Last update 6/8/2012 7:00:00 AM (GMT+7)
  

BUSINESS IN BRIEF 8/6
Dong deposit interest rate cut to 9%

The deposit interest rate for dong will be reduced to 9 per cent per year from the current 11 per cent from Monday, Governor of the State Bank of Viet Nam (SBV) Nguyen Van Binh said at a National Assembly meeting yesterday.

Binh said that the Prime Minister approved the SBV's rate cut, which it decided on with 14 commercial banks at a meeting last week.

Yesterday morning, dong interest rates at the large Vietcombank and the Asian Commercial Bank (ACB) declined unexpectedly on most long and short term deposits after a long time at 11 per cent.

The highest deposit rate at Vietcombank was reduced to 10.5 per cent per year, applied only for one-month terms. The rate of 10 per cent was applied for two- and three-month terms while those with six and 24-month terms got a rate of only 9.5 per cent.

The interest rate at ACB also reduced to 10.8 per cent for two, three, six and nine-month terms. However, the bank still kept the ceiling rate of 11 per cent for 12 and 13-month terms.

Commercial banks often offer the interest rate at the highest level allowed by the SBV to attract depositors.

Shares mixed despite rate cut, cheaper petrol

Shares were mixed on both stock exchanges this morning, despite an interest-rate cut and reduced fuel prices.

Yesterday, the central bank decided to lower the deposit interest rate from the current 11 per cent to 9 per cent per year, starting on Monday.

On the same day, petrol prices were also reduced by VND800 (4 US cents) to VND21,900 ($1.1) per litre.

On the HCM City Stock Exchange, the VN-Index gained another 0.35 per cent to finish this morning's session at 435.91 points on a turnover of more than VND816 billion ($39 million). Total volume was 57.6 million shares.

More than half of the top 30 shares by market value and liquidity climbed up, pushing the VN30 Index up 0.38 per cent to 511.37 points. Among its 30 codes, 16 rallied while six sank and eight were unmoved.

HCM City Infrastructure Investment (CII), property developer Quoc Cuong Gia Lai (QCG) and Phu Nhuan Jewelry hit the ceiling of a 5-per-cent rise this morning.

Gainers edged losers up 110-93 overall, with shares of SACOM Development and Investment Corp (SAM) being the most active code on a trade of 3.62 million shares, rising 2.3 per cent to settle this morning at VND8,800D9.

However, on the Ha Noi Stock Exchange, the HNX-Index declined 0.49 per cent, closing at 75.5 points as losers outnumbered gainers by 139-82.

Market value reached VND479 billion ($22.8 million) as nearly 46 million shares changed hands.

PetroVietnam Construction (PVX) was still the most active share with another 6 million shares exchanged, closing up 1.9 per cent at VND10,500 ($0.50).

The afternoon session will resume at 1pm.

Fuel prices slashed, import duties increased

The interministerial alliance of Finance and Industry and Trade today imposed a cut on oil and petrol retail prices – the third consecutive one since early May, while also increased import duties on the commodities.

Starting 2pm today (June 7), retail price of A92 gasoline was slashed by VND800 to VND21,900 a liter. (US$1 = VND20,800)

Diesel oil and kerosene both dropped by VND700 to VND20,500 a liter, and VND20,700 a liter, respectively, while fuel oil declined by VND650 to VND18,250 a kg.

The ministries also increased the import duties on oil and petrol by 3 percentage point to 7 percent.

The cut on domestic fuel retail prices is seen as an inevitable move as global prices have repeatedly slumped over the last 30 days.

Oil price in London closed yesterday session at $85.39 a barrel, up by 2.23 percent, which was only $2.08 a barrel higher than the bottom it reached on June 1.

Retail fuel prices in Vietnam have been hiked two times so far this year, in early March and late April, gaining a total of VND3,000 a liter.

Along with the global downward trends, three price cuts, including the latest one today, have also been released, contributing to reduce prices by VND1,900 a liter.

The other two price cuts fell on May 9 and 23.

Gold slumps, dollar slips after FED announcement

The local gold price has dropped by VND610,000 ($28.8) a tael following world trend after Federal Reserve (Fed) chairman Ben Bernanke said there would be no immediate quantitative easing on Thursday.

As of 9:30 am, gold bullions produced by Saigon Jewelry Co, the biggest Vietnamese gold refiner and trader, were quoted at VND41.5 million a tael and VND41.8 million a tael for bid and ask, respectively.

Meanwhile, the bid and ask price of SJC gold bullions in Hanoi were also trading at VND41.5 million a tael and VND41.82 million a tael, respectively.

Rong Vang Thang Long (Thang Long Golden Dragon) refined by the Hanoi-based Bao Tin Minh Chau Co were quoted at VND40.55 million a tael and VND40.85 million for bid and ask, respectively.

At the same time, spot gold was quoted by Kitco.com at $1,567.40 an ounce, and is still on a downward trend.

With the current exchange rate, plus additional fees and taxes, the local gold price was VND2.1 million a tael costlier than its world counterpart.

The precious metal has fallen by VND300,000 a tael compared to late last week.

Comex gold futures prices Thursday dropped below the psychological support at $1,600 an ounce.

August gold last traded down $43.20 at $1,590.8 an ounce, and spot gold then was last quoted down $30.20 an ounce at $1,590.

They both careened downward following Fed chairman Ben Bernanke's speech to the Joint Economic Committee of the U.S. Congress.

Bernanke said the US is facing economic headwinds, especially due to the European Union debt crisis, but offered no specifics on any fresh monetary stimulus package to promote more economic growth.

The speech disappointed gold market bulls who wanted immediate gratification on economic stimulus.

The US dollar index has traded lower again on more profit-taking from recent gains. The dollar index bulls still have the overall near-term technical advantage.

Some local banks have lowered the price of the US dollar below the ceiling rate by VND11 per dollar.

The prices of the greenback range from VND21,025-21,036 a dollar and from VND20,935 to 20,950 a dollar for bid and ask, respectively.

The average interbank rate Friday remained at VND20,828 a dollar with the ceiling rate of VND21,036 a dollar, unchanged for 24 weeks in a row.

State Bank of Vietnam governor Nguyen Van Binh late Thursday told the National Assembly that the central bank had bought $9 billion for the national forex reserves so far this year after pumping VND180 trillion ($863.3 million) into the market.

As of March 2012, SBV had used around VND130 trillion to buy $6.23 billion worth of foreign currencies from banking systems for the national reserve.

The central bank has also sold some $100 million for the banking system, Binh said.

Vietnam’s foreign exchange reserves as of mid-March jumped 25-27 percent over the end of last year, said the central bank governor in a press conference early last month.

Governor Binh added that the forex reserve surged 50 percent in 2011 over 2010.

Earlier this year, Binh said the central bank will not devalue the Vietnam dong by more than 3 percent in 2012.

300 tonnes of litchi exported to China daily

Since the end of May, on average 300 tonnes of litchi were transported every day to the Chinese market through the Lao Cai international border gate.    

Between 2,000-5,000 tonnes of fresh litchi will be delivered to Chinese dealers each day in the next two weeks when the harvest season is at its peak.

Litchis are mainly grown in Bac Giang and Hai Duong provinces, less than 70km from capital Hanoi.

At present, the average export price ranges between VND10,000-12,000 per kilo, mostly shipped to wholesale markets in China’s Yunnan province.

Local businesses find it beneficial to export their products to China through official trade channels, thanks to the stable prices and simple procedures.

Local businesses attend int’l Kunming Fair

More than 120 Vietnamese businesses are attending an import and export fair, which opened in Kunming City, the capital of China’s Yunnan province, on June 6.    

They are showcasing Vietnam’s traditional products including farm produce, handicrafts, foodstuff, and footwear products at 250 stalls of the event.

Le Thi Ha, Deputy General Director of ADPEX Joint Stock Company, said the increasing number of Vietnamese enterprises taking part in the annual fair reflects the effectiveness of their participation.

Yunnan now receives more favourable conditions to become a leading economic zone in China, offering better chances for Vietnamese businesses, thanks to geographic proximity, Ha said, adding she hopes local enterprises will take the initiative to exploit such a potential market.

On the first day of the fair, Vietnamese businesses signed various contracts worth millions of US$ with their partners from Guizhou, Chongqing, Sichuan, Yunnan, Taiwan and Hongkong.

First held in 1993, the Kunming Import and Export Fair has become a prestigious international trade fair, with total transaction value increasing from US$1.7 billion in 1993 to US$7 billion in 2011.

This year’s fair has attracted as many as 12,000 businesses and 23,000 importers from 30 countries around the globe.

Japanese firm to build shipyard in Khanh Hoa

Japan’s Oshima Shipbuilding Company has got its investment license to build a shipyard with a total registered capital of VND3.78 trillion (more than US$180 million) in the south-central province of Khanh Hoa.    

The yard, which will be built in two phases and operate in 50 years, will be situated on a 304 ha site in Cam Thinh Dong commune in Cam Ranh town.

It will take four years to finish infrastructure construction and install all necessary facilities.

In the first phase, the Oshima Shipbuilding Company is expected to build 12 vessels each year, with a tonnage of between 38,000 and 56,000, using the latest technology.

On entering the second phase, the shipyard will be able to turn out as many as 24 ships a year.

Once in full operation, the shipyard will employ 3,000 local workers.

Vietnam-Chile trade increases sharply

Two-way trade turnover between Vietnam and Chile in the first quarter of the year reached US$175.766 million, up 85 percent compared to the same period last year.

According to statistics from the Export Promotion Bureau (ProChile), Vietnam’s exports to Chile earned US$43.782 million and imports were worth US$131.984 million, increasing by 46 percent and 102 percent, respectively.

Vietnam mainly exports footwear, garments, cement and fish, while it imports bronze, seafood, scrap iron and steel and wooden products.

Bilateral trade hit US$486.84 million in 2011, up 50.24 percent against 2010, recording the highest level by the time.

Analysts said that with the recent enforcement of the bilateral free trade agreement (FTA), Vietnam-Chile trade exchange will rise considerably in the coming time.

German automobile producer expands operations

German auto parts maker, Robert Bosch, on June 5 announced its plan to expand a plant in the southern province of Dong Nai by increasing investment to US$322 million by 2015.  

Robert Bosch’s managing director in Vietnam, Vo Quang Hue, said the expansion of the plant, which makes push belts used for continuously variable transmission in automobiles, is to meet rising global demand.

The US$73-million production facility began operation in April last year, and four months later the company raised its total to US$136 million.

Tea exports hit US$69 million, up nearly 15 percent

Vietnam exported 49,000 tonnes of tea in the first five months of this year, earning US$69 million, up by 17.2 percent in volume and 14.8 percent in value against the same period last year.

Sources from the Agro/Forestry/Aquatic Products Processing Department under the Ministry of Agriculture and Rural Development said on June 3 that items such as tea, pepper, cashew and coffee still maintained their export markets.

Economists forecast that tea consumption will keep on track in 2012 as the agricultural sector has promoted its tea in the global market.

Pakistan remains Vietnam’s leading tea importer.

SilkAir opens Hanoi-Singapore direct flight route

The Singaporean airline SilkAir launched its new direct flight route Hanoi-Singapore at Noi Bai International Airport on June 5.

The company will operate three flights to Hanoi a week, on Tuesday, Thursday and Sunday.

The flights will depart from Singapore’s Changi Airport at 3.15pm and land at Noi Bai Airport at 5.35pm. The flight from Hanoi will take off at 6.30pm and arrive in Singapore at 10.50pm (local time).

This is the airline’s second direct flight to Vietnam after its Singapore-Danang flight.

Marvin Tan, Chief Executive of Silk Air, said the network of Singapore Airlines-Silk Air is expected to serve guests flying to 96 cities in 37 countries and territories.

VN fuel prices remain stubborn amid global slump

There seems to be no need for the interministerial administration of Finance, and Industry and Trade to scramble to slash domestic fuel prices, though their global counterparts have continued to fall sharply.

With global fuel prices consistently standing at low rates over the last few days, local fuel wholesalers are raking in whopping profits of VND1,800 per every liter of A92 gasoline, or tens of billions of dong every day.

While the public is badly hoping for a fuel price cut, the Ministry of Finance, which holds the right to make such a decision right, is still “watching over the global price fluctuation,” its representative said in an interview with Tuoi Tre Wednesday.

If the ministry does something, it said, it could reinstate the import duties slapped on fuel before a price cut would come into consideration.

“This is to ensure the interests between three parties: the government, wholesalers, and consumers,” the ministry said, an explanation that is well familiar to local consumers.

The A92 gasoline import price from Singapore, where Vietnam sources most of its fuel, on June 4 dropped to $104.9 a barrel, down by some $24 a barrel compared to certain sessions a month ago. Diesel and kerosene prices also fell to $112 a barrel and $109.9 a barrel, respectively, continuing their downward trend since late May.

Under the calculation stipulated by Decree No 84, the cost price of domestic A92 gasoline is currently VND1,400 a liter lower than the retail price. Similarly, the fat profits local fuel wholesalers are pocketing are VND1,370 a liter for diesel oil.

But the above figures are calculated based on the 30-day average price as required by the decree, while fuel wholesalers said a batch of imported fuel can be sold out within just seven to ten days.

Therefore, given the imported price of A92 petrol over the last ten days, the profits they have actually raked in can amount to as much as VND1,800 a liter.

In a better illustration, taking the import price of June 4, the gap between cost price and retail price for gasoline is an enormous VND2,800 a liter.

While some wholesalers have admitted that domestic fuel retail prices could well be slashed at the moment, none have made a move to call on the finance ministry to announce such a price cut.

“We have to wait for the decision from the ministry,” they said, seeming to deliberately forget how they had scrambled to ask for a price hike to escape losses when global prices soared.

And now, instead of cutting prices, fuel wholesalers are hiking commissions for dealers because of what they say is “harsh competition in the fuel market.”

A fuel dealer in Ho Chi Minh City said the wholesaler that supplies fuel for his facility has hiked commissions four times since May 29, just a couple of days after fuel retail prices were cut by VND300-600 a liter.

S, the head of sales of a company who runs nearly 30 filling stations citywide, said he is receiving commission worth VND750 per every liter of oil and petrol.

But that is not the highest rate ever granted, fuel dealers say, referring to some small-scale wholesalers which pay their dealers nearly VND900 worth of commission on every liter of fuel.

Retail fuel prices in Vietnam have gained a total of VND3,000 a liter this year, following two price increases, with the latest falling on April 20.

The Ministry of Finance also imposed two price cuts last month, on May 9 and 23, but these only helped reduce prices by VND900 a liter.

General power generation firms get nod for establishment

Minister of Industry and Trade Vu Huy Hoang has given the green light for the establishment of three power generation companies of Vietnam, Genco 1, 2 and 3.

Accordingly, the decision will empower the three newly established firms to take over electricity generating plants directly under the Electricity of Vietnam Group (EVN).

Uong Bi Thermal Power Co Ltd in northern Quang Ninh Province will be the backbone for Genco 1 managing big hydropower plants like Dai Ninh, Ban Ve, Song Tranh, and Dong Nai, and the shares of the EVN at Quang Ninh Thermal Power Plant and some other thermal project management boards nationwide.

Genco 2 is the upgrade of Can Tho Thermal Power Co Ltd managing the hydropower plants of Quang Tri and An Khe KaNak, the thermal power plants of Thu Duc, Hai Phong, Pha Lai and a number of other management boards.

The last one, Genco 3, was established on the basis of Phu My Thermal Power one member limited liability company and 11 affiliates including Buon Kuop Hydropower Plant, and the thermal power plants of Vinh Tan, Ba Ria and Ninh Binh.

However, firstly, by decision of the Ministry of Industry and Trade, the three generation companies will remain under EVN and had their personnel appointed by EVN.

Buying price ups for small-scale generators

The Electricity of Vietnam Group has raised the electricity buying prices for 10 small hydropower plants following the approval from the Ministry of Industry and Trade.

The new price, a 5 percent year-on-year increase, will be applied for 2012, according to the recently signed deals between EVN and 10 generators with capacity under 30MW, said the ministry at a recent press conference in Hanoi.

The reason for the price increase is that those small-scale generators and coal-fueled thermal power plants are facing some difficulties due to fluctuations in interest rates and exchange rates, said the Ministry of Industry and Trade.

"For bigger power plants with a capacity of over 30MW, the ministry will consider the specific constraints of each ones to regulate the buying prices accordingly," said Hoang Quoc Vuong, Deputy Minister of Industry and Trade.

"Many other plants proposed to adjust the buying price of electricity when renewing the contracts, but EVN, the sole buyer, is struggling with financial constraints.”

“Therefore, the adjustment must be carried out gradually, as EVN is not able to pay more, and the difficulties must be shared between related parties," according to the Ministry of Trade and Industry.

The ministry has also directed EVN, Vietnam Oil and Gas Group (PVN), the Coal and Minerals Industries Group of Vietnam (Vinacomin) to accelerate the preparation process for the realization of the competitive electricity market scheme, including improving the technical infrastructures and the renewal of electricity buying contracts.

HCM City comes to the rescue
 
The demand for funds among HCM City companies remains massive despite recent efforts by the Government to reduce bank lending interest rates, and HCM City plans to step into the breach and provide loans to them.

Following a meeting on Tuesday between the State Bank of Viet Nam's city office and the People's Committee to consider the problem, especially for manufacturing companies, Mayor Le Hoang Quan asked business groupings to report about the amount required by June 10.

The city is expected to lend around VND30 trillion ($1.44 billion) in June.

"The People's Committee will work with the SBV," he said, without revealing details of the proposed lending mechanism.

Nguyen Ngoc Thang, deputy director of the central bank's city branch, was quoted as saying by Nguoi Lao Dong (The Labourer) newspaper: "Most enterprises have overdue or bad loans but do not have effective business plans. That is why they can't borrow more."

He revealed that since May 4, though interest rates were reduced to 14 per cent per year for some key sectors like agriculture, small and medium-size enterprises, and support industries, only VND7 trillion ($336 million) was borrowed by 420 enterprises.

"The figure is small, only 1 per cent of the city's total credit," he added.

Meanwhile, banks do not know what to do with their funds.

"We used VND10 trillion ($480.7 million) to buy the government bonds at 4 per cent interest per year," Truong Van Phuoc, general director of the Viet Nam Export-Import Commercial Joint Stock Bank (Eximbank), said.

"We prefer to offer companies loans at 13-14 per cent per year rather than buy government bonds at 4 per cent," he added.

Phuoc approved the SBV's idea to set up a company to buy bad loans worth VND100 trillion from banks.

SBV deputy governor Tran Minh Tuan said many banks did not want to lend even at 14 per cent and "the situation must stop," he said, referring to the burgeoning bad debts at banks.

Businesses urged to embrace e-commerce

Vietnamese firms should make greater use of information technology to become more efficient and competitive in the context of global integration, delegates told a conference on promoting exports through e-commerce held in HCM City on Tuesday.

E-commerce was becoming an increasingly important part of IT use and an indispensable business tool, said Tran Huu Linh, general director of the Ministry of Industry and Trade's Viet Nam E-Commerce and Information Technology Agency.

"When a firm wants to look for a partner or product, the first search tool it thinks of is the internet, therefore e-commerce must be a part of each company's business strategy," he said.

Besides traditional methods like taking part in trade fairs and exhibitions and displaying goods at showrooms, businesses should also pay more attention to e-commerce to promote their image and products more effectively.

"With 156 million mobile phone subscribers, more than 30 million internet users, and the rapid growth in 3G subscriptions, Viet Nam has a good foundation for e-commerce to develop," he said.

"But compared to the others, e-commerce helps enterprises contact customers more easily and quickly and at lower cost," he pointed out.

Mitch Free, founder and CEO of MFG.com, a leading global online market place for sourcing made-to-order parts, textiles and packaging, said Viet Nam was known for having companies that could make products meeting US and EU standards at reasonable prices. "Many buyers in the west want to do business with Vietnamese companies but the challenge is they do not understand how to find the right companies," he said.

The internet was a very effective tool for sourcing something, he said.

If businesses did not embrace the internet or e-commerce, they would lag behind the global economy, he warned.

Vo Tan Thanh, director of the Viet Nam Chamber of Commerce and Industry in HCM City, said more and more Vietnamese companies were becoming aware of the importance of e-commerce, with 45 per cent having their own websites to promote their products.

The Government too has striven to develop e-commerce, he added.

Linh said the Ministry of Industry and Trade would this year draft new regulations for e-commerce development and measures to support companies using e-commerce.

Businesses should take advantage of this opportunity and use IT in their business strategies, he added.

Nguyen Van Hung, managing director of MFG.com in Viet Nam, said his company would assist 100 Vietnamese manufacturing firms in establishing a specific page for the manufacturing sector.

"This meant to create a strong community that can connect with overseas markets and enable buyers to approach suppliers directly to cut intermediate costs," he added.

The conference was organised by the Viet Nam Chamber of Commerce and Industry's branch in HCM City and MFG.com in HCM City.

Air Mekong signs strategic partnership agreement

Mekong Aviation JSC (Air Mekong) and the Viet Nam Import Export Bank (Eximbank) yesterday signed a strategic partnership agreement. Under the agreement, Eximbank would contribute 11 per cent of Air Mekong's charter capital to increase the amount to VND600 billion (US$28.5 million) for development plans in the following years.

State Bank extends BNP Paribas licence

The State Bank of Viet Nam has approved to extend operation time of French BNP Paribas Bank's HCM City Branch for five years dated from on Tuesday.

BNP Paribas which headquarters in Paris has branches in 85 countries. It has been one of the biggest listed banks in France and the European Union.-

Rice exports to decline by a million tonnes

The Ministry of Agriculture and Rural Development has forecast that rice export this year would reach just 6.2 million tonnes, 1 million tonne lower than last year.

The ministry said rice imports from some markets including China, Malaysia and Senegal were increased.

However, Vietnamese traditional importers such as the Philippines and Indonesia reduced their rice imports.

Phu My Fertilisers sets up production targets

PetroVietnam Fertiliser and Chemicals (Phu My Fertilisers) has said that it would supply around 70,000 tonnes of Phu My nitrogenous fertiliser and 60,000 tonnes of Ca Mau nitrogenous fertiliser to the market this month. The company has targeted earnings of VND14 trillion ($667 million) this year and a profit of VND1.78 trillion ($84.7 million).

Crude oil, natural gas production up

The crude oil and natural gas production index in the first five months of this year saw an increase of 5.9 per cent over the same period last year, said the Ministry of Industry and Trade.

The output of crude oil in five months reached 6.8 million tonnes, a year-on year increase of 11.5 per cent, and liquefied petroleum gas rose to 292,900 tonnes, 16.2 per cent higher than the corresponding period last year.

The output of oil and petrol last month dropped by 44 per cent against last month, staying at 309.9 tonnes, as Dung Quat oil refinery plant stopped its operation for an overhaul.-

Coffee processor denies bankruptcy

Coffee processor Thai Hoa Group (THV) denied that it was facing bankruptcy and signed distribution contracts with two Chinese partners on Tuesday.

"Our company has been actively working with banks to restructure our capital," THV chairman Nguyen Van An told the online newspaper Thi truong Viet Nam (Viet Nam Market).

Our co-operation with the Chinese counterparts was not merely a move to soothe investor concerns, An added.

"They are long-standing partners and willing to help when we face difficulties," he said. "But we have to overcome them on our own."

Under the contracts, THV would import 5,000 tonnes of Arabica coffee from the Chinese companies and export 1,000 tonnes of instant coffee and 10,000 tonnes of Robusta coffee to them.

Meanwhile, Agribank, Maritime Bank and the Viet Nam Development Bank have already supported the company's capital restructuring. Current debts worth VND198 billion (US$9.4 million) owed to Vietcombank would be serviced through the Debt and Asset Trading Corporation.

An hoped his company could resume normal operations by September.

THV earlier restructured its assets by selling 99 per cent of a project in northern Dien Bien Province and 51 per cent of a project in Laos to Maritime Bank. The company maintains facilities in Lam Dong, Quang Tri, Son La and Dak Lak provinces with a total capacity of 300,000 tonnes of processed coffee per year.

Haphazard investment in dozens of projects around the country failed to generate cash flows and put THV under huge financial pressure. Last year, it posted a record loss of VND280 billion ($13 million), and outstanding short-term debt reached VND1.8 trillion ($85.7 million), against a charter capital of just VND378 billion ($18 million).

Southern region to sustain growth

The Southern Key Economic Region is expected to maintain annual growth rates of between 9.5 and 10 per cent through 2020, Politburo Member Le Hong Anh said at a conference held in HCM City on Monday.

The southern key economic region includes HCM City and the provinces of Dong Nai, Binh Duong, Ba Ria-Vung Tau-Binh Phuoc, Long An and Tien Giang.

The conference was held to review implementation of the Political Bureau's Resolution No 53-NQ/TW during the 2005-2010 period.

Passed in 2005, Resolution 53 sought to promote the region as socio-economic spearheads of the country.

Making significant contribution to the region would be the service sector, with an average growth rate of between 10 and 11 per cent per year, Anh said.

Anh said the Government determined that the region was of strategic significance in ensuring the nation's socio-economic growth, ensuring national defence and strengthening security.

Since Resolution 53 was passed, provinces and cities in the area had registered growth rates higher than the national average, Anh said.

For instance, its annual growth rate in the 2006-2010 period averaged 11 per cent while the national average was just seven per cent.

Anh said the region'economic structure aligned quickly with the goals of national industrialisation and modernisation.

It made great contribution to the State Budget – as high as 64 per cent in the 2005-2010 period, with HCM City alone contributing 50 per cent of this.

Living standards improved significantly in the region, with an annual per capita income of VND48.6 million, much higher than the national figure of VND22.8 million.

To achieve the growth target of 9.5 or 10 per cent set for the 2011-2020 period, the region would have to become much more competitive, Anh said.

He said the Government, for its part, should complete soon a comprehensive socio-economic development plan that enables full utilisation of the potentials and strengths of each province and city in the region and neighbouring regions.

The plan should ensure "close and harmonious" development among the provinces and cities so as to "create an uninterrupted and logical economic space," he said.

The Government should research and introduce new mechanisms and policies that can ensure Resolution No 53 is implemented effectively in the coming period, Anh said, adding that "a proper organisation should be set up to help the Government regulate common activities of the region."

Other delegates at the conference suggested several measures, one of which was to extend the authority as well as responsibility of administrations of provinces and cities in the region.

They said this would enable local authorities to deal with their own problems easily and effectively.

Other measures suggested included acceleration of the economic restructuring process in the region, with added focus on high value-added and high-tech industries; and building HCM City into a high-quality service center in the region and the world.

Conference participants also called for strong development of technical and social infrastructure including the expansion of old national highways and construction of new ones in localities that need these the most.

Plans to use development aid more efficiently

Viet Nam is making a great effort to accelerate disbursement and make efficient use of Official Development Assistance (ODA) during a time of recession, according to foreign and local economists.

Speaking to Dau Tu (Investment) newspaper, Cao Viet Sinh, the deputy minister of Planning and Investment, said the disbursement of capital sources, particularly from the State Budget, government bonds, national target programmes, foreign direct investment and ODA, would improve aggregate demand, reduce inventories and stimulate economic growth.

According to the investment ministry's latest report, ODA capital disbursed in 2011 was at the very high level of US$3.65 billion.

Viet Nam and donors believe that 2012 would be a breakthrough year in the disbursement of ODA capital.

In the first five months of the year, the country disbursed US$1.72 billion worth of ODA, a year-on-year increase of 43 per cent. That included US$1.57 billion in loans and US$159 billion in non-refundable aid, he said.

Sinh, however, admitted that disbursed ODA capital in Viet Nam was still lower than the global average.

The ODA capital from the Asia Development Bank (ADB) that was disbursed by regional countries was 23 per cent on average, while the rate in Viet Nam was only 16 per cent.

As a result, billions of US dollars that ADB has given Viet Nam over the years had not been disbursed because the country was unable to meet certain conditions.

Viet Nam is now settling difficulties, including land clearance, matching capital and project management, that are believed to be obstacles to disbursement and effective use of ODA capital, according to Sinh.

Among the measures, the Government has issued documents on attracting, managing and using ODA and other preferential loans for the 2011-2015 period.

It has made adjustments to Decree No. 131/2006/ND-CP on the management and use of ODA, all of which are aimed to simplify procedures related to disbursement and effectively use this capital.

Hoang Viet Khang, director of the Foreign Economic Relations Department, said, under these measures, ODA capital would be used to support the implementation of targets included in the socio-economic development strategy from 2011 to 2015.

"These precious capital sources will also be used for the construction of infrastructure to serve industrialisation and modernisation through 2020, as well as implementation of other national programmes from 2011 to 2015," Khang said.

Projects to build international airports, deepwater ports, express highways and electricity supply and generation systems will be given top priority for ODA capital and preferential loans.

In an interview with Dau Tu newspaper, the Japanese Ambassador to Viet Nam, Yasuaki Tanizaki, said that since 1992 Japan had provided Viet Nam with 1,836.1 billion yen (US$23 billion) of ODA.

"In the Japanese 2011 fiscal year, Japan gave ODA worth 270 billion yen of ODA (US$3.4 billion) to 16 projects in Viet Nam. This was a record number in Japan's ODA-provision history for foreign countries," the ambassador said.

Japan's ODA capital has been invested in many areas in Viet Nam. Japan has, in particular, placed great importance on infrastructure development because of its essential importance for the economic growth of the country.

Among the many major infrastructure projects it has or is currently supported are the Hai Phong seaport, National Highway No.5 and Tan Son Nhat Airport, North-South Expressway, Cai Mep-Thi Vai seaport and Lach Huyen Port.

Yasuaki Tanizaki said: "I feel proud that Japan's ODA capital has been involved in these high-priority projects."

However, he said that some projects had not made the desired progress, and such projects were increasing in number.

The delay of these projects could be attributed to issues related to land expropriation and resettlement of residents.

"We must tackle these problems in order to further improve effectiveness," he said. "Japan willingly continues to provide assistance to infrastructure development in Viet Nam. More financial support is needed for the projects which Japan has been cooperating with, including the major projects."

HCMC asks banks, businesses to work for mutual interest

Banks having a huge surplus of funds should help business in dire need of capital and both sides should work together to  ease the current economic problems, said chairman of the People’s Committee of Ho Chi Minh City Le Hoang Quan.

According to Nguyen Ngoc Thang, deputy director of the HCMC branch of the Central Bank, till May this year, the total capital mobilization in banks reached VND907,100 billion (approx. US$43,195 million), an increase of 1.5 percent compared to the end of 2011.

However, various businesses in the city are now facing difficult times, what   with excessive inventory and overdue or bad debts. Having no effective solution to their problems, many of their safety indexes have declined steeply.

Receiving no detailed instruction or regulation from the Central Bank on giving new loans to pay back old ones, plus having difficulty acknowledging the health of these businesses, banks are not daring to approve new loan applications.

Since old outstanding loans used real estate as collateral (unsure guarantees these days) new credit limits are also not readily available.

Tran Minh Tuan, Deputy Governor of Central Bank, said that since the issue of Circular No.14 last month to regulate four specific groups namely agricultural organizations, small and medium size businesses, supplier industry for loan applications, about VND7,000 billion (US$333 million) has already been delivered to 420 companies. This is just a small number of all the total businesses in dire need of capital in HCMC.

Pointing out that reasons such as a weak financial state, huge inventory, unclear books, or no collateral - refusing loan applications will simply worsen the situation, said Deputy Governor Tuan, who recommends that the government should provide better loan regulations to rescue any firm from the brink of bankruptcy. He stated that besides attractive interest rates, it was wiser to control only outcomes rather than subjects of loans.

According to Tran Phuong Binh, President of Dong A Bank, at the moment, most banks, particularly renowned ones, have surplus funds and wish to reduce interest rate to attract more customers. “With the raising of interest rate of 11 per cent per year and lowering lending interest rate--sooner or later we will have to close our banks,” said President Binh.

Suggesting that the People’s Committee of Ho Chi Minh City should talk with associations of industries to make a specific list of anyone in need and the exact capital required, he stated that all banks willingly gave out loans despite high risks and asked that the public not blame banks for not offering assistance.

Agreeing with Binh’s stance, Truong Van Phuoc, President of Eximbank in HCMC, said that the Central Bank should widen the loan subject list to decrease the lending rate. Eximbank alone is willingly giving VND5,000 billion credit (US$238.1 million) with a lending rate of 13-14 per cent per year.

Referring to Do Minh Toan views, the Vice President of Asia Commercial Bank (ACB) said that the government should focus on unblocking suspended apartment plans. All banks have available credit for anyone wishing to buy a house under the social policy programme.

The last thing to do is call for investors and contractors to lessen their own benefits and reduce apartment prices. “Despite the lending rate of only 15.5 per cent per year for housing, ACB cannot deliver credit as house prices are still rather high,” said Toan.

Deputy Governor Tuan has demanded that the association of each industry must urgently provide a list of businesses in need of capital to an appointed bank, so that this economic debacle is avoided in the near future.

At the end of the meeting, Chairman Le Hoang Quan instructed related agencies and associations in HCMC to quickly create a list of unhealthy businesses so that the People’s Committee can cooperate with banks to provide appropriate and timely support.

In June, commercial banks in the city are expected to give out VND30,000 billion credit (US$1,429 million) to support businesses.

Emirates adds HCM City to its network

Fast growing airline Emirates has connected HCMC to its expanding flight network worldwide when it began a non-stop daily service between Dubai and this commercial hub of Vietnam on Monday.

Thierry Antinori of Emirates Airline told reporters in HCMC on Tuesday that the Dubai-HCMC service linked Vietnam to the airline’s global network consisted of 31 destinations in Europe, 22 in Africa, 16 in the Middle East, 11 in North and South America and 19 in the West Asia and Indian Ocean region.

The air carrier’s Executive Vice President for Passenger Sales Worldwide believed the new route would help boost trade and tourism connection between Vietnam and other parts of the world.

“We also look forward to opening up a wealth of opportunities in Vietnam for business and leisure travelers from the six continents that our passengers join our flights from,” Antinori said.

Antinori said now was the time for Emirates to fly to HCMC given the fact that HCMC as one of the most vibrant cities in Southeast Asia was recognized as the commercial hub of Vietnam, and trade between Vietnam and United Arab Emirates exceeded US$1.2 billion last year.

“… and that is why we have chosen this time to add HCMC to our rapidly expanding network,” Antinori said in a statement released on Tuesday. He told reporters that Emirates targeted to be active in the Vietnamese market “forever.”

Nguyen Thanh Rum, director of the HCMC Department of Culture, Sports and Tourism, encouraged Emirates’ executives by saying at the event that this city attracted more than 60% of the international visitors to Vietnam and over 80% of them traveled by air.

Figures of the General Statistics Office showed the number of visitors to Vietnam in the first five months of 2012 was around 2.95 million, up 17.5% year-on-year. Last year saw the country welcome over six million international arrivals, a rise of 19.1% over the year before.

Emirates uses an Airbus 330-200 configured with 27 Business-class and 251 Economy-class seats for the route.

Emirates offers various types of fares for Emirates’ return flights from HCMC to Dubai and Europe, starting from some US$800. Antinori said the airline targeted different groups of passengers, including leisure and business travelers for the flights to and from Vietnam.

Emirates’ cargo arm SkyCargo has stepped in to offer shippers solutions on imports into Vietnam, including automotive parts and raw materials as well as exports comprising of garments, footwear and seafood.

Richard Jewsbury, Emirates’ Senior Vice President, Commercial Operations Far East & Australasia, said the airline had hired more than 20 employees in charge of sales, cargo, activities at the airport in HCMC.

Antinori said Emirates would increase capacity on the Dubai-HCMC route by putting into service a bigger aircraft at the end of October this year.

Consultant asked to clarify plan for environment project

Relevant agencies want the France-based SCE Consultancy to clarify several issues in the implementation plan for the second phase of the Nhieu Loc-Thi Nghe Canal Basin environmental sanitation project in HCMC.

SCE suggested establishing a company in charge of implementing and operating the second phase of the environmental project. This company can be either State-owned or private and associated with the HCMC government and the Steering Center of the Urban Flood Control Program through trust contracts, SCE reported at a meeting on Monday.

SCE said the project should be developed under the format of public-private partnership (PPP). When private investors join the project, they will take charge of any risk emerging as they will be empowered during contract performance.

In its financial analysis report, SCE proposed the municipal authority collect wastewater treatment fee of VND5,000 per cubic meter and impose the so-called infrastructure-connection charge of VND1 million per square meter of floor space on newly-developed construction works.

Without the charge on new buildings, the environmental project will remain feasible, but the costs of construction and operation will surge, said the consultant. However, if wastewater treatment fee is not collected, it will be difficult to carry out the project.

After listening to the report of SCE Consultancy, the city’s departments said many issues need to be clarified before the implementation plan is submitted to the city government for approval.

A representative of the Department of Planning and Investment asked the consultant to select the most viable plan, in which its pros and cons over other plans are clearly stated. The scheme must satisfy the requirements on expenditure and technology.

The representative stressed the consultant should pay attention to the capacity of the wastewater treatment plant, because there is already a similar plant in HCMC, which is funded by Japan.

Regarding the proposal on forming a company in charge of the project, city officials said the Steering Center of the Urban Flood Control Program had already been appointed as the project owner. As such, there is no reason to set up a company as another project owner.

The planning department suggested SCE should take into account lending term, interest rate and repayment schedule to map out an appropriate financial scheme. The consultant was asked to clarify the basis for charging wastewater treatment fee and prepare a collection schedule.

Under the commitment of the World Bank (WB), the first phase of the Nhieu Loc-Thi Nghe environmental hygiene project will be completed this month.

During the second phase of the project, an 8-km sewer line with a diameter of 3.2 meters will be installed to transfer wastewater from Nhieu Loc Canal to the treatment station in Thanh My Loi Ward in District 2. The second component is to build a wastewater treatment plant with a capacity of 480,000 cubic meters per day.

The feasible study of the project is conducted by SCE Consultancy at a cost of US$1.01 million.

The second phase of the Nhieu Loc-Thi Nghe project is estimated to cost some US$470 million, in which WB and the Asian Development Bank (ADB) will lend US$450 million and the city’s budget will provide the balance. The second phase will be executed from 2015 to 2019.

Bosch reports robust growth in 2011 business

Germany-based Robert Bosch Group obtained total revenues of US$220.5 million in Vietnam last year, up 75% from the previous year, mainly resulting from the export of push-belts, the company said on Tuesday.

Among the six business sectors in Vietnam, the sector of auto spare parts and accessories is the one having the highest sales growth of 160%.

Speaking at the press conference announcing the business results on Tuesday in HCMC, Vo Quang Hue, general director of Robert Bosch Vietnam Co. Ltd., said that this was the result of the domestic investments and the recruitment of more employees to expand operations in three big cities of Hanoi, Danang and HCMC.

“The firm’s net revenue last year rose by 75% against the previous year; this impressive figure results from a large number of orders the push-belt plant in Long Thanh received,” Hue said.

Going into operation last April, the plant will expand its annual capacity from 3.2 to 4.3 million continuously variable transmission (CVT) push-belts, which is a very important component in the automatic gearbox of vehicles.

According to Hue, the other five sectors also grew strongly in Vietnam. Specifically, the sales of the portable electricity devices grew 30%, and that of the security system was 20% thanks to the video system and huge projects such as Danang International Airport and Indochina Plaza in Hanoi.

Regarding the transmission and automation, Bosch has invested US$200,000 to develop a consulting and sales services center for its hydraulic equipment.

“This center will help boost the growth through the equipment supply for some important projects such as hydropower dams or tidal gates,” Hue said.

A high growth is also seen in the software and thermal technologies, the two new business sectors of Bosch in Vietnam, especially with the Robert Bosch Engineering & Business Solutions Vietnam located in the e-Town office building.

Officially inaugurated in May last year, this is Bosch’s biggest software center in Southeast Asia.

“We have 200 software engineers, which is a considerable figure after only one year of operation, and we will recruit 500 more engineers until 2015. These engineers will be able to work with Bosch’s best engineers to develop advanced products and provide information technology services,” he said.

Entering Vietnam in 1994, Bosch Group established its subsidiary Robert Bosch Vietnam based in HCMC and opened a representative office in Hanoi in April, 2008. The push-belt plant in Long Thanh Industrial Park came into operation in August, 2008.

Robert Bosch has also decided to pour US$63 million into the plant, and with this investment increase, the total investment Bosch has spent on this plant will be US$322 million, according to Hue.

Ministry considers offering private sector access to ODA

The Ministry of Planning and Investment is considering the engagement of the private sector in ODA disbursement but there is still no specific details on what business sector that they can join, said Minister Bui Quang Vinh.

The minister said on the sidelines of a press briefing on the Consultative Group meeting for Vietnam that kicked off in Quang Tri Province on Tuesday that “the ministry has made some amendments in Decree 131 to allow the private sector to engage in ODA disbursement.” The documents to this effect will be presented to the Government soon.

However, Minister Quang stated that this issue requires a careful approach as the move to let the private sector engage in ODA disbursement means private enterprises can use this source of state capital.

“Private investors use their capital resources efficiently but things will become different when they use state capital,” said the minister. He reckoned ineffective use of long-term ODA loans will cost the country more.

Economic experts suggested if the public-private partnership format is smoothly fleshed out so as to allow the private sector to access ODA loans, this would help boost ODA disbursement rate which currently remains low.

The move to engage the private sector in ODA disbursement is deemed ‘better late than never,’ said economist Le Dang Doanh. However, he said barriers remain for the private sector to take out preferential ODA loans as it is still hard to access bank loans at current time.

Regarding the hot issue of Denmark putting on hold new funds for three ODA projects in Vietnam due to misuse of funds, Minister Bui Quang Vinh confirmed to the media that the donor has not made a formal decision on choking off the fund, and competent agencies are tracking every wrong-doing.

At the meeting on Tuesday, the donors mainly discussed poverty reduction and disaster mitigation solutions for the Central region during the dialogue. Victoria Kwaka, country director of the World Bank for Vietnam, said the event aimed to create discussion among the central government, local governments and donors.

Deputy Prime Minister Hoang Trung Hai suggested foreign donors to continue supporting Vietnam in developing its socio-economic strategy and he pledged to strengthen the fight against corruption.

 
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