make up one-third of Vietnam’s total yarn exports in previous years.

Tuan said around two-thirds of yarn products made in Vietnam are for export.

Turkey is one of the countries imposing trade defense measures against many products imported from Vietnam, including bicycle tire, plywood, granite, stainless welded cold-rolled steel pipes, air-conditioner, and plastic canvas.

Argentina probes ceramic tile imports from Vietnam

Argentina’s Ministry of Production has initiated an anti-dumping investigation into ceramic tile imports from China, Brazil, Malaysia and Vietnam, according to the Vietnam Competition Authority.

Argentina authorities will look into ceramic tiles imported from the countries in the 2015-2016 period and assess their impact on producers in the South American country in 2013-2016, the authority under the Ministry of Industry and Trade said, citing the trade section at the Vietnamese embassy in Argentina.

The dumping margins are claimed at nearly 30% for Vietnam, roughly 185% for China, nearly 107% for India, 126% for Malaysia and 23% for Brazil.

Ceramic tile production is one of the few sectors that have grown fast in Vietnam in recent years. Its currently capacity totals 500 million square meters per year, making Vietnam the top producer in Southeast Asia and the sixth in the world.

Major domestic ceramic tile markers are Viglacera, Dong Tam, Thach Ban, CMC, Taicera, Bach Ma and Prime.

Aside from domestic consumption, Vietnamese ceramic tiles have been sold to many countries. Domestic firms expect recently-signed trade agreements including the Trans-Pacific Partnership (TPP) will bring more opportunities for them to boost exports.

Vietjet marks new routes with 150,000 promotional tickets

The low-cost carrier Vietjet on September 5 announced 150,000 promotional tickets priced only from 0 USD under “ 12pm, It’s time to Vietjet ” campaign to mark its three new routes of Ho Chi Minh City-Kaohsiung, Hanoi-Taipei and Hai Phong-Seoul.

The promotion will run within September 6, 7 and 8 from 12h to 14h daily at www.vietjetair.com and is applied for Vietjet’s all international routes, including the new ones, from October 1, 2016 to March 31, 2017. 

The promotional tickets can be booked from 12h to 14h at www.vietjetair.com (also compatible with smartphones at https://m.vietjetair.com ) or at www.facebook.com/vietjetvietnam (just click the “Booking” tab). Payment can be easily made with debit and credit cards of Visa, MasterCard, JCB, and American Express and ATM cards issued by 2 9 Vietnam’s banks that have been registered with internet banking. 

The Ho Chi Minh City -Kaohsiung route will be launched on December 12, 2016 with five return flights a week on Monday, Tuesday, Thursday, Friday and Sunday. The flight, which lasts 3 hours 30 minutes per leg, departs from Ho Chi Minh City at 02:10 and lands in Kaohsiung at 06:30 (local time). The return flight takes off at 08:15 and lands in Ho Chi Minh City at 10:45.

The Hanoi-Taipei route will be operated on a daily basis from October 30, 2016 with the flight time of 2 hours 45 minutes per leg. The flight takes off from Hanoi at 14:15 and lands in Taipei at 18:00 (local time). The return flight departs at 19:10 and arrives in Hanoi at 20:55 (local time).

The Haiphong-Seoul route will be launched on December 12, 2016 with four return flights a week on Monday, Wednesday, Thursday and Sunday. With 5 hours per leg, the flight takes off at Cat Bi International Airport at 23:45 and lands in Incheon International Airport at 06:00 (local time). The return flight departs at 07:15 and arrives at 10:40.

With the three new routes, Vietjet operates a total of 20 international routes to 15 destinations across the region, looking to boost the regional trade and integration. 

Vietjet is the first airline in Vietnam to operate as a new-age airline with low-cost and diversified services to meet customers’ demands. It provides not only transport services but also uses the latest e-commerce technologies to offer various products and services for consumers.

Currently, the airline boasts a fleet of 40 aircraft, including A320s and A321s, and operates 300 flights each day. It has carried nearly 25 million passengers to date.-VNA

Nhon Trach 2 produces 25 million kWh for national grid

The Nhon Trach 2 thermal power plant of the PetroVietnam Power Nhon Trach 2 company in the southern province of Dong Nai on September 5 reached its target of producing 25 million kWh for the national grid after five years of operation.

Over the past years, the company has focused on applying advanced technologies in management and operation to reduce cost and improve efficiency in production.

The 2016 power output is estimated at 5.5 billion kWh, generating 1.25 trillion VND (56.25 million USD), up 1 percent and 9.5 percent from the previous year, respectively.

The company has made a proposal to PetroVietnam to build two more power plants: Nhon Trach 3 and 4, each would produce 750-800 MW, at a combined construction cost of over 700 million USD.

The Nhon Trach 2 company was listed among the top 50 enterprises with the best annual reports and among the top 30 of the VN HOSE index (HCM Stock Exchange), with a growth rate of 70 percent after two years of public listing.

The Nhon Trach 2 thermal power plant began its commercial operation in late 2011. As a national key project in the provincial PetroVietnam Nhon Trach Power Centre, the power plant has a total capacity of 750 MW and is fueled by natural gas which has been registered under the United Nations’ Clean Development Mechanism as a main fuel.

With three turbines, it is designed to churn out an average of 4.2 billion kWh each year.

It also plays an important role in supplying electricity to the southern key economic region.

SMEs to access more financial assistance packages

A number of banks will introduce financial assistance packages to small- and medium-sized enterprises (SMEs) to enable their active participation in international integration.

The banks have been entrusted by the Ministry of Planning and Investment’s Small and Medium Enterprise Development Fund, according to the Vietnam Chamber of Commerce and Industry.

Accordingly, each SME working in innovation and creativity is entitled to loans worth a maximum of 10 billion VND from a 100 billion VND (4.54 million USD) programme.

Those working in agro-forestry-fisheries will be able to borrow 150 billion VND (6.81 million USD), with each eligible to no more than 25 billion VND, as will those engaging in support industry for electronics and mechanical engineering.

The credit limit for SMEs operating in wastewater treatment amounts to 100 billion VND, and each could borrow up to a maximum of 25 billion VND.

Interested businesses are advised to refer to the ministry’s Circular No.13/2015/TT-BKHDT on the list of fields in need of priority support and criteria for borrowers under the fund’s scheme.

Domesco to lift foreign ownership cap

The State Securities Commission (SSC) has allowed Domesco Medical Import Export Joint Stock Corporation (Domesco) to increase its foreign ownership to 100 per cent, a move that shows Viet Nam's willingness to open up to more foreign capital.

This information was confirmed by the company.

Foreign stakes in Domesco are at the current limit of 49 per cent, of which Chile's CFR International SpA holds 45.9 per cent.

Domesco is the third-largest listed drug company, with a market capitalisation valued at nearly VND3.3 trillion (US$148 million) as of yesterday.

This is the third company which the SSC has allowed to lift the foreign holding limit, after Viet Nam Dairy Product JSC (Vinamilk), the largest listed company, and Everpia Viet Nam.

The pharmaceutical industry is one of the fast-growing sectors in Viet Nam, appealing to foreign investors as a rising middle class in the country spends more on healthcare.

Offshore ownership of many local drug makers is already at or near the limit, creating pent-up demand from foreign investors.

Foreign holdings in DHG Pharmaceutical and Imexpharm Pharmaceutical have also reached the limit. The current foreign holdings ratio in Traphaco is around 46 per cent.

According to a report by BMI Research, Viet Nam's pharmaceutical market is expected to rise from $4.2 billion in 2015 to $7.2 billion by 2020 and to maintain double-digit annual growth through 2025.

Investments in local healthcare companies have returned 46 per cent in 2016, the best performance among 10 industry groups on the HCM Stock Exchange, data on Bloomberg showed.

Prices of Domesco's shares tripled this year to a record high of VND96,000 a share on September 1.

The biggest listed pharmaceutical company, DHG, has risen 53 per cent. Imexpharm, Traphaco and Cuu Long Pharmaceutical, which round out the five biggest drug companies on the HCM Stock Exchange, are up between 80 and 147 per cent.

These companies performed well this year. DHG Pharmaceutical posted a net profit of VND300 billion in the first half of this year, up 15 per cent year-on-year. Domesco earned VND81 billion in net profit, up 21 per cent. Profits of Traphaco and Cuu Long Pharmaceutical were up 27 per cent and 37 per cent, respectively.

In the pharmaceutical market, only Domesco plans to scrap its foreign ownership limit.

Market insiders expect other local drug companies to follow Domesco and allow more foreign ownership. If this happens, merger and acquisition (M&A) activities in the pharmaceutical industry will likely be more vibrant. 

New investors sought for Vung Tau resort project

Ba Ria-Vung Tau province is seeking new investors to continue the incomplete Paradise Resort project on Back Beach near the Vung Tau city center.

Since coming into operation in 1995 its 27-hole golf course and housing area with only 54 units went straight into debt. The original developers also failed to make good on commitments to build several components, including a 500-room hotel, a theatre, and an entertainment area.

A representative from the provincial People’s Committee confirmed with VET that “the province is looking for a strategic investor to develop the large-scale project.”

To become the developer the investor must meet certain requirements that include total investment of at least $2 billion and equity capital of at least 25 per cent of this investment, with a timeline for project completion of three years.

The city also requested that construction of Paradise Resort be linked with the Bau Trung tourism area.

The Minister of Planning and Investment issued a license to the Vung Tau Paradise Company in 1991, a joint venture between Vietnam’s Vung Tau Intourco JSC and Taiwan’s Paradise Development and Investment Company to develop Paradise Resort.

The project is located on an area of 220 ha on Back Beach in Vung Tau and had a lifespan of 25 years. It was to have total investment of $97 million, in which the Taiwanese partner held 75 per cent and the Vietnamese company the remaining 25 per cent, contributed as land use rights.

Because the lifespan expired in April this year, the province is now seeking a new investor with financial capacity and experience in tourism.

According to Mr. Nguyen Dinh Trung, Deputy Director of the Ba Ria-Vung Tau Department of Planning and Investment (DPI), the province wants Paradise Resort to have facilities of international standard, including residential units, an amusement park, a spa center, and a golf course.

“The province will hire design companies to advise on specific plans for the project and will carefully select new investors that can meet the province’s expectations and ensure the project helps to promote provincial tourism,” he said.

Provincial authorities and local residents hope significant benefits will come once the project comes into operation.

The joint venture sought local authorities’ approval for extending its investment license but was refused as the province prefers to seek other potential investors.

Coffee exports record biggest 8M increase

Coffee exports recorded the highest year-on-year increase among agriculture products in the first eight months of the year, rising 39.9 per cent to 1.27 million tonnes worth $2.25 billion, an increase of 20.7 per cent, according to the Ministry of Agriculture and Rural Development.

The average export price of coffee in the first seven months was $1,754 per tonne, down 14.5 per cent year-on-year. Germany and the US were Vietnam’s two largest coffee export markets, with market shares of 15 per cent and 13 per cent, respectively.

Though coffee exports have seen dramatic growth since the beginning of the year most is low quality with low value, triggering concerns among domestic enterprises about losing export market share.

Mr. Nguyen Nam Hai, Standing Vice Chairman of the Vietnam Coffee - Cocoa Association (Vicofa), told local media that, in recent years, large foreign-invested enterprises (FIEs) have purchased most of Vietnam’s coffee beans as they can utilize advantages from borrowing US dollars at low interest rates from foreign banks.

They then exchange the US dollars into Vietnam dong to buy coffee in Vietnam, Mr. Hai said. Domestic enterprises, he added, cannot compete with such tactics.

The maximum interest rate on US dollar loans to FIEs in Vietnam is only 3 per cent per annum, while domestic enterprises are subject to 6.5 to 7 per cent per annum on Vietnam dong loans.  

Domestic enterprises have proposed the government establish a coffee fund to support domestic coffee manufacturers and businesses, similar to the models adopted in Brazil, Colombia and India.

Export turnover of agriculture, forestry, and fisheries in August was estimated at $2.76 billion, bringing the eight-month figure to $20.06 billion, an increase of 5.6 per cent year-on-year.

Export value in the first eight months was estimated at $9.9 billion, up 5.7 per cent compared to same period last year. Seafood export value was about $4.3 billion, an increase of 4.1 per cent, while forestry exports were $4.54 billion, down 0.5 per cent.

Pepper saw the second-highest increase in the period, of 30 per cent in quantity and 12.6 per cent in value. Some exports declined year-on-year, including rice, which fell 16.6 per cent in quantity and 13.1 per cent in value.

Others saw quantities increase but value decrease, such as rubber, up 10.4 per cent and down 4.6 per cent, and tea, up 6.6 per cent and down 0.3 per cent.

Abbott buys Vietnamese pharma producer

Global healthcare giant Abbott has announced the full acquisition of Glomed Pharmaceutical Company Inc., a leading Vietnamese drug manufacturer, on August 31.

Mr. Do Thai Vuong, Head of Public Affairs at Abbott Vietnam, confirmed with VET that “Abbott Vietnam completed all procedures to acquire Glomed on August 30.” He did not disclose the value of the deal.

The company will continue expanding its operations and commitments in Vietnam. Through this deal, Mr. Vuong said, Abbott has become one of the ten largest pharmaceutical producers in Vietnam, according to data in a health market report for the second quarter of 2016 from IMS, a US information and technology services company providing businesses in the healthcare industry with solutions to measure and improve their performance.

In addition to obtaining two manufacturing facilities in southern Binh Duong province, Abbott Vietnam also gains a portfolio of medicines that is well aligned with its current pharmaceutical therapeutic areas of focus on anti-infective medicines, gastroenterology, cardiovascular, pain relief, and respiratory care and women’s healthcare as well as over-the-counter products (OTC).

“This acquisition will further strengthen Abbott’s ability to serve patients in Vietnam with innovative, high-quality healthcare solutions that allow them to live a healthier life and reach their full potential,” said Mr. Ngo Van Huy, General Manager of Abbott’s pharmaceuticals business. “The company intends to build on Glomed’s success to date to ensure long-term growth in the country.”

“The merger with Glomed at this moment is a key step in Abbott’s strategy to focus on the pharmaceutical business in emerging markets with high growth rates like Vietnam,” he added. It also brings more revenue and technical knowledge on marketing to Abbott and its two Binh Duong factories.

He emphasized that Glomed’s production facilities are operating under Vietnam’s Good Manufacturing Practices (GMP) standards. Abbott will apply its expertise to enhance the availability of Glomed products based on a detailed evaluation to be conducted within the next few months.

Glomed Pharmaceutical Company Inc. was founded in 1995 and has more than 100 pharmaceutical products with two plants in Binh Duong built in 2007 and five branches in the country.

In 2012 it was among the Top 100 enterprises recording the highest growth in Vietnam, according to VietnamReport, and has been striving to become among the Top 5 leading drug producers domestically.

Abbott has been in Vietnam for over 20 years and is especially known locally for its milk formula. It has also developed strongly in healthcare, including nutrition, pharmaceuticals, diagnostics and medical devices.

Abbott Laboratories completed an acquisition of Veropharm in late 2014, one of Russia’s largest pharmaceutical manufacturers, and Latin America’s CFR Pharmaceuticals Company.

Provinces, cities issue municipal bonds for funding needs

On August 26 the southern province of Bà Rịa-Vũng Tàu issued for the first time municipal bonds worth VNĐ500 billion (US$4.44 million) to raise capital for infrastructure projects.

The southern province of Ba Ria - Vung Tau will build a number of infrastructure projects by capital raised from the local bond issuance.- Photo dulichcondaosense.com

The money will be used for building the Phước Hòa-Cái Mép Road, the Hồ Sông Ray inland canal system, and the Vũng Tàu Polyclinic.

The VNĐ100,000 ($4.4) bonds with a five-year tenor were auctioned at the Hà Nội Securities Trading Centre.

The coupon rate after being agreed between the seller and buyers will be fixed over time and paid on maturity.

Those eligible to buy the Bà Rịa-Vũng Tàu municipal bonds range from Vietnamese enterprises and economic institutions to foreign organisations legally operating in Việt Nam, as well as Vietnamese individuals, overseas Vietnamese and foreigners working and living in Việt Nam.

Bà Rịa-Vũng Tàu is among several provinces and cities nation-wide that have in recent years chosen to issue municipal bonds to mobilise capital for development projects to make up for a dearth of public funds.

Investors can buy the bonds and hold them to maturity or trade them on secondary markets. Bonds are often described in terms of their yield, or the interest rate. Thus prices and yields are inversely related to one another.

This new capital source has made significant contributions to socio-economic development in many localities nation-wide.

In 2003-2011 only Hà Nội, HCM City and Đồng Nai issued municipal bonds, raising a  total of VNĐ15.7 trillion (US$697.64 million).

Then, in 2012, HCM City and Đà Nẵng issued bonds worthVNĐ4.81 trillion ($213.8 million).

However, the trend really took off in 2013 when many provinces and cities vied with each other to issue the bonds.       

The HNX is the exchange that has witnessed the most successful auctions of these bonds in the last few years.

The capital city has issued bonds seven times at the HNX, raising VNĐ11.4 trillion. Đà Nẵng managed to mobilise VNĐ1.1 trillion in October 2014.       

According to data from the Việt Nam Bond Market Association, by July 2016 the total value of government bonds, government-guaranteed bonds and municipal bonds in the market was VNĐ880.66 trillion, of which government bonds accounted for VNĐ715.56 trillion.

The government-guaranteed bonds were valued at VNĐ140.59 trillion and municipal bonds at VNĐ24.51 trillion.

The main buyers of municipal bonds have been banks and life insurance companies like VPBank, MB, BIDV, Agribank, Vietcombank, Maritime Bank, Techcombank, LienvietBank, and AIA.

Analysts said the municipal bond market is likely to develop robustly since the government would be unable to meet localities’ funding needs for socio-economic development.

The bonds are a favourite with many investors since they often have more attractive interest rates than government bonds.     

Because of this, although the Bà Rịa-Vũng Tàu Province’s issuance of municipal bonds this time was not successful because the interest rate offered by the seller did not match with the rates proposed by the buyers municipal bonds still opened a new opportunity for the provincial government to seek capital for its socio-economic development plans in the future.

So the Bà Rịa-Vũng Tàu government plans to continue going down this route to raise funds for infrastructure projects.

Foreign investors not gung-ho about VN banks

Late August IFC, a member of the World Bank Group, announced a quasi equity investment in the Tiền Phong Commercial Joint Stock Bank (TPBank), which hopes to increase lending to local businesses.

This investment of VNĐ403.1 billion (US$18.35 million) in dividend preference shares, once converted, will allow IFC to become a shareholder in the bank, owning 4.999 percent of the bank’s equity, the institution said in a release Friday (August 26).

With this, TPBank has increased the value of its assets to over VNĐ83.2 trillion and chartered capital to VNĐ5.84 trillion.

According to the IFC, its investment is enough for TPBank to lend to more than 40,000 small and medium-sized enterprises, representing a loan portfolio growth of more than $2 billion equivalent over the next five years.

IFC is also providing advisory services to improve the lender’s risk management, digital and small and medium enterprises (SME) banking products, and corporate governance standards.

TPBank is one of the few lenders to successfully convince foreign investors to part with their money.

Since 2015 many banks have been outlining plans to sell stakes to foreign investors, but their efforts have mostly been in vain.

GPBank is one such. Though the lender was ready to sell 100 per cent stakes, Singapore’s United Overseas Bank (UOB) and Malaysia’s Hong Leong Bank rejected the offer after doing due diligence.

The question is why are foreign investors indifferent to the banking sector.

Analysts said some years ago Việt Nam’s banking sector had been considered highly lucrative, especially by foreign investors.

But it turned out that not all foreign investors were eager, with many apprehensive that since the majority of Vietnamese firms were small and medium –sized enterprises, lending to them was a very risky proposition.

Many were also unsure about banks’ profitability since the bad debts situation was opaque.

Under current regulations, a single foreign investor cannot hold more than 20 percent of the chartered capital of a bank while the combined stakes of foreign investors cannot exceed 30 percent.

The 30 per cent cap is not attractive enough for foreign investors to invest in banks since it would not allow them to participate in management, planning and strategising.

Analysts said however the Vietnamese banking sector remains attractive to banks from other countries in the region such as Japan, South Korea and ASEAN members.

Most want to invest in the Vietnamese banking sector to support companies from their countries operating in Việt Nam.

But another reason that has made foreign investors hesitate is that, faced with integration pressure, the State Bank of Việt Nam would have to throw open the banking sector at some point. This would mean more opportunities for foreign investors to get into banking and finance, including setting up their own banks, which precludes the need to invest in Vietnamese institutions.

Thus, any tie-ups with local institutions would only happen if they are sure about their potential and profitability.

TPBank could persuade IFC to invest money in it since it is small but healthy and possesses all the advantages of a digital bank that would help it to develop well in future.

Banks told to be prepared to write down bad debts

According to the financial reports of many banks, bad debts seemed to escalate in the second quarter of the year.

The data from nine listed banks showed that their bad debts were worth over VNĐ43 trillion ($1.91 billion), up 28 per cent from the VNĐ33.87 trillion figure recorded late last year.

Eximbank recorded the highest rise in bad debts, going up from 1.86 per cent at the end of 2015 to 5.3 per cent in June, or equivalent to VNĐ4.2 trillion.

To bring down their bad debts, banks have in recent yeas mainly adopted two ways: selling them to the Việt Nam Asset Management Company and sharply increasing credit.

However, both methods are no longer working because the VAMC is now focused on realising old bad debts and has reduced buying afresh.

Banks are also finding it difficult to push up lending since most domestic businesses are still facing difficulties due to the current difficult economic situation at home and abroad.

Faced with the situation, analysts said, banks and their customers should be more flexible in settling bad debts and even have to accept big losses.

SCB seemed to accept this as a fait accompli, settling VNĐ1.2 trillion worth of bad debts in the first half of this year. In May and June the bank sold three fisheries processing plants at prices that were much lower that initially estimated.

The bank hopes to recover a further VNĐ1.5 trillion by lowering the prices of the bad debts.

In addition to banks’own efforts, experts said, the Government and the central bank should have specific plans and road maps for settling the bad debts.

Creating a debt market is an imperative to encourage foreign investors to buy bad debts, they said.

Overseas remittances to HCMC reach $2.85 billion

Overseas remittances to Ho Chi Minh City was estimated to reach US$2.85 billion by the end of August this year, a year on year increase of nearly 6 percent.

According to Mr. Nguyen Hoang Minh, deputy director of the State Bank of Vietnam in HCMC, the remittances to the city saw an increase of 14 percent in August over the previous month.

Most of the remittance volume came from the US and Europe and flowed in production and trading.

Overseas remittances have highly grown for the last five years averaging 10-12 percent a year.

Vietnam has a high number of overseas and labor export workers. In addition, remittance service by banks has been developed, facilitating money transfer and increasing the remittance volume to the country.

HCMC to host first Ornamental Fish Festival 2016 in November

The first Ornamental Fish Festival 2016 will be held at Le Van Tam Park in Ho Chi Minh City’s District 1 from November 10-14, the Investment and Trade Promotion Centre of Ho Chi Minh City (ITPC) announced.

The festival will be a chance for ornamental fish lovers to acknowledge about ornamental fish, promoting ornamental fish breeding as well as bringing an opportunity for insiders to exchange experiences related to their field.

HCM City exported around 10 million ornamental fishes worth US$11 million for the first seven months this year. The city exported 13 million ornamental fishes to get US$12 million last year, according to the Ho Chi Minh City's Department of Agriculture and Rural Development.

The event is part of the Hi-Tech Agriculture and Food Industry Fair (Hi-Tech Agro) 2016.

Dong Nai struggles with abandoned projects

Dozens of FDI projects being abandoned in Dong Nai Province, causing concern about Vietnam's FDI project management capacity. 

As of August, 26 FDI projects, nine of which belong to South Korean investors, six by Taiwanese investors and the remainder from other Asian investors, worth USD133m remained inactive. USD79m have been disbursed on 24 projects, six of which already have most of their money disbursed.

Last year, Dong Nai Province also withdrew licences from 37 projects, most of which were abandoned for over five years.

The management board of Dong Nai Province's industrial zones is auditing suspended or abandoned projects and will publicly announce the list as soon as possible.

Too many abandoned projects have badly impacted the province's economic planning and tax revenues. The customs agencies and taxation departments are assessing the damage including tax arrears, unpaid wages and insurance for local workers. They will also assess the ground clearance costs for undisbursed projects.

A number of foreign companies have taken bank loans in Vietnam to invest in local projects. However, a lot of them were forced to dissolve almost immediately due to many difficulties or incompetence, leading to rising bad debts. Some investors only hoarded the land and didn't even begin construction.

Vietnam's FDI performance is criticised as inaccurate because it is mostly calculated based on the FDI commitments but in reality, actual disbursement rates are always much lower than the headline figures.

Phan Huu Thang, former head of the Foreign Investment Agency under the Ministry of Planning and Investment, said Vietnam had over USD100bn of undisbursed foreign investment a year. This money often belonged to stagnant or abandoned projects. However, those projects haven't had their licences withdrawn and are still used to calculate Vietnam's FDI performance.

Nguyen Mai, chairman of Vietnam Association of Foreign Invested Enterprises, blamed local authorities for hasty decisions, granting permits to too many projects without considering their quality or realism.

Since 2013, Vietnam has tightened the laws, especially with the investment laws issued in 2014, the quality of FDI projects have improved. However, the country is still facing with environmental problems, industrial planning and abandoned projects.

HCM City considers Tan Son Nhat flyover

The Transport Department in HCM City has said it is considering to build a five-kilometre flyover which would run from Truong Son Road to Tan Son Nhat International Airport.

The department believe the USD156 million could operate as public private partnership and ease chronic congestion problems around the airport.

 The Truong Son Road is always crowded with lots of vehicles running to the Tan Son Nhat International Airport.

"There will also be six branches connecting to the terminals, parking lots and some surrounding streets,” the department suggested in its proposal. "It will also connect with the flyover 1 which is being planned for Binh Thanh Street."

Tan Son Nhat Airport currently faces overcrowding due to poor infrastructure. The airport was designed to serve 25 million passengers a year but the number of passengers has increased sharply and expected to reach 31 million in 2016.

To solve the problem, the department wants to improve road and rail links.

Seafood firms get no support over mass fish deaths

Seafood enterprises cannot benefit from an assistance program for individuals and businesses hit by mass fish deaths in four central coastal provinces though they have suffered heavy damage from the incident.

Nguyen Ngoc Oai, deputy director of the General Department of Fisheries under the Ministry of Agriculture and Rural Development, told a press conference in Hanoi last week that the list of eligible beneficiaries of the program does not comprise seafood enterprises.

On August 29, Deputy Prime Minister Truong Hoa Binh convened a meeting with the ministries of agriculture-rural development and finance and the Government Office to discuss relevant issues. Later, the Government Office announced Binh’s conclusion on lengthening the list of individuals and businesses eligible for the assistance program.

Besides fishermen, the list comprises owners of fishing boats with a capacity of over 90 HP and their employees, owners and workers of seafood cold storage facilities, fish sauce and shrimp paste businesses, and fish and shrimp farms.

The agriculture ministry will show eligible individuals and businesses excluding seafood processing firms how to calculate losses caused by the most serious environmental incident in Vietnam.

More than 100 tons of dead fish was collected along the coast of Ha Tinh, Quang Binh, Quang Tri and Thua Thien-Hue provinces after the steel complex of Formosa Ha Tinh discharged harmful industrial waste into the sea. The Vietnam unit of Taiwan’s Formosa Plastics Group took full responsibility for the incident and had completed the US$500 million compensation for economic damage as of last month. 

On August 23, the Vietnam Association of Seafood Exporters and Producers (VASEP) wrote to the Government, the ministries of agriculture-rural development and industry-trade requesting financial support for seafood processing firms in the four central provinces.

The document said the April mass fish deaths had left serious impact on seafood production and export.

Truong Dinh Hoe, general secretary of VASEP, said seafood processors are facing a slew of difficulties and State agencies should assess all the losses that seafood firms are suffering.

He said the lack of raw material for processing products for export has made it hard for seafood companies to fulfill their signed contracts while importers are hesitant to clinch new contracts.

The four provinces reported a total of around 3,900 tons of seafood in stock. The Government has told the Ministry of Health to coordinate with relevant ministries and localities to take samples for testing and allow safe products to be consumed. Tainted seafood will be destroyed and its owners will get financial support equivalent to 70% of the value of the discarded volumes.

Many localities attract no FDI in Jan-Aug

Nineteen localities reported no fresh foreign direct investment (FDI) approvals in January-August, according to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment. 

Most of them are northern provinces like Tuyen Quang, Yen Bai, Dien Bien, Lai Chau, Bac Kan and Cao Bang, which have attracted little FDI capital over the years.

Meanwhile, seven provinces including Kien Giang, Daklak and Lao Cai each attracted only one FDI project worth hundreds of thousands of U.S. dollars to US$5 million. Many others reported 2-3 FDI projects with modest investment capital pledges.

According to the FIA, foreign-invested firms registered a combined US$9.8 billion for 1,620 fresh projects in Vietnam in the first eight months, up 24.3% against the same period last year. Overall, FDI approvals for new and existing projects surpassed US$14.36 billion, a 7.7% pickup year-on-year.

The northern city of Haiphong took the lead with 30 fresh and 21 operational projects capitalized at a combined US$2.02 billion, representing 14% of the country’s total. Hanoi came second with some US$1.8 billion for new and existing projects, making up 12.4% of the total.

Notably, the manufacturing and processing industry attracted US$10.53 billion to 678 new and 551 operational projects, accounting for 73.3% of the total. The real estate sector ranked second with US$836.2 million, representing 5.8% of the total.

HCMC pledges full support for investors

The HCMC government will provide full backing for companies including foreign ones and timely solve their problems in an effort to make the city Vietnam’s most appealing destination for overseas investors.

Speaking at a ceremony held last week to celebrate Vietnam’s 71st National Day, HCMC chairman Nguyen Thanh Phong said the city is a growth driver for Vietnam’s economy, plays a pivotal role in the Southern Key Economic Zone and is a pioneer in the nation’s international integration process.

Phong said that over the years HCMC has taken the lead in gross domestic product (GDP) growth, contributing about 22% of GDP, one-third of industrial output, one-third of budget collections and more than one-fourth of total exports of the nation.

HCMC is the most attractive destination for foreign investors in Vietnam with a favorable location, developed infrastructure, ample human resources and pro-business policy. The city aims to become a special metropolis which contributes the country’s industrialization and modernization process and become one of the major centers of economy, finance, trade, science and technology in Southeast Asia.

According to Phong, partnerships with 41 foreign cities have brought pragmatic benefits in terms of economy, culture, education and urban planning to HCMC.

Phong pledged HCMC will further improve the investment environment and create the most favorable conditions for businesses. The city will continue maintaining regular meetings with foreign businesses to listen to and timely solve their difficulties as well as improving the quality of human resources and infrastructure.

HCMC exports inch up slightly in Jan-Aug

HCMC posted export revenue of US$20.1 billion in the January-August period, up 0.8% against the same period last year, according to a report on the city’s socioeconomic performance in the first eight months.

The modest growth was considered positive as HCMC’s exports in the January-August period of last year fell by 5.6% year-on-year.

If crude oil was excluded, the city’s export turnover in the year to date totaled US$18.4 billion, a 6.4% rise compared to the year-earlier period.

China, South Korea, Hong Kong and India remained as the major export markets of HCMC, with shipments to China rising 29.4%, Hong Kong climbing 19.5%, South Korea soaring 30.8%, India surging 45.8%, Indonesia leaping 167.5%, and the Netherlands up 23.6%.

Among export products, coffee obtained growth of 39.3%; wooden products 13.6%; computers, electronic products and components 29.6%; machinery, equipment, tools and spare parts 23.2%.

Exports to Japan, Malaysia, the U.S., Australia, the Philippines, Singapore and France grew at slower paces, the report said.

In the period, the city spent US$23.7 billion on imports, up 9.7% over a year ago. Imports from the U.S. leapt 130.6%, South Korea 46.5% and Hong Kong 16.1%.

Major products brought into the country in the period included machinery, electronic products and spare parts, and pharmaceuticals.

Last year, HCMC earned US$27 billion in export revenue, up 9.9% year-on-year, and US$32.7 billion in import, increasing 6.2%.

The city targets export revenue growth of 8% this year and reductions in imports of luxury consumer goods, outdated technology and products which have been produced domestically.

New manufacturing orders post slower growth

Business conditions in the Vietnamese manufacturing sector continued to improve in August, boosted by faster rises in employment and stocks of purchases, but growth in output and new orders eased again during the month, according to a Nikkei report released last week.

The headline Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI) rose to 52.2 in August from 51.9 in July, signaling a modest improvement in operating conditions compared to the previous month. The health of the sector has strengthened in each of the past nine months.

Andrew Harker at IHS Markit, which compiles the survey, said the latest PMI data for Vietnam are something of a mixed bag again. The data are generally positive, with rates of expansion in employment and stocks of purchases particularly strong.

On the other hand, output and new orders increased at weaker rates, suggesting that client demand is showing signs of softening. Adding to this picture is the fact that firms often had to offer discounts in order to secure new work.  

“IHS Markit is currently forecasting gross domestic product (GDP) growth of 5.85% for Vietnam in 2016 and these latest figures suggest that the manufacturing sector will continue to make a solid contribution to the overall economy,” Harker said in the report.

August’s increase in output was the weakest in five months, but extended the current sequence of growth which began in December last year. Investment goods producers recorded a rise in production, but output dipped in the consumer and intermediate goods sectors.

Vietnamese manufacturers took on extra staff at a solid pace in August, and one that was the fastest since December 2013. This helped firms to reduce their backlogs of work, as has been the case in each of the past five months.

Manufacturers raised their purchasing activity in line with higher new orders in August. Moreover, the rate of expansion picked up slightly from that seen in July.

The rate of input cost inflation remained solid amid reports of rises in raw material costs. There were some mentions of supply shortages, which also contributed to longer vendor lead times.

Meanwhile, manufacturers continued to lower their output prices slightly in August, the third month running in which that has been the case. Where charges fell, panelists mentioned offering discounts in order to secure new business.

Output prices decreased in the intermediate goods sector, but increased at consumer and investment goods firms.

Finally, stocks of finished goods continued to decrease in August, extending the current sequence of decline to eight months. Some panelists mentioned using inventories to fulfill new orders as opposed to new production.  

KIDO eyes 65% of TAC

The KIDO Group Corporation (KDC) has announced it will bid to purchase a 65 per cent stake in cooking oil giant the Tuong An Vegetable Oil Company (TAC).

The terms of the deal, including the bidding period, bidding price, and other details are yet to be disclosed.

TAC’s share price increased dramatically in the last there trading days, from August 30 to September 1, reaching VND67,500 ($3). At this price KIDO would have to part with VND833 billion ($37.4 million) to complete the deal.

TAC’s shareholding structure changed significantly in July, with nearly 65 per cent changing hands. The Viet Long Securities Investment Fund Management Corporation (VLFM) purchased 4.55 million shares, or 24 per cent, from the Vegetable Oils Industry Corporation (Vocarimex).

A total of 7.6 million shares, or 40 per cent, were traded in 32 separate transactions at VND62,000 ($2.8) per share on July 13, totaling VND471 billion ($21.1 million).

KIDO’s second half 2016 financial statement mentioned that the company has placed an advance payment of nearly VND440 billion ($19.7 million) for TAC shares.

Two members of TAC’s board have resigned recently. The board has therefore announced an extraordinary shareholders meeting on October 6 to confirm the resignations and elect two new members.

It was reported on August 22 that KIDO had finished transferring the remainder of its confectionary business to Mondelēz International from the US.

After selling 80 per cent of its subsidiary, the Kinh Do Binh Duong JSC (BKD), to Mondelēz International in the second quarter of last year KIDO is expected to reap VND2 trillion ($89.7 million) from the sale of the remaining 20 per cent.

KIDO has already received VND1.55 trillion ($69.5 million) from Mondelēz International and will receive a further VND450 billion ($20.2 million) after the paperwork is completed. With the aim of acquiring 65 per cent of TAC and 51 per cent of Vocarimex, KIDO is forecast to take the lead in the Vietnam’s cooking oil market.

Singapore’s Wilmar International announced in July that it would buy 45 per cent of Bunge Ltd’s oilseed crushing factory. Bunge is Vietnam’s largest producer of soybean oil, the world’s largest palm oil processor, and one of the largest soybean buyers, and aims to strengthen its presence in Vietnam’s cooking oil market.

Cai Lan Oils & Fat Industries Company (Calofic), in which Wilmar holds a 76 per cent stake, is the leader in Vietnam’s cooking oil market with a 37 per cent market share. It reported total 2015 revenue of VND11 trillion ($493 million), three times higher than its nearest competitor, TAC. Calofic has won the trust of a wide range of customers with its famous brands, including Neptune, Simply and Meizan.

With KIDO eyeing stakes in Vocarimex and TAC and with Wilmar’s deal with Bunge, competition in Vietnam’s cooking market is heating up.

TAC is the second-largest cooking oil company in Vietnam, with a 22 per cent market share. It reported total 2015 revenue of VND3.6 trillion ($161.3 million).

Animal feed imports from China surge

Imports of animal feed and materials from China jumped 38.1% to US$1.95 billion for eight and a half months, according to the latest statistics from the Ministry of Industry and Trade.

During the first half of August alone, Vietnam imported US$140 million of animal feed and materials, including US$39 million for corn and US$13 million for soybean.

Imports of such products from China hit US$56.5 million in July, double the level recorded in June.

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