Last update 5/1/2012 7:00:00 AM (GMT+7)

Habubank’s plan to merge with SHB gets nods

Hanoi Building Commercial Joint Stock Bank (Habubank) will merge with Saigon-Hanoi Commercial Joint Stock Bank (SHB) with the nods given by most Habubank’s shareholders at a recent meeting.

With over 85.2 percent of Habubank’s voting shares approving the plan, the merger ratio between Habubank share, coded HBB, and SHB, coded SHB, will be 1:0.75.

The new bank, the result of the merger, will taken the name of SHB with chartered capital of VND8.865 trillion ($425.6 million).

It will not raise capital and pay dividends in the next 2-3 years.

After the merger, the new bank’s total assets will be VND123.724 trillion with capital adequacy ratio of 13.22 percent, total outstanding loans at over VND 51 trillion, the return on equity and asset rate (ROE, ROA) at 14.9 percent and 1.16 percent respectively.

As of early March, the capital of HBB was at VND195 billion.

As of February 29, the total rate of bad debts under the Vietnam auditing standards of HBB was above 16 percent.

HBB’s total assets was VND36.855 trillion, while its total liabilities were at VND33.112 trillion and chartered capital was at VND3.741 trillion. Its pre-tax profit was negative VND649 billion.

But the rate doubled if it is based on special assessment in accordance with greatest potential risk.

In this case, HBB’s total assets decreased to VND33.3 trillion, while total liabilities were at VND33.112 trillion and pre-tax profit slumped to a negative VND4.197 trillion.

Among HBB's bad debts, debt-stricken shipbuilder Vinashin accounted for some VND4 trillion.

Major export industries struggle to stay competitive
Major export industries need to join in global distribution chains, improve the quality of their products, and develop recognised global trademarks if they are going to boost their competitive capacity and see sustainable export growth, says Pham Van Chat, an expert with the Ministry of Industry and Trade.

The ministry has been actively promoting Vietnamese products to major European supermarket chains, seeking to enter these markets more aggressively via their distribution networks, Chat said.

Meanwhile, major export industries report that they continue to face challenges to sustainable development.

Despite seeing annual growth in exports as high as 20 per cent per year, the garment industry continues to face challenges, including inefficient production and unstable markets and financial resources, said the deputy general secretary of the Viet Nam Textile and Garment Association, Nguyen Van Tuan.

Garment makers have often focused on maintaining jobs in the sector but not on improving processes, while Chinese and Japanese garment makers have developed more efficient production lines, Tuan said.

Domestic garment makers have also failed to develop strong support industries and local suppliers of cotton and fibres, he said.

The wood products industry has seen annual export value jump from $219 million in 2000 to $3.9 billion in 2011, but the industry still remains unprofessional and unco-ordinated, suggested HCM City Fine Arts and Wood Processing Association vice chairman Tran Quoc Manh.

Nearly the entire industry consists of small- and medium-sized enterprises with unskilled workers and low output, Manh said.

The industry has also had difficulties in obtaining materials and are forced to import up 70 per cent of their raw materials to meet demand, he added.

The seafood industry, despite exports exceeding $6 billion in 2011, has faced a similar problem in sourcing quality raw materials for processing and was also grappling with anti-dumping cases and strict quality standards in export markets though the industry, said Viet Nam Association of Seafood Exporters and Producers (VASEP) general secretary Truong Dinh Hoe.

The domestic seafood industry needed more assistance from the Ministry of Agriculture and Rural Development to ensure supplies of raw materials that ensure the quality and hygiene of processed products, Hoe said.

Industrial output hits two-year low

The index of industrial production (IIP) in the first four months of the year surged only 4.3 per cent over the same period last year, the lowest level for the past two years, the General Statistics Office reported.

In the economic downturn of 2010 and 2011, the index still increased by 7.9 per cent and 10 per cent during the same period, respectively.

Processing and manufacturing, which account for more than 75 per cent of the country's total industrial production value, rose only 3.8 per cent the first quarter. The industry grew 12.4 per cent during the same period last year.

Within the processing and manufacturing industry, the IIP for cement, vehicles, iron and steel, ceramics, and electric cable and line decreased between 6.5 per cent and 27 per cent over the same period last year.

The mining industry saw an even more gradual rise of 2.6 per cent.

Water and gas production and distribution surged 14 per cent.

GSO expert Vu Quang Ha attributed the results to decreasing consumption demands in both domestic and foreign markets.

"Industrial producers are suffering from high inventory that has caused them to shrink production," Ha explained.

The consumption index of the processing and manufacturing industry had risen only 3.5 per cent as of April 1, resulting in an inventory index of 32.1 per cent, three times higher than the same period in previous years.

Some industrial products reported very high inventory, such as plastics with 102.2 per cent, prefabricated iron products with 101.5 per cent, and fruit and vegetable processing and preservation with 94.8 per cent.

Production and processing of beer, seafood, animal feed, automobiles and motorbikes, textiles and garments, cement and fertiliser also saw a high inventory of between 30 per cent and 60 per cent.

The Ministry of Planning and Investment said industrial production during the first four months of the year faced many challenges due to accelerating input costs, high interest rates, low consumption and high inventory.

Small- and medium-sized enterprises and those in the processing and manufacturing industry were the most vulnerable, and the ministry recommended that the Government focus on boosting industrial production as it would be a key factor to help the country maintain a GDP growth rate of 5-5.6 per cent this year. The industrial sector last year contributed roughly a third of the country's GDP.

The Ministry of Industry and Trade has tried to find new consumption markets and promote trade programmes in a move to help producers boost exports.

Despite a lack of capital, many producers are still reluctant to borrow from banks due to high lending interest rates.

Experts called on the Government to cut the rates again to help ease difficulties for businesses as part of the plan to accelerate the economy.

Debt trading firm to help settle Bianfishco’s debts

The Debt and Asset Trading Corporation (DATC), under the Ministry of Finance, has considered providing a maximum sum of VND250 billion (US$12 million) to handle the debt of beleaguered seafood company Bianfishco, its CEO Pham Quang Thanh told Tuoi Tre.

Thanh said the debt-ridden company is expected to return to operations next month, functioning as an outsource manufacturer for other seafood exporters to maintain work and income for its 3,000 workforce.

There are two solutions for Bianfishco to restart, added Thanh.

The first option is to sell Bianfishco, he said, adding that many investors from Japan and the US are showing interest in the company for its modern technology and high economic potential.

“DATC will act as an intermediary if there is any deal,” he said.

In the second plan, DATC will consult, intermediate, and propose solutions for Bianfishco and its creditors, most of which are the credit institutions, to negotiate for the debtor to restart operation.

If any creditor wants to sell the debt Bianfishco owes them, DATC will buy it, he said.

“[Bianfishco’s] total debt is around VND1.5 trillion ($72 million), with VND1 trillion indebted to the banks, while the company’s total assets are VND2 trillion.”

However, Thanh cautioned that the second solution may be hindered if the creditors are not willing to cooperate.

Banks hold the key decision on whether or not Bianfishco can restructure its debts, he explained.

From the case of Bianfishco, Thanh also complained that most banks have only focused on evaluating their borrowers’ collateral assets, rather than the effectiveness of the projects subject to the loan application.

In the case of Bianfishco, the banks offered loans without an adequate inspection into what the company would do with the money, as it later turned out that the seafood company had managed to borrow VND20 billion ($960,000) only to buy a luxury car.

“Worse, when the borrowers face troubles, banks only focus on collecting debts, rather than sharing the difficulties with them,” he added.

As for the plan to restructure Bianfishco, Thanh said its shareholders should be restructured first.

Bianfishco should invite shareholders that are experienced in the seafood sector and have true management ability to take its helm.

“Some local seafood businesses have also planned to join Bianfishco via the investment funds,” he said.

“An international investor has also bid $120 million to buy the whole company.”

VAT refund scheme should be fully implemented

The pilot value-added tax (VAT) refund scheme for foreigners passing through Viet Nam's two biggest airports should be rapidly implemented throughout the country, said attendees at a seminar in HCM City on Thursday.

Addressing the seminar, vice chairwoman of the HCM City People's Committee Nguyen Thi Hong said the planned two-year pilot scheme was too long and that it should be foreshortened to six months or at most a year.

The Government has decided to pilot the VAT refund scheme from July in an attempt to boost sales of local products and promote tourism. Foreigners who buy goods in Viet Nam and leave via Noi Bai Airport in Ha Noi or Tan Son Nhat Airport in HCM City will be reimbursed the VAT they have paid. The pilot programme is intended to run from July 1, 2012 to June 30, 2014.

Pham Gia Tuc, vice chairman of the Viet Nam Chamber of Commerce and Industry, said if the refund scheme was working effectively, it should be implemented at other international airports before the end of the trial period.

Meanwhile, Deputy Finance Minister Do Hoang Anh Tuan said the pilot refund programme would bring huge benefits to tourism and trade.

The programme would also help businesses promote their products and boost sales, Tuan said, adding that nearly 200 firms registered to take part in the programme as of April 18.

Tuan also urged the General Department of Taxation to promote the scheme to local retailers in HCM City, Ha Noi, or handicraft villages – the only locations eligible.

A valid invoice with a value of at least VND2 million ($95) and a tax claim form are required.

Commercial banks selected to handle tax repayments are allowed to charge a service fee of up to 15 per cent of the refund value. The refund will be made in Vietnamese dong or can be converted to other currencies accordingly.

Automaker Truong Hai enjoys earnings of $552.3 million

Truong Hai Automobile Co earned VND11.6 trillion (US$552.3 million) in 2011 and posted an after-tax profit of VND669 billion ($31.8 million), on which it will pay an 18-per-cent dividend. Truong Hai led domestic automotive sales last year with a 29-per-cent market share. In the first quarter of this year, it purchased a 51-per-cent stake in South Korean manufacturer Soosung for $3.5 million.

Chinese plums with cancer-causing additives rife in HCMC

Many Chinese pickled and dried plums, recently detected by their home authorities as containing cancer-causing additives and chemicals, are being sold in Ho Chi Minh City’s markets.

Chinese media coverage has reported that pickled and dried peaches, plums, and many other fruits produced by three renowned local manufacturers have been found to contain huge amounts of additives such as saccharin and sodium cyclamate sweeteners; carmine and amaranth coloring; and sulfur dioxide whitener.

The amount of additives found in the plums is three time higher than the allowed level, Chinese media reported.

Health experts said sodium cyclamate can turn into an extremely toxic substance that can cause cancer, while sulfur dioxide can combine with vitamin B1 to damage consumers’ brain, lungs, and liver.

Chemicals like carmine, amaranth, or saccharin can also be dangerous if more than the allowed content is consumed.

While the detection of such toxic products has caused a stir in China, what deserves more concern is that the cancer-causing plums can easily be found on shelves without packages and labels, and are sold by the kilo in Vietnam.

At the wholesale markets around HCMC, pickled plums are stored in 10-kg cartons with only one label showing their name and price. No information about the products’ manufacturers, origins, or expiry dates can be found.

“Those selling these products know for sure where they come from only by glancing at the prices, so there is no need for a label,” says Minh, a small trader in Binh Tay market.

“As much as 70 – 80 percent of plums being marketed are Chinese products as it’s not easy to find their domestic counterparts in the markets.

“Most local plum manufacturers provide careful and appropriate packaging to their products, which are distributed via retailing channels rather than wholesale markets,” continues Minh.

But the main reason for their popularity, Minh adds, is that Chinese plums are always cheaper than domestic products.

Chinese pickled plums cost VND80-100,000 a kilogram, while locally-made products are sold at VND120,000 a kilogram.

“We traders only sell what can bring greater profits.

“We don’t care where the products come from,” says Minh.

Similarly, poorly-packed plums are also flooding into An Dong, Ben Thanh, and Ba Chieu markets.

Though there is not a single piece of information about the products’ origins and manufacturers, all traders confirm that they come from China.

Expiry dates are only displayed on the carton when the products are imported in batches. However, as traders later divide them into smaller cartons for sale, it does not matter if they put on an expiry date for the product or not.

“Traders can write whatever dates they want on the cartons, so what’s the point of doing so?” they say.

T, an official of the HCMC Market Management Agency, says that dried and pickled plums are categorized as a food commodity, and are thus required to obtain food safety and hygiene certification to be eligible for circulation.

However, the unsafe products still manage to enter the Vietnamese market.

“There is no such product imported via the seaports in HCMC,” a municipal customs official says.

“This means Chinese plums are transported to Vietnam via the border gates with China in the northern provinces.”

“It’s not easy to provide customs inspection on products transported that way.”

Blue chip REE's first quarter earnings reach $12.6 million

The net profit of Refrigeration & Electrical Engineering Co (REE) soared to VND265.6 billion (US$12.6 million) in the first quarter, an increase of 64 per cent over the same quarter last year. REE closed yesterday off 2.2 per cent to VND17,500 per share.

Work begins on additional HCM City Stock Exchange building

Construction began last Saturday on an additional building for the HCM City Stock Exchange, next to the existing facility on Vo Van Kiet Avenue in District 1. The 12-storey building, being built at a cost of VND414 billion (US$20 million), is scheduled to open in 2014, according to exchange chairman Tran Dac Sinh.

A $30 million system would be installed in the new building to support the operations of the country's two stock exchanges and the Viet Nam Securities Depository, Sinh said.

Minister of Finance Vuong Dinh Hue said the new building would serve the increased operational scale of the market as well as the modernisation of trading systems.

Property firm Hoang Quan boss says company will not go under

Real estate developer Hoang Quan (HQC) has denied rumours of its impending bankruptcy.

The company merely moved its headquarters to reduce operating costs, asserted deputy director Le Trong Ngoc. HQC's short-term assets currently total VND1.6 trillion (US$76 million), while short-term debts have hit VND1.9 trillion ($90.4 million), mostly owed to affiliates and key personnel. HQC also said yesterday that it would issue 200,000 convertible bonds by the end of this year with a par value of VND1 million ($47.6) and a two-year term.

Quoc Cuong Gia Lai real estate developer vows to settle debts

The chairwoman of real estate developer Quoc Cuong Gia Lai (QCG), Nguyen Thi Nhu Loan, told company shareholders on Thursday that QCG would be able to settle all of its long-term debt this year, estimated at VND1 trillion (US$47.6 million). The company has already received preferential financing from the Viet Nam Development Bank at a rate of 7.6 per cent for a 12-year-term on one project. In addition, it hoped to generate VND620 billion ($29.5 million) from selling half of its interest in another project. QCG plummeted to its floor price of VND12,600 during yesterday's session. QCG also operates in hydropower and rubber plantations.

Shorter transaction settlement period to begin in June

The State Securities Commission will shorten the stock market transaction settlement period from four days (T+4) to three (T+3), beginning in June, if all brokerages have sufficient funds to settle payments prior to 4 pm of the T+2 date and the depository centre can ensure a smooth clearance system. The Viet Nam Securities Depository also plans to issue a regulation which strengthens sanctions against brokerages which violate settlement regulations.

Exports to South Africa exceed $133m

Exports to South Africa generated over US$133 million in the first quarter of the year, up 80 per cent over the same time last year, according to the Viet Nam General Department of Custom. Among the exports seeing high turnover were electronics and component, cashews, footwear and equipment.-

Cement plant sees construction delays

Quang Nam Province has asked Xuan Thanh Group to accelerate implementation of its 57.4ha Thach My cement plant project in Nam Giang District in order to ensure its completion as scheduled in 2013.

The plant, being built at a total estimated cost of VND4 trillion (US$190 million), was identified as a key provincial project when ground broke back in July 2010. Xuan Thanh Group has blamed a shortage of needed construction materials for the sluggish progress on the plant, but Nam Giang District People's Committee chairman Alang Mai has refused to accept the explanation as a good excuse in this case.-

Insurer targets 18% rise in earnings

Bao Viet Holdings has targeted consolidated earnings this year of VND17.6 trillion (US$837 million), an increase of 18.2 per cent over the previous year, the insurance group announced at its annual shareholders meeting in Ha Noi on Thursday. Profits were expected to top VND1.7 trillion ($82 million) by the end of the year, a rise of 13.2 per cent.

To meet the targets, Bao Viet said it would restructure the group to boost cross-subsidiary co-operation, enhance governance, accelerate implementation of information technology projects, restructuring the group, enhancing the corporate governance model, and increase the effectiveness of investments and risk management systems.-

Supermarkets offer aggressive promotions

Many supermarkets in HCM City have launched promotions to attract customers during the upcoming Southern Liberation (April 30) and May Day holidays.

Big C supermarkets, for instance, are offering discounts of 5-50 per cent on more than 1,500 items as part of five promotions. It is also offering enclosed gifts to customers.

Co.op Mart has announced that it would drop prices on thousands of essential goods by up to 49 per cent.

Other supermarkets, including LotteMart and Maximark, are also offering discounts. To meet high demand during the holidays, supermarkets have also increased its stockpile of goods. BigC supermarkets said that its stockpile of goods had increased by 30 per cent compared to normal days, especially for ready-to-eat foods and vegetables.

Numbers of 3G users skyrockets

The total number of 3G subscribers in Viet Nam has reached 12.8 million, accounting for 14.7 per cent of the population, the Ministry of Information and Communications announced at a meeting earlier this week to review tasks in 2012. After three years, network providers have exceeded targets and deployed 33,700 3G stations nationwide, the ministry said.

Local firm supplies content for LG Smart TVs

LG Electronics Viet Nam and Viet Nam Communications Corporation (VC Corp) have formed a strategic partnership under which the latter will provide content on LG Smart TV 3D products to hit the market this July. VC Corp will also work with other content providers in the integration of content applications.-

Viettel to help equip public libraries with broadband

Telecom group Viettel has pledged to provide broadband internet for 900 public libraries in 40 cities and provinces and reduce charges to them by 70 per cent in a project to enhance computer education and internet facility in Viet Nam. Over the next five years, 1,900 internet access points will be established, in addition to 99 already established in a pilot project.

An Giang courts more agricultural tourism
The Cuu Long (Mekong) Delta province of An Giang plans to strengthen co-operation with travel agencies based in HCM City as it implements the second phase of an agriculture tourism project that seeks to raise the incomes of local farmers.

Agriterra, a development arm of five farmers' unions in the Netherlands, will fund 47 per cent of the project's VND20 billion (US$961,000) outlay for the second phase with the province raising the rest.

With support from Agriterra, the Viet Nam Farmers' Association had chosen Tien Giang and An Giang provinces in the south and Lao Cai Province in the north for a 2007 – 10 project that would help local farmers develop their household economy and escape poverty.

Of the three provinces participating in the first phase of the project, only An Giang was selected to continue with the 2011-14 second phase, said Nguyen Thanh Tung of the An Giang Farmers' Association.

"It is very important for the project to work with travel firms in the city in order to promote agriculture tours that will bring both city residents and foreign tourists to An Giang," Tung said.

Under the project, selected farmers in the province will be provided with professional skills through courses on tourism services. They will thus learn to develop tourism products that meet the demands of both domestic and foreign tourists.

Tourists would stay at local people's houses, visit local tourism sites, enjoy traditional festivals and dishes, and participate in farming activities, Tung said.

An Giang's tourism potential has been seen in the steady increase of visitors over the last three years.

In 2009, it received 3,000 visitors, 500 of them through the agriculture tourism project office. Corresponding figures increased to 7,000 and 800 in 2010; and 10,000 and 3,000 in 2011.

It is expected that the province will attract about 13,000 domestic and 650 international visitors in 2014.

Delta farmer creates 19 new robust high-yield rice strains

A farmer from the Cuu Long (Mekong) Delta province of An Giang has successfully created 19 new strains of robust, high-yield rice by cross-pollinating various strains.

Hoa Si Hien, 43, has called the new strains Tan Chau (TC1 to TC 19) after Tan Chau town where he lives.

"My two latest strains – 18 and 19 – are highly resistant to brown plant hoppers and rice blast disease since they were created from wild varieties," he said.

During the last summer-autumn crop, TC 18 and 19 yielded 5.5 tonnes per hectare without the use of pesticides, he said.

"During this winter-spring crop, I am experimenting by growing the two rice strains without using fertilisers on an area of 1,000 square meters."

Hien was not born into a farmer's family but at the age of 25, after he married, his wife's parents gave him a 2,000sq.m rice field.

With his hard work, he managed to buy more land, increasing his holding to 1.8ha.

Getting good rice strains was always his biggest concern since he had to go to other districts to buy them, and he sometimes returned empty-handed.

In 2004 the man who left school when was a sixth-grader attended a training course in creating rice strains held by Can Tho University and the An Giang Agriculture Extension Centre.

After that he began to carry out research in an effort to create a new variety.

After several failures he managed to grow four new varieties in 2007.

Since then he has continued with his efforts.

"I hope I can create more strains that are able to resist the droughts in the Tay Nguyen (Central Highlands) and central regions as well as salinity in coastal areas."

In the last two years he has instructed students from An Giang and Can Tho universities in practical techniques to create rice strains.

In 2009 Hien received a merit certificate from the International Rice Research Institute for his contributions.

The Cuu Long Rice Research Institute has gifted Hien with a microscope and the An Giang People's Committee gave him an instrument to measure moisture in rice grains.

Nguyen Thanh Hung, deputy head of the Tan Chau Town Farmers Association, said most of Hien's strains were suitable for growing all over the delta since they were highly resistant to brown plant-hoppers and rice blast disease and of high quality and yield 6-8 tonnes per hectare.

"TC's 2, 3, 5, 6, 8, and 17 are now planted widely in Tan Chau and other areas," he said.

"Can Tho University is planning to recommend that the Ministry of Agriculture and Rural Development certify TC 2 and TC 5 as "national-level" rice strains," he added.