US Ex-Im Bank to prioritize credit for Vietnamese SMEs
The US Ex-Im Bank will offer preferential credit supporttargeting Vietnamese small- and medium-sized enterprises (SMEs) this year, its chairman Fred Hochberg told a press briefing Monday.
Hochberg, who is leading a business-development mission in Vietnam to boost trade ties and business opportunities between Vietnam and the US, said US Ex-Im Bank is implementing many projects in Vietnam, especially in the southern provinces, with most of their partners being small- and medium-sized enterprises, and household businesses.
Ex-Im Bank ensured capital source, trade credit insurance, and other sponsorships to aid business between these enterprises and their US partners, he told reporters.
In 2011, Ex-Im Bank authorized only about US$1 million in financing to Vietnamese projects that used US goods and services , while the figure in India was as much as $3.2 billion.
However, nearly $1.5 billion in critical infrastructure projects is currently in discussion, including satellite, thermal power, and renewable energy projects.
This financing is the fulfillment of two existing memoranda of understanding (MOU) signed in 2010 and 2011 totaling $1.5 billion.
The MOUs called for the facilitation of US. exports to Vietnam in key sectors such as air transportation, power generation and transmission, and oil and gas development. In connection with these projects, there is also an additional $500 million in financing that the Bank hopes to close on in the near future.
“We are here to roll up our sleeves and get these transactions done,” Hochberg said.
“Vietnam’s infrastructure continues to develop at a rapid rate, and I want to make certain that high-quality American goods and services are available for these projects.”
Responding to the question why a major bank prioritizes its credit supports for the SMEs and household businesses, he said it is in accordance with the US government’s policy, which aimed at ensuring the SMEs can access the effective credit and capital sources.
“Most of the foreign partners of the US are SMEs, and we think it will be the same in the case of Vietnam.”
The chairman said if Vietnamese SMEs want to borrow loans for the purchase and use of US goods, machinery, and services, Ex-Im Bank will work with local banks to determine the amount of money they need to propose appropriate credit insurance and financial limits.
“Interest rates will be around 3 to 4 percent a year for loans in US dollars, depending on the loan terms,” said Hochberg.
Vietnam is one of nine key markets, including Brazil, Colombia, Mexico, Turkey, South Africa, Nigeria, India, and Indonesia, where Ex-Im Bank is focusing its business-development efforts because of the country’s infrastructure and development needs.
“Vietnam is a country of enormous potential, and it is vital that we work together and invest in projects that benefit both of our economies,” said Chairman Hochberg.
“Significant infrastructure developments are planned throughout Vietnam over the next several years, and I’m here to ensure that American companies invest in those projects, and that we maintain a dynamic and comprehensive partnership.”
Stocks gain on improved market value
Stocks recouped yesterday's losses across the nation today on improved trading volume and value.
On the HCM Stock Exchange, the benchmark VN-Index finished at 401.08 points, an increase of 0.34 per cent from yesterday. Market value grew 24.4 per cent to reach VND531.4 billion (US$25.3 million), while the volume of trades rose over 12 per cent to 37 million shares.
The VN-30 Index, which tracks the movements of the 30 leading shares by market capitalisation and liquidity, also rose 0.41 per cent to close at 449.31. Trading value on those 30 stocks, accounting for 57 per cent of total market value on the HCM City bourse, totalled over VND302 billion ($14.4 million).
Insurer Bao Viet Holdings (BVH) and Vietinbank (CTG) hit their ceiling prices, but food producer Masan Group (MSN), property developers Vincom (VIC) and Hoang Anh Gia Lai (HAG), and steelmaker Hoa Phat Group (HPG) lost from 0.5-2.1 per cent.
Other heavyweight codes Sacombank (ST), Vinamilk (VNM) and Eximbank (EIB) closed unchanged, of which the latter was the most active with 4.24 million shares changing hands.
Gainers outnumbered losers by 131-88.
On the Ha Noi Stock Exchange, the HNX-Index climbed 1.69 per cent to close at 62.53 points, with advancers edging decliners by 136-103.
Trading value grew by 15 per cent over yesterday to almost VND328.3 billion ($15.6 million) on a volume of 38.3 million shares.
PetroVietnam Construction (PVX) and VNDirect Securities (VND) saw the heaviest trades with over 5 million shares changing hands for each code. VND hit its ceiling at VND8,100, while PVX also rose 4.9 per cent to close at VND8,600.
Military-run telecom to enter pay TV industry
The military-run Viettel Group has said it plans to enter the pay TV industry this year.
Viettel said it had become harder to accelerate profits at a time when the telecom industry has become saturated.
“There is little room left for us to grow in the telecom industry, which encourages us to expand into the pay TV sector,” Deputy CEO Nguyen Manh Hung told the Vietnamese Post Newspaper.
There are currently only 4.5 million pay TV subscribers in Vietnam, a rate Hung said was too low compared to other countries.
“With many businesses expected to jump into the industry this year, the pay TV market is likely to boom,” he said.
A huge source of capital and a developed transmission infrastructure would be Viettel’s largest advantages in exploiting the pay TV market, industry insiders said.
However, Viettel’s lack of experience in content organizing, compared to its rivals VTV and HTV, could also be a challenge.
In terms of attractive service prices, Viettel would also face tough competition from several major providers such as K+ and VTV, experts said.
$7.64 bln liquidity support for Tet won’t boost inflation
The VND160 trillion ($7.64 billion) supplied by the central bank for liquidity support before the Lunar New Year (Tet) holiday will not cause any impact on inflation, said a central bank’s official.
"The money pumping is a regular activity of the central bank to help the banking system meet rising demand for payments on the occasion of the Tet holiday,” said Nguyen Thi Hong, head of monetary policy department.
"The capital injection via the OMO is mainly for the very short term, so there is not enough time for the credit institutions to use this capital to lend the economy,” Hong said.
“In addition, the growth targets for total money supply and credit are under the tight control of the central bank, "Hong said.
According to Hong, the money supply was primarily carried out through open-market operations (OMO) from January 9-20.
OMO is the channel that provides short-term capital to the banking system, mainly 14-day terms, and there were only a few sessions with 21-day terms, Hong said.
The lengthening of the 14-day to the 21-day term is to ease banks’ liquidity constraints in early trading sessions of the post-Tet period since they don’t have to repay a large amount of money in a short period.
In January, the State Bank of Vietnam (SBV) pumped more than VND59.6 trillion ($2.85 billion), doubling the net-injection volume of the VND30.7 trillion it pumped in January 2011.
As the central bank had applied the 21-day term to accompany the normal 7-day and 14-day terms for OMO lending, the money it withdrew was lower than last year.
The move aimed to meet the liquidity of commercial banks and prevent the pumping of a large amount of capital into the market at the same time, said the SBV.
According to the SBV, in the week between January 7th and 13th, interbank rates inched up 0.44-1.92 percent for lending ranging from 1 week to 2 months, and the rates respectively soared 6.08 percent and 3.56 percent to over 20 percent for 9-month to 12-month terms.
The central bank also said the banking system’s liquidity is abundant in the post-Tet period.
"After Tet, the money has been re-deposited into the banking system. Currently, the credit institutions’ liquidity is abundant," Hong said.
The system’s liquidity situation has generally improved from the Tet holiday, compared to in 2011, since the SBV had used diverse money supply channels for capital support.
Agriculture vital to economic development
President Truong Tan Sang yesterday underlined the continued importance agricultural production will play in the country's economic development in the next five to ten years.
He made this statement at a meeting with leaders of central Quang Nam Province's Dai Loc District.
President Sang said last year, agricultural exports brought the country tens of billions of dollars and with proper financial mechanisms and investment, it will be necessary for local authorities to appreciate the role of farmers in building new models for the countryside and to withdraw bureaucratic policies.
He urged local authorities to outline the content of the countryside's new models to help local people understand what changes will come.
On the same day, President Sang visited the district's Ethanol Factory Dai Tan which is a local leader for investing in bio-energy production. The factory plans to employ hundreds of thousands of local workers.
Sang appreciated the achievements of the factory in applying new technologies to reduce environmental pollution while creating jobs for local people.
On the same day, the President also visited the German Groz Beckert Group, which produces needle variants for its partners in the sewing industry. He stressed that Viet Nam and Germany are strategic partners, so it was necessary for the two sides to support each other toward mutual benefit.
President Sang also visited the Cuu Dai Bridge in the communes of Duy Hai and Duy Nghia in Duy Xuyen district, which will connect tourism areas of Hue City, Da Nang City and Quang Nam Province.
He also paid a visit to 87-year-old Vo Thi Nguyen in Dai Loc District who took part in the country's revolution.
Vietnamese rice certified as an organic product
Last week, arice producer in the southernmost province of Ca Mau was granted an organic rice certification by the global organization BIO Organic, and an Organic Foods certification under the US Organic Food Production Act.
Richard de Boer, director of Union Vietnam -- the Netherlands-based company in charge of evaluating and certifying organic rice -- said Vien Phu JSC was the first rice company in Vietnam and Southeast Asia to be granted the organic product certification.
Vien Phu’s rice will now be labeled “Certified Organic Foods,” which show that the product does not contain antibiotic and insecticide residue, as well as chemical fertilizer, coloring, addictives, and preservatives.
Doctor Nguyen Dang Nghia, director of the Southern Center for Soil, Fertilizer, and Environment Research said the organic product certification is more valuable than the Global GAP (Good Agricultural Practice).
Products with the Organic Foods label are now much preferred by global consumers, thanks to their high economic value and safety to consumers and the environment.
Vietnamese organic rice will be recognized worldwide, and will be able to enter strict markets in the EU and North America, said Richard de Boer.
Meanwhile, Vien Phu CEO Vo Minh Khai said the company is negotiating rice exports with foreign partners after receiving the certifications.
“Though still lower at the initial stage, the company’s total rice production is expected to top 5 tons per hectare by 2015,” said Khai.
Khai said Vien Phu will also cooperate with up to 20,000 local farming households to expand the organic rice field areas to 20,000 hectares in the near future.
“If the provincial authorities support the project, Ca Mau could have all rice s, an area of up to 100,000 hectares, under the organic cultivation model,” he said.
Poor Tet sales leave firms with stockpiles
Many companies that participated in HCMC's Tet price-stabilisation program are struggling to liquidate the stocks they had built up following unusually sluggish demand during the year's biggest festival.
The Ministry of Industry and Trade blamed the poor sales on the economic crisis and a change in people's consumption habits.
Unofficial figures from the Vietnam Plastic Association (VPA) showed that members only managed to sell two-thirds of their stockpiles, the association's vice president, Ho Duc Lam, said.
"With such large amounts of goods in stock, the enterprises will be facing difficulties in doing business because their money is stuck," he told Tuoi Tre newspaper.
Demand has been unusually low even for essential goods such as cookies and candies.
Tuoi Tre quoted a deputy director of a HCM City-based confectionery company as saying its stocks had increased by 5 percent compared to last year.
Garment companies were facing similar trouble after Tet demand fell by 30 percent, Nguyen Huu Toan, deputy general director of the Sai Gon 2 Garment Company, said.
Though the company reduced production compared to other years, it still had a hard time because of the low demand.
Many firms blamed the early arrival of Tet – too close to the New Year, which made it one extended shopping season – for the low demand.
Normally the Lunar New Year comes later, making it a distinct shopping season.
Lam said companies will be more cautious this year following the changes in consumption habits.
The director of An Phuoc Garment Company Ltd, Nguyen Thi Dien, agreed, saying that people tend to be cautious in their buying habits amid the economic difficulties, and so firms should review demand carefully.
They should distribute their products efficiently around the country to ensure sales, she added.
Phan Van Thien, deputy general director of Bibica Corporation, a confectionery industry leader, said firms should better research the market to understand consumers' needs.
Shrimp exporters secured of material
Local shrimp exporters say they are no longer concerned about material shortage this year.
Chu Van An, deputy general director of Minh Phu Seafood Corp., said his firm planned to expand its cultivation area by 200 hectares every year from the current 1,200 hectares in Kien Giang, Vung Tau and Ca Mau.
The company also wants to increase its self-supplied input material to 70 percent of the processing demand in 2015, compared to 10 percent at present.
“Our company aims for sustainable development, through the establishment of a closed production and processing chain in order to better manage quality risks,” An said.
He said besides capital sources, good governance is necessary for the country’s leading seafood processors to efficiently invest in cultivation area.
Good farming management and farming area expansion help ensure the input quality for products exported to the markets that are anxious about the use of prohibited antibiotics in seafood cultivation.
According to An, Minh Phu Corp. produces some 12,800-13,000 tons of tiger prawns and white-legged shrimps per year, meeting only 10 percent of the demand for input materials of the company’s processing plants.
But he said there would be no material undersupply this year because in 2011, high export prices attracted many large firms to invest in shrimp breeding and shrimp farming.
Meanwhile, the seafood breed company Hung Vuong Ben Tre, established by Hung Vuong Joint Stock Company and Ben Tre Forestry and Aquaproduct Import-Export Company in 2011, plans to supply some 10 billion shrimp breeds to the market this year.
The Vietnam Association of Seafood Exporters and Producers (VASEP) also holds the view that local shrimp supply will be stable in 2012 because enterprises and farmers have engaged in white-legged shrimp cultivation as well as learned experience from the tiger prawn disease epidemic last year.
In addition to the local supply, processing enterprises also import raw materials from India and Indonesia.
Japan, the US, China and South Korea are expected to remain the main exporters of Vietnamese shrimps. The U.S. and Japan tend to boost import of value added products and reduce that of material products.
The purchasing power of the European Union market, which holds an 18 percent of the total export value of Vietnamese shrimps in 2011, is predicted to be impacted by the economic uncertainty and hardly recover in a short time.
In 2011, the total export value of Vietnamese shrimps amounted to US$2.39 billion, or a rise of 14 percent year-on-year, with tiger prawn exports reaching $1.43 billion.
Minh Phu Seafood Corp. is the country’s biggest exporter with $348 million earned last year, some 28 percent of which was from the American market.
Local exports struggle to break barriers to US
Though local fruit exports to the US have been rising thanks to surging demands, Vietnamese exporters are yet to break the formidable barriers on food safety to this market.
A large number of industry players asserted that the appetite of European-American and African-and Asian-American people had paved the way for a sharp rise in tropical fruit and vegetables consumption in the US.
On average, every American spends around US$232 on 124 kg of fruits a year, Matthew Lantz of the United States Agency for International Development (USAID), told a seminar on farm produce exports to the US held in HCMC earlier this month.
The total American fruit import spending amounts to US$3.4 billion annually, indicating a pretty high demand of fruit of the country, Lantz said. He suggested Vietnam take advantage of this fact to boost its fruit exports to the US.
Furthermore, the fact that Vietnam will join the Trans-Pacific Partnership (TPP) also offers a great opportunity for local fruits to approach the American market in a much more effective way.
The US is imposing a tariff of 2.2 percent on fruit exporters, but this level will be lowered to 0 percent for Vietnam after it joins TTP.
TPP also creates another favorable condition for Vietnamese agro-product exporters. The American tightening supervision on animals and plants under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) will enable Vietnamese exporters to map out import terms that are favorable to them.
“These guidelines will make it clearer for Vietnamese fruits to approach testing issues in America and other TPP’s markets,” Lantz said.
To export fruits to the US in a better way, Lantz said Vietnamese enterprises should directly sell products to American buyers to save costs.
For example, local firms could promote products in the US via community organizations, farmer associations or retailers, he said.
Despite opportunities in the US market, local exporters have still confronted with barriers on food hygiene and safety.
Neglecting this reality, Vietnam will fail to increase its export turnover as targeted, experts said.
At the same seminar, several exporters shipping fruits to the US expressed their concerns over new technical barriers that the latter had just set up. Red Dragon Co.’s director Mai Xuan Thin complained that some shipments of dragon fruit from his company had been detained for an antibiotic residue test.
Meanwhile, the American plant inspection agencies have yet to announce criteria on permitted antibiotic residue for imported fruits. This has worried Vietnamese exporters, including those licensed to export dragon fruits and rambutans to the country.
A director of a HCMC-based fruit export firm insisted that Vietnam’s Ministry of Agriculture and Rural Development work with relevant American authorities to solve this issue as soon as possible.
He believed getting a good hold of specific regulations set by the US would help Vietnamese exporters be more active in preserving and processing fruits, especially when the volume of fruits exported to this market has been on the rise in recent years.
Answering the questions of local businesses relating to the aforementioned issue, Lantz said that the U.S. had yet to set up detailed rules of antibiotic residue for every kind of imported fruits.
Nonetheless, it tends to apply stricter criteria on food hygiene and safety for all imported products based on new regulations of the FDA Food Safety Modernization Act (FSMA) issued on April 1.
The U.S. Federal Food, Drug and Cosmetic Act (FDCA), which was passed by Congress in 1938, gives authority to the US Food and Drug Administration (FDA) to oversee the safety of food, drugs and cosmetics.
FDCA has been amended many times but FSMA is the biggest amendment to food safety over the decades.
According to FSMA, FDA has the right to appraise and control food safety of products provided by foreign sellers.
It has been given the authority for the first time to coercively recall suspected products that should have been voluntarily recalled by exporters.
Hence, according to Lantz, Vietnamese exporters doing business in the U.S. have to analyze and identify possible risks of processing, manufacturing and transporting products to control and minimize these risks.
Cbank cuts compulsory reserves for 5 lenders, boosts agricultural lending
The State Bank of Vietnam (SBV) has issued a document on cutting the compulsory reserves in Vietnamese dong deposits for 5 lenders with large agricultural lending.
Accordingly, the document will be applied to the Bank for Agriculture and Rural Development of Vietnam (Agribank), Lien Viet Post Bank, Mekong Housing Bank, Mekong Development Bank, and the Central People’s Credit Fund of Vietnam.
Agricultural lending from those lenders amounted to 40-70 percent of Q4/2011’s total outstanding loans, according to the SBV.
The new compulsory reserve ratios, at 20 percent of normal rates of all lending terms for other banks, will be applicable from now until the end of July this year.
The current rate for over 12-month terms is 1 percent, while the rate for non-term and under 12-month terms at commercial banks is 3 percent.
The rate applied for Agribank and the central People's Credit Fund is 1 percent.
Agribank, the country's biggest bank in terms of assets, should extend 75-80 percent of its total lending to agriculture, while other lenders should devote at least 20 percent of their credit to the sector, said SBV’s governor Nguyen Van Binh.
Agricultural lending should be the banking system's top priority this year, he said.
Vietnam is among the world's top exporter of robusta coffee and the second largest rice exporter, after Thailand, with some 70-80 percent of the 87 million strong of Vietnamese population live in rural areas.
The central bank has been applying compulsory reserve levels of up to 3 percent for Vietnamese dong deposits, depending on the terms, in an effort to help control inflation, starting May last year.
Many experts then worried that it may cause a liquidity shock to banks as they were struggling hard to mobilize the dong to ensure liquidity, according to Sai Gon Tiep Thi newspaper.
Duong Thu Huong, Secretary General of the Vietnam Banking Association, (VNBA) told Sai Gon Tiep Thi that there are many monetary tools to control inflation, including the compulsory reserve ratio adjustment, but it was not advisable to use the tool then.
In late August, Le Xuan Nghia, vice head Nghia, deputy head of the National Financial Supervisory Committee, told Dau Tu newspaper that there was a surplus of VND37-38 trillion ($498.7 million) of idle capital at many commercial banks due to the implication of SBV’s adjusted compulsory reserves.
It could be the foundation for interest rate cuts in coming months, Nghia then said. But the current depositing rate is still at 14 percent, while the lending rates hover at 18-20 percent.
The central bank has targeted total credit growth this year at between 15 and 17 percent, compared with an expansion of 10.9 percent in 2011.
The central bank has also asked the aforementioned credit institutions to make monthly reports to the Credit Department under SBV.
Bad debts hit record high
Bad debts at a number of credit institutions in HCMC in 2011 were high, even sharply rose compared to the previous year, said the central bank’s HCMC Branch.
The branch unveiled the above information in a review report on last year’s performance and the orientation for this year.
According to the report, the fifth-group debts – seen as the worst non-performing loans - accounted for a high portion of overall bad debts among the local lenders.
A large part of the bad debts was loans given to the property sector. A local bank even reported the value of realty loans shot up to 70% of its total outstanding loans as of the end of last year.
Another report by the branch showed that the Vietnam Bank for Agriculture and Rural Development, or Agribank, had the highest ratio of bad debts, at over 15 percent out of the 4 state-owned commercial banks.
Meanwhile, the average ratio of non-performing loans of commercial joint stock banks in the city was 2.59 percent.
In contrast, commercial joint stock banks whose headquarters are located outside HCMC posted the figure at more than 26 percent.
Also, finance companies in the city suffered a 16.97 percent ratio for the non-performing loans while the figure for finance leasing companies was 23.31% as of end-November in 2011.
However, people credit funds at the end of November last year recorded a bad debt ratio of only 5.46 percent.
The city’s credit institutions reported their total bad debts in the primary market servicing residents and organizations at 3.85 percent at the end of last November. The statistics by the HCMC Branch pointed out that most banks enjoying low profits or mired in losses or high bad debt rates had been involved in real estate-related loans.
The central bank affirmed that credit activities of the banking system this year would continue to face unexpected risks as uncertainties of the property market and local enterprises remained unpredictable.
Therefore, the branch urged local banks to closely supervise bad debts and give out appropriate solutions.
Also, the branch requested its members to handle and minimize bad debts as well as ensure the bad debt ratio at less than 5 percent of total outstanding balances.
In addition to credit risks caused by increasing bad debts, the branch proposed credit institutions strictly manage term risks.
“It is very difficult to adjust the structure of short-term deposits in sync with long-term loans and thus the capital usage at small commercial lenders has been burdened with heavy pressure for fear of term risks,” the branch explained in its report.
Recent statistics from the branch revealed that total debts relating to non-productive sectors including consumer credits, real estate loans and loans for securities as of September 30 last year made up 18.57 percent of total outstanding balances, down 0.03 percent from the beginning of the same year.
The total mobilized deposits in the city as of December 31 last year reached VND888.9 trillion, up 10 percent year-on-year while the credit growth at the year’s end was estimated at 6.3 percent against 2010.
Cashew exports to earn $1.75b
Viet Nam is forecast to export 200,000 tonnes of cashew nuts this year, earning an export turnover of US$1.75 billion, according to the Ministry of Agriculture and Rural Development.
The exports would increase by 25,000 tonnes in volume and $250 million in value against last year's figures, enhancing the country's position as the world's leading cashew exporter, the ministry said.
However, ensuring stable human and raw cashew resources and complying with international hygiene and food safety standards remained the main challenges for the sector in the future, it said.
To help the sector keep its top position, Minister of Agriculture and Rural Development Cao Duc Phat said the State would form policies for cashew exports, such as providing land-use certificates to cashew farmers to help them secure bank loans.
Corporate income tax reduction for cashew exporters would also be under consideration, he said, adding that the cashew sector would also better ensure the supply of raw cashews to be processed by accelerating local production of raw cashews and finding direct importation sources rather than via intermediaries, as is currently the case.
Vietnamese cashew nuts are now shipped to 50 countries and territories with the US being the largest importer, representing one-third of the total cashew export volume. The country has 220 factories processing cashew for export with a total capacity of 600,000-700,000 tonnes a year.
In the first month of this year, the country exported 12,000 tonnes of cashew nuts, with an export turnover of $98 million, equivalent to the turnover of the same period last year but with a 12 per cent reduction in quantity.
President supports business youth
President Truong Tan Sang yesterday affirmed that the Party and State would guide the implementation of the Politburo's Resolution No9 on promoting the role of entrepreneurs in Viet Nam in the period of industrialisation, modernisation and international integration.
The President made this statement while receiving a delegation from the Viet Nam Young Entrepreneurs Association (VYEA), calling it an essential measure in order to allow entrepreneurs to contribute their talents to the country.
Reports from chairman Mai Huu Tin attest that the association has developed significantly over its 18-year existence and has created a new generation of entrepreneurs with passion and intelligence, who serve as key leaders in the branded business sector.
Many entrepreneurs have become National Assembly deputies and have suggested legislative improvements related to national economic development.
With more than 9,000 members from 62 out of 63 provinces, the association has adopted three major programs for young entrepreneurs: "Starting a career and developing the country", "Building corporate cultural and social responsibilities", and "Building a strong VYEA".
Speaking at the meeting, the President said the association needed an effective model to attract new members and encourage new business creation.
Sang also expressed his hope that the association would take responsibility for uniting entrepreneurs to perform the tasks of economic development and participate in social work.
Participants from the association promised to actively contribute to the construction and development of the country. They also proposed a new mechanism that would help Vietnamese entrepreneurs enhance their competitiveness, brand development and expansion activities in international markets.
Reserve rules eased for five banks
The State Bank of Viet Nam granted permission on Thursday to five credit institutions to maintain compulsory reserves for Vietnamese dong deposits at below regulated levels for a five-month period beginning February 1.
The Mekong Development Commercial Bank, Mekong Delta Housing Bank, Agribank, LienViet Post Bank and the Central People's Credit Fund will be allowed to maintain compulsory reserves 20 per cent below the levels required pursuant to Circular No 20/2010 TT-NHNN issued by the State Bank in September 2010.
The central bank said that it had eased the requirements for these institutions because they fulfilled a significant public policy role, lending heavily to agricultural producers and for rural development projects.
Under Circular No 20, each credit institution would be required to ensure that at least 40 per cent of its loans be made for agriculture and rural development in order to enjoy the lower compulsory reserves requirement.
The designated credit institutions would now be required to submit monthly reports on lending made for agriculture and rural development purposes, the State Bank said. It also ordered its provincial branches to set compulsory reserve levels for these credit institutions.
Currently, commercial banks and other credit institutions are required to maintain compulsory reserves of 3 per cent against deposits with a maturity of under 12 months, and 1 per cent against term deposits of 12 months or more.
Dumping claim over clothes hangers
The US Department of Commerce has instituted an anti-dumping action and filed countervailing duty petitions against steel garment hangers from Viet Nam and Taiwan.
The preliminary phase of the investigation process was commenced on December 29 and is slated for completion on February 21, the department reported.
Under the petitions, anti-dumping margins for made-in-Viet Nam steel garment hangers ranged from 82.87 per cent to 159.20 per cent.
Petitioners included the US producers M&B Metal Products Co Inc, Innovative Fabrication LLC/Indy Hanger, and US Hanger Co LLC.
India will be likely the third country which US authorities use to compare costs for production during the investigation since Viet Nam is not recognised by the US as a market economy.
About 10 Vietnamese hanger makers have jointly hired lawyers to respond to the action.
"If the local producers don't prepare documents comprehensively to follow-up the lawsuit, it is possible that anti-dumping tariffs may be high," said Dinh Anh Tuyet of the IDVN Law Office.
According to the Vietnamese Ministry of Industry and Trade, after the investigation, the US Department of Commerce will issue a preliminary determination in June and then the US International Trade Commission will make a final determination in July.
This marks the third time that Viet Nam has been hit with claims involving both anti-dumping tariffs and countervailing duties. The first was the action against Vietnamese polyethylene plastics (PE) in 2009 and the second involved carbon-steel pipe fittings. Vietnamese PE producers were applied high anti-dumping tariffs on the grounds that enterprises' documents did not satisfy the requirements of the US Department of Commerce, said Tuyet.