EU warns Vietnam fruit and vegetable growers

The European Commission's Directorate-General for Health and Consumers (DG SANCO) has issued a warning to Vietnam fruit and vegetable growers, the Ministry of Industry and Trade (MoIT)’s European Market Department announced on Oct. 6.

The Department reported that since Feb. 2, 2014, the DG SANCO has on three occasions, received information from EU member countries warning about batches of imported basil and bitter gourd from Vietnam, which tested positive for harmful organisms in the wood packaging boxes.

Earlier, DG SANCO officially announced the EU would ban the import of Vietnamese fruit and vegetable if it finds more Vietnamese batches not in compliance with phytosanitary regulations during the period from Feb. 1, 2014 to Feb. 1, 2015.

According to the International Plant Protection Convention (IPPC), wood packing material should be dried at high temperature to kill harmful organisms and contain a safety inspection stamp.

The MoIT’s European Market Department has asked local importers to strictly follow phytosanitary regulations and meet all requirements for food hygiene and safety provided by the EU.

Farm Expo 2014 opens in HCM City

A wide range of Vietnamese agricultural exports are being showcased at the Vietnam Farm Expo 2014, which opened in Ho Chi Minh City on October 8.

The event drew 170 pavilions of both local and foreign businesses from across the country, including Hanoi, HCM City and Vinh Long, Dong Thap, Ninh Thuan, Khanh Hoa and Kien Giang provinces.

On display are key agricultural exports such as rice, tea, coffee, pepper, cashew, seafood, fruit, vegetables, beverage, and confectionaries that meet VIETGAP and GLOBALGAP standards.

Pham Ngoc Hung, Vice President of the HCM City Businesses Association, said the three-day expo is expected to introduce Vietnam’s high-quality farm produce and processed food to local and external customers. It aims to create a good venue for producers and suppliers to seek trade partners and showcase state-of-the-art equipment and technology for agricultural production and processing.

Foreign exchange rate remains unchanged, says SBV

Deputy Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong on Oct. 6 affirmed that no adjustments have been made in the foreign exchange rate at present despite the price of US dollar is rising during these days.

Though the forex rate saw an increase on the inter-bank market in early October, it was much lower than that stipulated by the SBV, Hong said.

She attributed the rise to rumours about the central bank’s adjustment in the current forex rate. The foreign currency supply and demand were stable in September, resulting in a surplus of around US$11 billion in overall payment balance in the nine-month period.

According to some other opinions, Vietnam dong (VND) is losing its price due to heavy pressure caused by abundant liquidity in the banking system. Moreover, inter-bank interest rate was at low level, so credit organizations were hesitant to buy foreign currency.

However, Hong said VND liquidity has reduced, while credit growth is resuming, with September figure hitting 7.26% compared to the end of last year.

She noted that the SBV will continue monitoring strictly forex rate and implement monetary policy tools to stabilize the foreign currency market if necessary. The State bank is willing to sell foreign currency to keep forex rate at a stable level, Hong added.

HSBC: Vietnam’s PMI goes up in September

The Purchasing Managers’ Index (PMI) of Vietnam rose to 51.7 in September from 50.3 on higher new orders, while input prices eased significantly, according to a latest report by the Hong Kong-Shanghai Bank Corporation (HSBC).

The report showed that Vietnam’s PMI has expanded for 12 consecutive months since September 2013. In Q3 of 2014, the manufacturing sector punched above its weight, growing by 9.8% y-o-y and contributing 1.9% to the economy's 6.4% y-o-y growth rate.

With inventories reduced, output is expected to expand further in Q4, reflecting a GDP expansion of 6.0% y-o-y in the last quarter of this year.

September consumer price index (CPI) dropped further; with oil price subdued and demand pressure weak, said HSBC, which predicted CPI to end 2014 below 4%.

Inflationary pressures are benign as food supply is ample, domestic demand is sluggish, credit growth low, and oil prices weak. In recent years, domestic firms' trade deficits have narrowed while foreign enterprises' surpluses have picked up, providing stability for the currency and the economy.

In the medium term, HSBC believed that labour market, financial, infrastructure and supporting industry reforms are required for growth to be sustainable. Low linkages with foreign enterprises and persistent skilled labour shortages are currently limiting the benefits of FDI, especially regarding the acquisition of technology.

HSBC said the EU Vietnam Free Trade Agreement (FTA) will likely conclude by year end, if not in early 2015, resulting in stronger growth of manufacturing exports. The expiration of EU anti-dumping measures on Vietnam leather footwear, labour cost competitiveness with China and anticipation of the Trans Pacific Partnership have caused firms to shift production to Vietnam.

While manufacturing is going from strength to strength, Vietnam's service sector is flat-lining. Despite strong demographic transitions and rising income, the service sector is being dragged down by weak consumer sentiment and high levels of bad debt in the financial sector, HSBC reported.

Garment exports to hit US$25 bln for 2014

Garment and textile exports are forecast to exceed the yearly plan by 16% and peak at US$25 billion for 2014, according to the Vietnam National Textile and Garment Group (VINATEX).

In the first nine months of 2014, garment exports were US$17.2 billion, up 19% over the corresponding period last year.

Many traditional markets remained on a high growth trend, such as the US (15%), the EU (19%), Japan (14%) and the Republic of Korea (32%).

India has now replaced China to become the largest cotton supplier for Vietnam, behind the US.

In the first nine months, Vietnam imported 550,000 tonnes of cotton valued at US$1.1 billion from foreign countries (including US$500 million from the US and US$300 million from India).

Enhancing Vietnamese capacity for global trade

Vietnamese companies have encountered difficulties piercing foreign markets due to lack of managerial skills and failure to carefully evaluate the market risks, said Dr. Christiane Beck, Project Director Sequa Trade Capacity Building.

A high-quality due diligence market analysis is critical to the success of doing business in a foreign country, Beck said in announcing the launch of a new programme for small and medium-sized businesses in 15 provinces and cities nationwide.

The programme funded by the European Trade Policy and Investment Support Project (EU-MUTRAP) aims to improve managerial skills for Vietnamese businesspersons and, in particular, their competence in transacting international trade.

Vietnamese companies have encountered  numerous difficulties manoeuvring the complicated maze of laws and regulations, particularly in the European Union, noted Dr. Christiane Beck.

She added the project will focus on developing skills to insure Vietnamese companies understand the means and methods of how to obtain and analyse market information to optimally assess market opportunities.

Nguyen Dac Hoan, Project Manager of DEVIWAS from Germany in turn said by learning how to properly assess foreign markets local businesses will be able to better plan and prepare themselves to understand and comply with the requirements of foreign markets and the business culture of partners.

Vietnamese companies primarily are suffering from short-sightedness and lack of long-term strategic planning.  In the move to global integration, they tend to be putting the cart before the horse and are getting ahead of themselves, said Hoan.

In a nutshell, the problem is lack of strategic thinking and the failure to lay out sufficiently detailed short, medium and long-term plans.  This has resulted in Vietnamese businesses turning their businesses into “general stores” and not zeroing in on their areas of strengths and forging a market niche.

Therefore, businesses are not developing in a sustainable and stable manner, Hoan said.

Experts from DEVIWAS caution that faced with fierce competition, Vietnamese businesses, especially those in short supply of capital resources, experiences, technologies and human resources should not attempt to compete head on with the foreign competition.

If Vietnamese businesses are to be successful then they must establish alliances with foreign partners and benefit from their experiences via cooperative and joint venture projects.

Dr. Christiane Beck echoed the experts from DEVIWAS views, saying said the project’s activities are aimed at enhancing capacity of Vietnamese businesses to cooperate with partners from the European Union.

The “European Trade Policy and Investment Support Project (EU-MUTRAP) is the continuation of 15 years of successful cooperation between the EU and the Ministry of Industry and Trade in the field of trade related to technical assistance.

The EU-MUTRAP project supports sustainable international trade and investment in Vietnam with a total budget of EUR16.5 million, of which EUR15 million has been sourced from the EU and the remainder from Vietnam.

Vietnam-Japan enhance connectivity in agriculture

A high-level delegation from the Japan Ibaraki Prefecture led by its Governor Masaru Hashimoto commenced an official visit to Vietnam on October 5 aimed at strengthening cooperation in agriculture, trade, human resources and manufacturing.

Speaking at a press conference in Hanoi on October 5, Governor Hashimoto applauded the robust economic development of Vietnam, saying he is confident there are many bright prospects on the horizon for the nation.

He said he is heading up a 100-member strong delegation of Japanese business representatives, who have all expressed a strong desire to cooperate with Vietnamese companies, particularly in agriculture.

On the occasion of President Truong Tan Sang’s visit to Ibaraki Prefecture in March, he mentioned he signed a memorandum of understanding (MoU) to boost agricultural cooperation by supporting training agricultural engineers training and applying advanced technologies in agricultural production.

In May, Governor Hashimoto said the Vietnam Ministry of Labour, Invalids and Social Affairs and the Ibaraki Agriculture Association signed an agreement on receiving Vietnamese apprentices to learn agricultural techniques of Ibaraki prefecture.

For the past five consecutive years, Ibaraki prefecture’s agricultural production value has ranked second in Japan, just after Hokkaido. Ibaraki has taken the lead in Japan in sales turnover of fruits and vegetates to the Tokyo market for the past ten consecutive years.

With such achievements, the Governor expressed his hope to increase future cooperation with Vietnam in agriculture and other fields to further elevate the friendship and economic development between the two nations.

New shipping route cuts costs for freight transport

A new coastal transport route between Quang Binh and Kien Giang province opened on Sunday, slashing freight rates by up to 75 per cent.

Deputy Minister of Transport, Nguyen Van Cong, said at the opening ceremony in Hue that the route followed the success of one recently opened between Quang Ninh and Binh Thuan.

He said the Quang Ninh – Binh Thuan route had not only reduced transportation costs, but had led to fewer road accidents.

One of the newly developed coastal routes connects Quang Binh and Binh Thuan (858km), and the other connects Binh Thuan and Kien Giang (700km).

Only vessels classified for both river and sea travel are allowed to travel in both new routes - as long as they do not venture more than 12 nautical miles from the coast in seas with waves 2.5 metres high or less.

Statistics from the Viet Nam Maritime Administration (Vinamarine) show that the demand for waterway transport in coastal provinces is rising because the cost of shipping goods is much cheaper than by road.

The amount of goods carried through the Mekong Delta Region is more than 50 million tonnes a year.

Companies in Da Nang transport a total of 400,000 tonnes of goods a year, including petroleum, steel products and fertilisers.

Since the Quang Ninh – Quang Binh waterway route opened recently, a large number of companies have changed from road to water transport.

Vinamarine also reports that road transport cost for one container from Hai Phong to Thanh Hoa was between VND10 to 12 million, while water transport cost only VND 2.4 million.

Inflation holds steady in first nine months

The inflation rate in Viet Nam is expected to reach three to four per cent this year barring any sudden increase in the prices of goods and services, the Voice of Viet Nam (VOV) reported.

In a report on the country's economic situation in the first nine months of 2014 which it released last week, the National Financial Supervisory Commission (NFSC) also said the consumer price index (CPI) in September remained stable and at the low level that was maintained in the past two years.

Despite seasonal factors in the past month, the education services sector increased by 7.1 per cent, making its CPI surge the highest in the past seven months.

However, inflation was at its lowest level, increasing by 3.62 per cent year-on-year. With the downward trend in inflation, the committee forecast the decreasing CPI to facilitate an interest rate decline.

The payment balance saw a surplus and stable exchange rate during the nine-month period. As of September 15, State budget overspending was estimated at VND124.5 trillion (US$5.9 billion), a 4.7 per cent year-on-year decrease.

The commission also said exports and imports witnessed a positive growth rate in the period, with a trade surplus of around $1 billion, accounting for 0.9 per cent of export turnover.

GDP growth has also been on an upward trend since the beginning of the year. Growth reached 6.15 per cent in the third quarter, higher than the 5.25 per cent recorded in the second quarter.

The NFSC predicted that the country's GDP this year would reach 5.8 per cent because of high third quarter growth.

However, the committee said difficulties remained for local businesses. A total of 48,330 companies shut down or suspended operations between January and September, representing a 13.8-per cent year-on-year increase.

The NFSC attributed this to the slow improvement in personal consumption and low private investment. Low demand and bad debts were the two main reasons preventing private businesses from increasing their investments.

To address these problems, the committee made five proposals: provide low interest rate capital for banks to reduce their lending interest rate, use State financial resources of the Viet Nam Asset Management Company to buy bad debts, accelerate investment disbursement from the State budget and Government bonds, improve administrative procedure reforms, and restructure State-owned enterprises.

Can Tho posts record $616m trade surplus

This Cuu Long (Mekong) Delta Province has achieved a record trade surplus of US$616 million in the past nine months, according to the city planning and investment department.

During the period, Can Tho's exports hit $914 million and its imports hit $298 million, the department said, adding that rice and seafood remained the city's key exports, bringing a combined turnover of $723 million or 79 per cent of total export value.

Other exports include garments and textiles, pharmaceuticals, arts and handicrafts and footwear, as well as iron and steel, fruits and canned mushrooms. These have raked in $181 million in profits, a 29-per cent year-on-year increase.

Duong Nghia Hiep, deputy director of the city trade and industry department, attributed the performance to the city's efforts to curb imports and produce quality exports to achieve higher turnover.

Hiep also said the efforts of domestic companies, especially those into rice and seafood exports, to improve the quality of their products, seek new markets in Asia, Africa and the Middle East and proactively deal with foreign customers and consumers to better serve their needs, also contributed to the result.

Earlier, Can Tho set a target of $1.65 billion in export profits by year-end, including $516.5 million from rice and $488 million from seafood. The goal is $150 million higher than that of 2013, according to the city trade and industry department.

Can Tho has trade relationships with more than 80 countries and territories. Besides the traditional markets of Japan, the United States and the European Union, the city has also expanded to markets in the Middle East, North Africa and Eastern Europe.

The city also aims to create favourable conditions for small enterprises to promote their goods in the French market, said Truong Quang Hoai Nam, vice chairman of the city People's Committee.

The committee organised a working session with representatives from the Business Association of Vietnamese High-Quality Goods last Thursday to find ways to help small enterprises producing consumer goods, handicrafts, food and tourism services to intensify trade ties with French partners.

Vu Kim Hanh, the association president, said expanding operations to foreign countries, including France, was a big step for small enterprises that are extremely vulnerable when entering new markets.

Viet Nam offer support to Laos

Viet Nam was willing to support Laos in its five-year socio-economic plan by sharing experience, Deputy Prime Minister Vu Van Ninh told his Lao counterpart Bunpon Buttanavong in a meeting in Ha Noi yesterday.

Ninh pushed for increased negotiations and the signing of a new trade deal, making it easier to achieve a trade value of US$2 billion by 2015.

Both Deputy PMs agreed to facilitate visits at all levels in a bid to share experience in management, socio-economic development and Party-building.

They expressed their appreciation for the joint preparations for the 37th meeting of their inter-government committee and the progress made in trade and investment, with bilateral trade exceeding $1 billion for the first time last year.

Both ministers highlighted the need to accelerate strategic co-operation projects, including the erection of a statue of President Ho Chi Minh in Vientiane to mark his 125th birthday and the 85th anniversary of the Indochinese Communist Party, as well as other celebrations next year.

The guest vowed to do his utmost to foster friendship between the two countries.

Capital injection needed to cut loan interest rates

The State Bank of Viet Nam needs to inject privileged capital into the banking system to help credit institutions cut lending costs without causing a systematic imbalance in interest rates.

The National Financial Supervisory Commission (NFSC) made this proposal in its September economic report, which infonet.vn cited.

SBV figures in September showed that lending interest for general production and business remained stable at nine to 10 per cent for short-term loans and 10.5 to 12 per cent for medium- to long-term loans. Meanwhile, deposit interest rates fell by 0.1 to 0.3 percentage points to five to six per cent for short-term loans, six to 7.2 per cent for loans of less than 12 months and 7.3 to 7.8 per cent for longer-term loans.

The NFSC backed up its comments with reports from 15 credit institutions and said the average profit margin between deposit and lending interest rates in the first half of this year decreased by 50 per cent year-on-year.

"The growing imbalance of interest erodes the financial capacity of credit institutions and the risk provisioning toward bad debts as well," the report said.

The commission also suggested the volume of low-interest capital that the central bank should inject.

To date, the banking system handled more than VND249 trillion (US$11.6 billion) in non-performing loans (NPLs), compared with VND464 trillion ($21.7 billion) in bad debt in September 2011. After three years, an estimated 53.6 per cent of NPLs were resolved.

The Viet Nam Asset Management Company (VAMC) is expected to purchase VND70 trillion ($3.2 billion) of NPLs by the end of this year, plus VND78 trillion ($3.7 billion) in provisional funds from commercial banks and credit institutions.

SBV Governor Nguyen Van Binh told the National Assembly Standing Committee meeting last week that the central bank would take drastic measures to handle bad debts.

However, in its latest report, the NFSC said the VMAC was in need of a State-sourced financial stream to become more competent in purchasing bad debts. Otherwise, the VMAC will need more time to lengthen tenures of special notes to help credit institutions accumulate long-term capital sources.

Exchange-traded fund listed in HCMC

Viet Nam's exchange-traded fund (ETF), VFMVN30, was officially listed yesterday on the HCM City Stock Exchange, with about 20.2 million shares valued at more than VND10,000 (US$0.47) each.

Bao Viet and HCM City securities companies created the ETF, the first domestic open-end fund in Viet Nam tracked by the VN30 Index, with supervision from the Viet Nam Standard Chartered Bank Ltd and under the management of the Viet Nam Fund Management Company (VFM).

The ETF shares, with a price margin that is within 20 per cent, represent the performance of the 30 largest stocks in HCM City. Each stock has a certain percentage in the portfolio, with the highest belonging to property giant Vingroup with 11.07 per cent, followed by Vinamilk with 10.32 per cent, private equity group Masan's with 9.12 per cent and Sacombank with 8.03 per cent.

The ETF's opening is expected to solve problems related to the foreign ownership of shares, as it grants unlimited ownership of shares to foreign investors, who are restricted to only 49 per cent of closed-end funds.

The VFM has mobilised a registered capital of VND202 billion ($9.6 million) for the fund's initial public offering, thereby doubling its target of VND100 billion ($4.76 million).

Although the fund's scale is still much smaller than that of the total assets of two foreign ETFs, including The Market Vectors Viet Nam ETF and DB X-Tracker FTSE Viet Nam, its registered capital is $10 million to $7.5 million higher than that of The Market Vectors's initial start and $5.3 million higher than that of the FTSE.

Ministry proposes special tax on online games

The Ministry of Finance recently submitted a proposal to the Prime Minister about applying a special 10 per cent consumption tax on online games.

The online educational games approved by the Ministry of Education and Training are proposed to be exempt from the tax.

The special tax is expected to help orient the business and production operations of firms and enhance the management of online games. The ministry has suggested a 10 per cent tax to initially help enterprises to manage and take initiatives in outlining plans for investment, production and business.

It is projected that the special tax will bring in more than VND650 billion (US$30.9 million) per year.

Hoa Sen builds Nghe An steel sheet factory

The Hoa Sen Group began the construction of a steel sheet factory worth more than VND2.3 trillion, or US$109.52 million, in this central province last Saturday.

The facility, spread over an area of 12 ha in the Nam Cam Industrial Zone in Nghi Loc District, is expected to be completed in August 2018, and will create jobs for about 500 workers when it becomes operational.

The company said that the factory will help increase its production capacity to meet the demand for steel products in the northern and central provinces, and increase its exports to Laos, Thailand and Myanmar.

The Hoa Sen Group is based in the southern province of Binh Duong. Last year, the company maintained its number one position in manufacturing and trading in steel sheets in Viet Nam, commanding 40 per cent of the domestic market, according to the Viet Nam Steel Association.

Ha Noi targets increased growth

Ha Noi hopes to develop its economy by 7 to 7.5 per cent annually between 2016 and 2020, said chairman of the city's People's Committee, Nguyen The Thao, during a recent interview with Vietnam News Agency.

Thao also said Ha Noi needed to reduce its poverty rate by 1.5 per cent annually.

He said the capital, as a leading economic centre, should focus on maintaining economic stability and controlling inflation that is why it had set targets to help the nation become industrialised by 2020.

Thao said Ha Noi's economic growth had historically been high and that it had risen one-and-a-half times faster than in the rest of the country. In the past three years, it grew 9.17 per cent.

The rate of mobilising social capital continued to rise by 16.36 per cent per year. The city also attracted 2,806 business projects with a total value of US$21.1 billion.

The city had implemented national programmes providing vocational training and creating jobs for workers.

Each year, the city had created jobs for 137,000 labourers, keeping the unemployment rate below 4.8 per cent last year.

Thao also said the city had helped lift 16,500 to 20,000 households out of poverty. By the end of last year, there were 59,360 low-income households.

Planning, infrastructure development and urban management remain high on Ha Noi's list. The city has expanded many new roads, such as Hoang Quoc Viet, Nguyen Chi Thanh, Tran Khat Chan and Dai Co Viet.

The city also paid attention to rural infrastructure. It removed temporary classrooms from schools. In 2012 and 2013, it installed about 10,000 water treatment machines in 10,000 low-income households in Thanh Oai, Thuong Tin, Me Linh, Ung Hoa, Phu Xuyen and My Duc districts.

The Government carried out 37 projects to mark the 60th anniversary of the city's Liberation Day. Seven have been completed and 22 others will be concluded by the end of next year, he said.

Nguyen Van Ha, a Vietnamese man living in the Czech Republic, said he was impressed to see Ha Noi producing more commercial centres, banks and trade.

"I will invest in the city," he said. "I will introduce the city to my friends who are seeking a good place for investing."

But the city's urban planning and management remain weak, said Bui Xuan Tung, deputy head of the municipal Department of Planning and Architecture.

Skinny houses posed a safety threat, so the city should write more regulations on building such structures, Tung said.

Vietcombank exceeds annual target during first nine months

The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) announced that it has fulfilled 99 percent of its annual target for capital mobilisation with 390 trillion VND (nearly 18.6 billion USD) during the first nine months, up by 18 percent from the beginning of the year.

The bank’s outstanding loans increased by 10 percent to 300 trillion VND (14.15 billion USD) by the end of September compared to the figure in early 2014, indicating that the bank’s market share improved since last year.

So far, Vietcombank generated more than 7.5 trillion VND in pretax profit before paying for risk provision. This accounts for 70 percent of this year’s profit target, up by 8 percent compared to the same period last year.

Chairman of Vietcombank, Nguyen Hoa Binh, believes this positive development forms a basis for the bank to fulfill all of its targets this year.

The bank’s General Director Nghiem Xuan Thanh emphasised the need for Vietcombank to strictly control bad debt whilst maintaining a high level of credit growth and accelerating the recovery of off-balance-sheet debt.-

Mekong Delta aquatic output reaches 2.8 million tonnes

According to the South West Region’s Steering Committee, the Mekong Delta produced 2.8 million tonnes of aquatic products during the first nine months of this year, of which 1.8 million tonnes came from aquaculture.

The output increased by 140,000 tonnes compared to the same period last year, helping the region earn more than 3.4 billion USD from aquatic export, up by 19 percent year-on-year.

The provinces of Kien Giang and Ca Mau produced the most, with a combined 830,000 tonnes.

The provinces increased their offshore fishing fleet and aquacultural production areas to 800,000ha. The Safe Quality Food 100 (SQF 100), Vietnam Good Agricultural Practice (VietGAP), and Global GAP models are being applied, enterprises are encouraged and helped to update technology and train their workers to improve their skills and to meet the requirement of international markets.

Additionally, water management, post-harvest, processing, and export activities of aquatic farms and processing factories have been put under strict management in accordance with international standards.

Moreover, the provinces are creating conditions for producers to sell their goods more efficiently at markets and restaurants in the Mekong Delta region, with 1,500 tonnes of fresh and frozen seafood being traded a day.-

Binh Duong starts construction on joint venture textile factory

Construction on a textile factory began in the southern province of Binh Duong on October 6, marking the first joint-venture between businesses from Hong Kong (China) and Vietnam.

Funded by Hong Kong’s Haputex Development Limited and Viet Huong Investment Development JSC, the 120 million USD facility will cover an area of 12ha and produce 36 million meters of fabric per year, once it starts operations in late 2015.

By 2019, the factory aims to expand its annual capacity to 96 million meters of fabric, predominantly using made-in-Vietnam materials and technology from Germany and Japan.

Nearly 90 percent of products will be exported to the US, with the rest going to Japan.

Over 3,000 local residents are expected to be employed by the factory.

World Bank cuts forecast for Vietnam's economic growth

Sandeep Mahajan, head economist at the World Bank Office in Vietnam, said that economic growth would likely be only 5.4% this year, missing the government's target of 5.8%.

However, in a press conference held on October 6, Mahajan also said that Vietnam still has three more months to improve the forecast. Since Vietnam's growth depends on exports, it can benefits from the recovery of the world economy. Even though Purchasing Managers Index was lowered recently, it is still over 50, an expansion in the manufacturing sector.

Mahajan also said that the restructuring of state-owned enterprises was going slower than what the World Bank had expected. However, he showed understanding by saying that a successful equitisation process has many factors.

Due to the impacts of economic downturn, investors are reluctant to buy shares, putting more pressure on enterprises.

According to Mahajan, Vietnamese authorities should be more active in making information about the process public. Transparency is another matter that needs to be worked on if Vietnamese authorities want to speed up the restructuring process, he said.

He added that Vientam's economy has two kinds of growth. The first is strong and comes from FDI and the second, weaker one comes from domestic companies. This, along with a high trade deficit, has hampered Vietnam's overall growth. According to him, authorities must focus on the development of local firms to fix the problem.

HCM City credit grows 6 percent

Ho Chi Minh City achieved a 6.05 percent credit growth worth 1,010 trillion VND (47.4 billion USD) from January to September 2014, according to the local government.

Outstanding loans in Vietnamese dong accounted for 83 percent or 839 trillion VND (39.39 billion USD) of the total number of loans, while foreign currencies made up the remaining 17 percent or 8 billion USD. Short-term loans made up 51 percent of the portfolio.

Loans in priority sectors, including rural and agricultural development, exports, small and medium enterprises, auxiliary industries and high-technology applied enterprises, totalled 136.24 trillion VND (6.4 billion USD), a 7.9-percent increase over that of the end of 2013.

The city's total deposits increased by 4.71 percent in the first nine months to reach 1,226 trillion VND (57.55 billion USD). Of these, deposits in dong made up 84.7 percent.

By end-July, the city's bad debt was estimated to be worth 59 trillion VND (2.76 billion USD), making up 5.93 percent of total outstanding loans, or a 1.24-percent increase over that of last December.

Nguyen Van Binh, the State Bank of Vietnam (SBV) governor, told the National Assembly Standing Committee last week that bad debts nationwide amounted to eight percent of total outstanding loans by the end of late July. Binh said he would bring down the ratio to six percent by year-end.

The country's credit growth from January to September 2014 reached 7 percent while the annual target is set at 12 to 14 percent.

The VND continues to slip against USD

After the sudden increase of the value of USD against the VND on Oct. 1, it has continued to rise.

A price survey of commercial banks Friday morning showed that, since the previous day, the buying price of USD increased by between VND5 and VND30 and the selling price of UDS increased up to VND60.

Currently, the lowest buying price is around VND21,200 and the highest is VND21,290, while the highest selling price is VND21,340.

At VietinBank, both the buying and selling prices increased VND30 from the previous day, brought the exchange rate to VND21,255 - VND21,315.

At BIDV, the exchange rate  VND21,250 - VND21,330. At LienVietPostBank, the exchange rate is VND21,220 - VND21,340 VND/USD. At Sacombank, the exchange rate is VND21,230 - VND21,330.

Meanwhile, the inter-bank exchange rate remained stable at VND21,246.

Over the last few days, exchange rates have increased by VND75 due to adjustments by the State Bank of Vietnam. Since the beginning of the year, the State Bank has made a 1% increase of the exchange rate and the State Bank's governor said that they will continue to push down the value of the VND against the USD by 1%-1,43% by the end of the year.

Bulk buying of live crocs by Chinese traders hurts Vietnam leather firms

Many crocodile leather businesses in Vietnam are facing a raw material shortage, as crocodile farms are selling the live reptiles to Chinese traders en masse to yield bigger profits.

Ca Sau Hoa Ca (Saltwater Crocodile), a well-known Ho Chi Minh City firm that makes handicrafts and souvenirs from crocodile skin, used to source more than 200 crocodiles a month to tan their skins for production.

But the company has been using skins from its reserve stock this year as it is unable to pay higher prices than the rates Chinese traders are bidding to buy live reptiles from local farms, company director Ton That Hung told Tuoi Tre (Youth) newspaper.

In order to maintain a profit, the leather company can only pay up to VND170,000 (US$8) a kg for live crocodiles, according to Hung.

But Chinese traders are willing to buy the animals for up to VND240,000 ($11.3) a kg, he said.

“So the crocodile farms prefer selling to the Chinese,” he added.

Hung said his company is able to continue business, though at a smaller scale, thanks to a reserve stock of skins.

“Smaller businesses had to shut down since they could not solve the problem,” he said.

This is not the first time Chinese traders have affected the production of Vietnamese businesses by buying their crucial raw materials in large quantities. Similar cases have impacted seafood, mango and coconut processors, and fish sauce makers.

Vietnamese crocodile leather manufacturers faced the risk of a short supply as early as two years ago, when Chinese traders began hunting for young crocodiles at high prices.

“The Chinese bought as much as 70 to 80 percent of Vietnam’s supply of young crocodiles then,” an industry insider said.

“So we do not have enough mature crocodile skin to tan at the moment,” he added.

The best quality skins are those tanned from crocodiles weighing 15 to 20kg, according to the insider.

“But we have few such crocodiles now, as the animals weighing 6 to 8kg were all bought by Chinese traders in 2012,” he said.

Many crocodile leather firms have increased their product prices due to the skin shortage, according to Hung, of the Ca Sau Hoa Ca Co.

“Businesses that export their products to Japan or Germany are on the verge of losing orders,” he added.

Rising demand for crocodile dishes?

Nguyen Thi Lan, a trader in the Mekong Delta province of Dong Thap who collects crocodiles to sell to China, said prices for the animals have soared sharply over the last two years.

In 2012, crocodiles weighing between 8 and 35kg were sold for only VND150,000 ($7.06) per kg, but the prices are now up to VND240,000 a kg, Lan said.

“I had received an order for 40 metric tons of live crocodiles per month, but could only export 11 metric tons, even though I had hunted everywhere for the reptiles,” Lan said.

“Two years ago it only took me a week to source enough for the order.”

Lan said there has been rising demand for dishes made from crocodiles in China over the last few years.

The Chinese traders are also hunting for young crocodiles in Vietnam to bring to farms on Hainan Island, she added.

Prices for the young animals thus rose steeply to VND1 million ($47) a kg, but supply was behind demand, according to the Dong Thap trader.

“Most of the crocodiles are raised on small-scale farms in Vietnam, so the growers will sell to whoever pays a higher price,” Lan said.

Vietnam mulls 10 pct excise tax on online games

Vietnam’s Ministry of Finance has proposed adding online games to the list of goods subject to special consumption taxes, which currently includes tobacco and liquor products, a decision that could result in VND650 billion (US$30.59 million) in tax collection per annum.

The excise tax must particularly be applied to online games that can cause addiction, and those with violent content, the finance ministry said in its report to the government on the amendment of the law on special consumption tax.

The report, based on the findings of the finance ministry’s study of the Vietnamese online gaming market, was made after the National Assembly’s Standing Committee proposed subjecting online games to the excise tax.

In 2013, there were around 58 businesses, mostly located in Hanoi and Ho Chi Minh City, that provided online games in Vietnam, the finance ministry said, citing data from tax agencies.

These companies had a collectively registered capital of VND1.15 trillion ($54.13 million), while their total revenues were as high as VND7.98 trillion ($375.6 million).

Revenues from the domestic market alone were VND6.48 trillion ($305 million), according to the finance ministry.

Online gaming is thus a lucrative market, and gaming businesses are much healthier than firms operating in several other service sectors, the ministry concluded, noting that most of the Vietnamese businesses in the online gaming sector are game providers, not game makers.

The Ministry of Information and Communications has licensed 73 games to be distributed in Vietnam, but there are still a number of illegal games.

The unlicensed games, mostly from foreign game makers, have generated billions of dong worth of profits from Vietnamese gamers, according to the finance ministry.

The ministry, however, admitted that it is not easy to tell which games have violent or banned content.

“There are games that have educational content, such as helping children to learn English and math,” the ministry said.

It thus proposed that educational games, as verified by the Ministry of Education and Training, be exempted from the excise tax.

The tax rate for online games must be 10 percent in the initial phase of implementation, which the finance ministry said is intended to “allow gaming firms to have time to rearrange their business.”

Taxing online games is hoped to add more than VND650 billion a year to state coffers, the ministry said.

Once finalized, the law on special consumption tax will take effect on July 1, 2015.

ANZ sells entire stake in securities firm SSI

Banking giant ANZ is selling its entire 17.51 per cent stake in Vietnam’s top brokerage firm, Saigon Securities Inc.

ANZ is divesting its stake in Saigon Securities Inc.

“While Saigon Securities Inc (SSI) remains a leading securities company in Vietnam and the partnership has benefited both parties, the sale is consistent with the group’s super regional strategy which emphasises the growth of ANZ-owned businesses and its commitment to improving returns in Asia,” Tareq Muhmood, CEO of ANZ Vietnam, told VIR.

ANZ has been a shareholder in SSI for seven years. It entered SSI in 2007, buying a 10 per cent stake at $88 million. ANZ on September 29 stated that it had agreed to sell its 17.5 per cent stake.

SSI was priced at VND29,200 per share on September 26 which means the stake was worth around $85 million by market price.

According to SSI’s press release issued on September 29 announcing the divestment, ANZ’s  move was in line with the banking group’s strategy to focus 100 per cent of its capital into commercial banking in Vietnam.

“This is a chance for foreign investors,” Nguyen Duy Hung, chairman-cum-CEO of SSI, said. “SSI’s foreign share threshold had been reached since 2011. SSI and many foreign investors have asked the government for expansion many times since to no avail. ANZ’s divestment has opened up some room.”

The divestment would not affect SSI’s development strategy, Hung claimed. “SSI remains attractive to many other foreign investors,” he said.

A group of domestic investors have registered to buy the shares from ANZ, including Hung himself, Duong Mat Troi Investment JSC., whose CEO is Hung’s younger brother, and Saigon Dan Linh Real Estate Co., Ltd, which is owned by the brother’s family.

The price of SSI shares has been on a steady uptrend, ending at VND31,700 a share on October 3 up from VND30,700 a share on September 29 when the news was released. SSI was the biggest brokerage on the Ho Chi Minh Stock Exchange based on market share of 13.27 per cent during the first three quarters of the year. It earned audited consolidated net profits of VND456.16 billion ($21.6 million) on revenue of VND868.64 billion ($41.16 million) in the first half of 2014.

State Bank leader eases banking sector concerns

State Bank of Vietnam Governor Nguyen Van Binh claimed the threats to the country’s banking system had largely been alleviated at last week’s National Assembly Standing Committee meeting.

Binh’s message was intended to calm National Assembly members who had earlier asked him to clarify how the banking system had been restructured.

“The financial system’s safety has been ensured and controlled. The danger of collapse and risk in the system has been pushed back. Liquidity has been ensured, with the state’s assets and the public’s deposits completely safe, even in the weakest banks,” he stressed.

“Positive beyond-expectation results in the reform of state-owned and joint stock banks have been clearly seen,” he added.

According to the State Bank of Vietnam (SBV), restructuring plans for BIDV and Mekong Housing Bank would soon be approved.

The SBV had also approved schemes for Vietcombank and Agribank. Changes will be made to Agribank’s member council, management and control boards to renew the bank’s leadership. “This year is expected to see Agribank’s credit growth reach 7-8 per cent, with the focus largely on rural and agricultural development,” Binh said.

The SBV is also appraising restructuring plans for financial leasing companies owned by state-run commercial banks. The SBV will also compile a master plan to raise the financial capacity of five state-run commercial banks until 2015. This plan will be submitted to the prime minister soon.

“Equitisation of state-owned banks has gone well with results exceeding expectations,” Binh said.

Regarding joint stock banks, the SBV reported that out of nine banks defined as weak since 2012, eight banks had seen their restructuring schemes approved, with the remaining bank’s restructuring plans to be submitted to the prime minister in due course.

“All the approved plans are being implemented under the close eye of the SBV. So far, five banks have been merged [including De Nhat, Tin Nghia, Habubank, Western Bank and Dai A],” Binh said.

“The SBV has approved plans to merge Southern Bank with Sacombank, and MDBank with Maritime Bank. It is also guiding the acquisition of some credit organisations,” he said.

By late June 2014, total assets and deposits among the country’s nine weakest banks rose 3.l7 and 3.28 per cent respectively, against the 2013 figures. They also recorded credit growth of 10.18 per cent against late 2013.

The SBV has also approved restructuring schemes for 24 of the country’s 25 joint stock commercial banks.

Ernst & Young’s senior partner financial services Asia Pacific Keith Pogson said Vietnam should use the Law on Bankruptcy to eliminate weak banks that were impeding the banking system’s development.

“I’m sure that foreign investors are still interested in Vietnam’s banking potential. I have worked with many foreign investors holding stakes in many Vietnamese banks. They say they have no plans to withdraw capital from these banks,” Pogson said.

Last week saw the US-backed JP Morgan Bank president Nicolas Aguzin in a meeting with Deputy Prime Minister Vu Van Ninh, express the hope of participating in Vietnam’s commercial bank restructuring. Ninh said banks like JP Morgan were welcomed to participate in developing the Vietnamese banking system.

UK, Vietnam strengthen partnership dialogue

Lord Mayor of London Alderman Fiona Woolf on October 7 said at a dialogue in Hanoi that the UK plans to assist Vietnam in developing infrastructure by implementing the Public-Private Partnership (PPP) model.

She stressed the PPP model is developing in a dynamic way and Vietnam is facing huge challenges funding the cost of infrastructure. She underlined the international community and the City of London – the world’s leading financial centre are also seeking new models to provide capital sources in a long-term and sustainable manner.  

At the dialogue, Minister of Planning and Investment Bui Quang Vinh said the PPP  model is attractive to Vietnam.

Minister Vinh said in recent times, the Vietnam Government and the Ministry of Planning and investment (MPI) have made significant reforms on public investment to facilitate private investment in Vietnam. He emphasized a PPP decree is on the agenda to be submitted to the government soon, which he hopes will open up a new channel to attract more investment capital.

Stanley Boots, an international consulting expert for the MPI said Vietnam needs some US$17 billion per year to meet the demand for infrastructure construction in the 2010-2020 period, half of which will be mobilized from the private economic sector.

However, to fulfill the target, Vietnam has to deal with shortcomings such as complicated legal framework and lack of social unanimity.

The MPI has devised solutions for dealing with the shortage of capital sources since 2008. In 2009, the MPI also issued a decree to allow the implementation of some PPP pilot projects and made remarkable reforms in the 2011-2012 period.  

The contents of the new PPP decree are in accordance with Vietnam’s situation and international norms on PPP. Accordingly, the decree should muster a high consensus on the existing legal documents and resolve issues on loans and investors’ demands as well as strengthening capacity of the concerned parties.

At the dialogue, head of the MPI's Bidding Management Department, Le Van Tang also  updated information on projects calling for investment under the PPP model in the time head.

Japanese investors remain bullish on Vietnam

President of the Upper House of the National Diet of Japan, Masaaki Yamazaki on October 7 said Japanese companies are confident and optimistic about the long-term prospects for investing in Vietnam and HCM City.

He made the comment during talks between President of the Upper House of the National Diet of Japan, Masaaki Yamazaki and a high-level HCM City delegation led by Secretary of municipal Party Committee Le Thanh Hai in Japan.

During the talks, Yamazaki expressed delight at the development of Japan-Vietnam relations over the past few years. He expressed his belief that the visit will introduce the advantages of HCM City to Japanese localities and agencies to cement the strategic partnership for peace and prosperity in Asia between the two nations.

President Masaaki Yamazaki emphasised Vietnam has experienced relatively strong economic growth over recent years and is a nation with a young vibrant hard working population and political stability, which are highly desirable traits attractive to the Japanese business community.

HCM City Party Committee Secretary Le Thanh Hai, in turn, expressed his strong belief that legislative agencies of both nations will conduct regular exchange of high-level visits to share experiences, contributing to further strengthening friendship, mutual understanding and bilateral cooperation.

Hai highlighted the Japanese Government’s great support for Vietnam through its ODA to help restructure the national economy, develop infrastructure, improve the quality of health, education and cope with climate change.

The Secretary expressed his hope that the Japanese Government will continue to maintain high ODA funding for Vietnam and committed to the effective use of ODA  to boost the country’s socio-economic development.

He added the National Diet of Japan will continue backing Vietnam’s stance on resolving sea disputes by peaceful solutions and dialogues in accordance with international law, especially the United Nations Convention on the Law of the Sea (UNCLOS).

 He asked the President to to support Vietnam’s socio-economic development, especially in training human resources, attracting Japanese investment in Vietnam and cooperating in the hi-tech and support industries.After the talks, the delegation participated in a conference to promote exchange between the Japanese and HCM City business communities and witnessed the signing of six memoranda of understanding (MoU) on investment cooperation.

Meeting with Japan's Agriculture, Forestry and Fisheries Minister Koya Nishikawa the same day, Hai spoke highly of Japan-funded technical support projects in Vietnam in the field of agriculture which has helped developing agriculture and rural development on a sustainable basis.

He expressed his wish that Minister Koya Nishikawa will actively consider  proposals on technical assistance projects and non-refundable aid technological transfer and human resources training for Vietnam.

Minister Koya Nishikawa believed agricultural cooperative ties will further develop to match both nations’ potential. Japan has devised a strategy for improving the quality of food sources thus opening up bright prospects for future cooperation. 

ASEM 10 arouses European investment interests in VN

The 10th Asia-Europe Meeting (ASEM-10) and related meetings are believed to help stimulate investment interests from Europe to Asia, especially from Europe to Vietnam.

Ambassador and Head of the EU Delegation to Vietnam Franz Jessen made the remark at a press briefing in Hanoi on October 7 to share information about the ASEM-10 scheduled for Milan, Italy from October 15-17.

As planned, Prime Minister Nguyen Tan Dung will visit Brussels on October 13-14 before heading to Milan for the ASEM 10.

In Brussels, Prime Minister Nguyen Tan Dung will meet three top European leaders- the President of the European Council, the President of the European Commission and the President of the European Parliament.

The meetings will focus on economic cooperation and the Europe-Vietnam Free Trade Agreement (EVFTA) negotiations.

Ambassador Franz Jessen said apart from dialogues between leaders from different nations, bilateral meetings between heads of state and the business community will be conducted at the ASEM-10. Accordingly, the event is expected to draw the participation of 41 heads of state and government leaders from the two regions.

The attendance of the top leaders demonstrate Europe’s particular concern about Asia and vice versa.

The forefront of this year’s summit will be concentrated on strengthening connectivity in terms of trade facilitation, customs clearance in the two regions, tourism development.

The 10th round of the EVFTA negotiations are currently taking place in Belgium while the 9th round was held in the central Danang City just 10 days ago. The very close distance between the two rounds of talks shows negotiators’ sustained efforts to conclude negotiations soon.

The presence of Prime Minister Nguyen Tan Dung at the EU headquarters in Brussels is an important factor in achieving better results from the negotiation process, Franz Jessen said.

Since the ASEM 5 held in Vietnam in 2004, two-way trade between Vietnam and the EU has witnessed strong growth, reaching US$33 billion per year, but 10 years ago’s figure was very low. Over the past three years, the EU- Vietnam trade is growing steadily, maintaining at a double-digit increase.

The EU diplomat also highly appreciated Vietnam’s positive role in ASEAN over the past two years, saying that as the country coordinator of the ASEAN-EU relations, Vietnam has always integrated the benefit of ASEAN into the ASEM forum and been a good partner in the region.

 

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR