Ca Mau Petroleum Fertilizer to increase 2017 sales by 10%

The Ca Mau Petroleum Fertilizer Joint Stock Company (HoSE stock code DCM) has released its 2017 business plan.

Sales of commercial urea are estimated at 752,000 tons, new products of all kinds 30,000 tons, and fertilizer trading 75,000 tons, with total revenue of VND5.3 trillion ($232.4 million), an increase of 10 per cent against 2016. DCM exported 75,725 tons of urea with sales reaching VND411.2 billion ($18.03 million) to Cambodia in 2016, up 89.8 per cent against 2015.

The parent company targeted total revenue of VND5.3 trillion ($232.46 million), after-tax profit of VND633 billion ($27.76 million), and a dividend payout of 9 per cent.

DCM also announced its results for the first two months of 2017, when it produced 153,000 tons and consumed more than 120,000 tons of raw materials. In 2017 it expects to export about 80,000 tons of urea to Cambodia while also exporting other products to the neighboring country, such as NPK and DAP under the Ca Mau fertilizer brand.

In addition, the company’s Board of Directors also expects total investment capital in 2017 to be around VND540.5 billion ($23.68 million) for the procurement of assets, equipment, and capital construction. Capital for investment will use about VND288.6 billion ($12.65 million) of equity capital, with the remainder coming from loans and other sources.

DCM’s total bank debts as at December 31, 2016 were estimated at VND6 trillion ($263.9 million), VND1 trillion ($ 44 million) less than its equity. Fixed asset depreciation is nearly VND1.3 trillion ($57.1 million) per annum and the company has about VND3 trillion ($131.6 million) in savings and bank deposits of VND2.3 trillion ($100.9 million) in the form of short-term financial investments.

DCM’s share price closed at around VND11,000 ($0.48) on March 13.

Hoa Phat targets 1mn tons of feed annually by 2020

The Hoa Phat Group (HPG) is to speed up its agriculture operations to produce 1 million tons of animal feed and 300 million eggs annually within the next three to five years.

Chairman Mr. Tran Dinh Long told the Group’s annual shareholders meeting for 2017 that from now to 2020 it will continue to maintain its leading position in the steel market, where it holds a domestic market share of 25-30 per cent, and enter the Top 10 in the animal feed market.

It agricultural operations currently account for only a small proportion of its revenue and profits, at about 4.4 per cent and 0.4 per cent, respectively.

Regardless, HPG has been developing strongly in the field under a 3F model: “Feed - Farm - Food”.

HPG now has two feed mills with total capacity of 600,000 tons per year in northern Hung Yen and southern Dong Nai provinces. It is pushing ahead with the construction of a third feed plant in northern Phu Tho province with a capacity of 300,000 tons per year.

The steel producer targets producing 1 million tons of feed per year, raising 650,000 pigs and 75,000 heads of cattle per year, and producing 300 million clean chicken eggs per year. 

Mr. Long also revealed plans to issue an additional 250 million unrestricted shares in the second quarter of this year to existing shareholders at a ratio of 5:1, with those holding five shares being entitled to buy one new share.

The asking price is yet to be made public and will be decided later by the Group’s Board of Directors (BoD) at the issuance date, based on the book value and the share’s market price. The asking date will be set after the Group pays out its 2016 dividend via a share issuance and receives State Securities Commission (SSC) approval.

Other than the share issuance, Hoa Phat has also proposed to shareholders a 2016 dividend payout. If approved, the two moves would see the Group’s charter capital increase to VND15.14 trillion ($664 million), or 1.8 times higher than its current level.

The Group has recently adjusted its business targets this year, with turnover and after-tax profit of VND40 trillion ($1.75 billion) and VND6 trillion ($263.2 million), respectively.

In 2016, HPG’s revenue reached VND34 trillion ($1.4 billion) and after-tax profit VND6.6 trillion ($290.4 million), up 34 per cent and 89 per cent, respectively, compared to 2015 and its best results to date.

Sacombank to hold AGM on April 28

After not holding an annual general meeting (AGM) last year, Sacombank will hold its 2017 AGM on April 28 in Ho Chi Minh City, with its Board of Directors (BoD) expected to have seven members in the 2017-2021 period.

The new Supervisory Board is expected to consist of four members, up from three, while the next BoD is expected to remain unchanged in number, with one independent member and at least half of members not participating in or managing the bank’s daily operations. The specific number, however, will be decided at the meeting.

The AGM will discuss profit distribution plans for 2015 and 2016 while reviewing the bank’s business performance over the last two years. Key business targets for 2017 will also be revealed. The deadline for submitting nominations for open positions is no later than April 10.  

At an average price of VND10,900 ($0.48) per share, Chairman Mr. Kieu Huu Dung spent some VND3.3 billion ($144,000) on acquiring his first 300,000 Sacombank shares on March 3 after being in the position since 2014.

In recent changes to the bank’s BoD, Mr. Tram Be and his son Mr. Tram Khai Hoa resigned as members of the management board on February 24, which was part of a government plan to reform the banking system, the State Bank of Vietnam (SBV) said.

The Ho Chi Minh City-based Sacombank is the country’s fifth-largest partly-private bank in terms of total assets, which were estimated at VND290.86 trillion ($12.77 billion) after it merged with Phuong Nam (Southern) Bank in 2015, with the central bank taking over all Sacombank shares owned by then Deputy Chairman Mr. Be.

Post-merger, Mr. Be authorized the Vietnam Asset Management Company (VAMC) to take over his entire holdings and those of related shareholders in Sacombank if the lender was to be consolidated. This authorization was conducted upon the SBV’s request. 

“Mr. Be and related parties have the responsibility to continue resolving outstanding issues at Sacombank in accordance with existing laws,” the central bank statement said.

The bank’s business performance has experienced a downturn after being merged with Southern Bank in 2015. It recorded pre-tax profit for 2016 of just VND531 billion ($23.4 million), down 64 per cent year-on-year, and after-tax profit of VND372 billion ($16.4 million). Its charter capital remained at VND18.85 trillion ($832.6 million) as at December 31, 2016.

Total assets stood at VND333.3 trillion ($14.7 billion) at end-2016, up 14 per cent from the beginning of the year. Customer lending was VND198.8 trillion ($8.8 billion), up 6.9 per cent, while customer deposits reached VND291 trillion ($12.85 billion), up 11 per cent.

In January, Sacombank was named one of the top five banks to undergo restructuring in 2017, together with the four banks the central bank acquired at a price of zero Vietnam dong in 2015: VNCB, PG Bank, Ocean Bank and Dong A Bank.

Mr. Dung declared that Sacombank is not a weak bank, pointing out that it still leads the commercial group. He also revealed that many potential investors are keen to lend a hand to address the consequences of the Southern Bank merger and, in the meantime, the bank’s restructuring plan is to be submitted to the central bank. 

In the latest news, the restructuring plan for five weak banks has been submitted to and approved by the Politburo. The SBV encourages mergers and acquisitions (M&As) for weak credit institutions on a voluntary basis with relevant rights for both parties assured. This will become compulsory, however, if the institutions do not volunteer. 

Vietcombank offers to finance Tan Son Nhat expansion

Vietcombank has proposed it finance all of the lending needs of Airports Corporation of Vietnam (ACV) in expanding capacity at Ho Chi Minh City’s Tan Son Nhat International Airport, in the form of independent financing or focal arrangement of capital.

Vietcombank Chairman Nghiem Xuan Thanh said that the expansion is a key project that will not only bring about higher economic efficiency but also many socio-political benefits.

According to a proposal from the Civil Aviation Administration of Vietnam, Tan Son Nhat will be expanded from 574 ha to 612.2 ha by reclaiming land now used for a golf course and defense to build new railway stations at terminals T3 and T4, widen aircraft aprons, and improve road access.

The total cost of the expansion is some VND19.35 trillion ($848.6 million), with State capital to be mobilized for the airport works and the remainder to be financed by private investors and ACV.

Vietcombank saw 2016 after-tax profits surge 28 per cent while its bad debt ratio was kept at 1.48 per cent as at December 31, its consolidated financial statement for the fourth quarter of 2016 reveals.

Pre-tax profit stood at VND2.2 trillion ($97 million) in the fourth quarter, for VND8.5 trillion ($377.5 million) during the year as a whole, up 24 per cent against 2015. After-tax profit reached VND6.85 trillion ($303.3 million), up 28 per cent.

Air Asia offers 3 million tickets at VND0

The low cost airline Air Asia is offering three million tickets costing at just VND0 on all its routes from March 13-19. 

The special price will be applied for flights departing from September 1, 2017-June 5, 2018, excluding taxes and fees.

The carrier also announced its new cabin baggage policy designed to eliminate the excessive number of bags carried onboard, overcrowding aircraft cabins.

Passengers can travel with a cabin baggage that must not exceed 56cm x 36cm x 23cm including handles, wheels and side pockets; and one piece of  laptop bag, handbag, backpack or any other small bag that must not exceed 40cm x 30cm x 10cm. The total permitted weight for two pieces must not exceed 7kg.

Seminar on business networking with Japan slated for September

A seminar will take place next September with an aim to connect enterprises from the Japanese prefecture of Hiroshima and the Mekong Delta region, said Sato Yoshio, director of Hirosima’s Department of Commerce, Industry and Labor.

The seminar will be organized by authorities from Hiroshima in partnership with the Southwestern Steering Committee, and the Mekong Delta provinces of Soc Trang and Can Tho.

At a meeting with the steering committee in Can Tho City on March 13, Yoshio said the event would help enterprises build business links in the field of environment.

Tran Huu Hiep from the Southwestern Steering Committee told the meeting that the sides should present specific projects for in-depth discussions in an effort to promote cooperation among enterprises from the two countries. 

The seminar is expected to discuss related contents on environmental survey, wastewater treatment, solid waste treatment, and recycled organic fertilizer production, Sato Yoshio added.  

At local level, Dao Anh Dung, vice chairman of Can Tho City, said the locality is in need of modern equipment for sludge and waste treatment apart from the demand for wastewater treatment at tra (pangasius) fish farms, and for waste treatment in pig farming.

Prior to the seminar, a Vietnamese delegation including representatives of the committee, leaders of the two provinces of Can Tho and Soc Trang and relevant agencies will make a fact-finding trip to Japan’s Hiroshima next June to look into environmental technologies of enterprises there.

Local mid-level business leaders trail behind global peers by 15 years

Mid-level business leaders in Vietnam need five to 15 years to adapt to regional and global leadership skills, said Human Capital Leadership Institute under Singapore Institute of Leadership Management in HCMC last Friday when announcing the “Leadership Mosaics across Asia” study conducted among 165 business leaders in nine Asian countries.

Most of the 50 business leaders attending the announcement ceremony accepted the conclusion of the study, and discussed how to raise the leadership capacity for Vietnamese entrepreneurs to catch up with other countries in the era of international integration.

"It is never easy to own a business, especially for those leaders who want to expand their business operations overseas. Domestic business leaders need to find and make the most of opportunities to exchange with regional and international organizations, and systematize internal working procedures to meet international standards,” said Tieu Yen Trinh, CEO of Talentnet.

Other business leaders including Praneeth Yendamuri, managing director of Kimberly-Clark Vietnam, and Pham Hong Hai, CEO of HSBC Vietnam, agreed that to catch up with the fast pace of international integration, domestic enterprises should improve their internal strength before going global.

To ensure sustainable development, enterprises need to have timely training plans for the next generation of leadership which requires lots of efforts and investments.

According to several CEOs, the roadmap for potential leaders to meet global standards has fundamental steps such as creating opportunities for young leaders to interact with international culture and working environment as soon as possible, sharing success stories to set examples for them, trusting and giving them chances to innovate.

Hai of HSBC Vietnam said cultural differences will not be an obstacle if domestic business leaders maintain their forward-looking and sincere attitudes when working with foreign partners.

“The leaders should step out of their comfort zones by actively taking part in exchange activities and short-term training courses in foreign countries,” Hai suggested.

"With numerous trade agreements that have or are to be signed, Vietnam is spurring integration into the global economy, meaning that Vietnamese businesses are facing a lot of opportunities as well as challenges. For better adaptation, they should enhance corporate governance and professional management, improve skills for staff, and increase the business scale. The model of multicultural leadership in multinational companies is a good example for them," Praneeth Yendamuri said.

An Gia, Creed Group acquire Lacasa project

An Gia Investment and Creed Group of Japan on Sunday announced they had completed the acquisition of seven blocks of the Lacasa complex in HCMC’s District 7 from Van Phat Hung Group.

An Gia Investment bought two blocks in March 2015, and now in collaboration with Creed Group of Japan, it continued acquiring the remaining five blocks in the second phase.

This is the sixth mergers and acquisitions (M&A) deal that An Gia has concluded in recent years.

This six-hectare project includes 2,000 apartments and officetels with a total investment of about VND3.5 trillion, or roughly US$160 million. The project is rated as a mid-end property, with 3.5 hectares of land for construction, including about 7,000 square meters of water surface and landscape.

In a press release issued on Sunday, Luong Sy Khoa, vice president of An Gia Investment, said that after the acquisition of projects, An Gia Investment will improve the design, add more utilities, and adjust prices. These methods were applied successfully to five previous M&A projects.

Creed Group has committed to invest US$200 million in An Gia Investment. Both sides are stepping up the acquisition of property projects. Recently, these two companies have cooperated with Phat Dat Real Estate JSC to restart the River City project. The 11.25-hectare project is expected to be handed over to homebuyers in 2019.

Prior to Creed Group's participation, An Gia Investment had also acquired a number of half-done projects. The Garden project in Tan Phu District in HCMC is an example. The project bought from Nakyco Investment Ltd Co was handed over to customers in June of 2016. Similarly, Angia Star project in Binh Tan District bought from Tan Binh Construction JSC is expected for completion and handover to customers in the second quarter of 2017.

Sugar import quotas in 2017 to be auctioned

The Ministry of Industry and Trade will likely put up for auction the quotas for importing 89,500 tons of sugar this year.

The ministry is currently seeking comments on the draft circular on auction of sugar import quotas in 2017 before the official promulgation. Accordingly, the content of the draft does not change much compared with Circular No. 07/2016/TT-BCT on auction of quotas for sugar import in 2016.

Specifically, the auction of sugar import quotas in 2017 will be conducted through a council. Entities allowed to participate in the auction include traders directly using sugar as raw material for production, and traders using crude sugar for refining.

The sugar import quota auction in 2016 took place at the office of the Ministry of Industry and Trade on September 7, with 22 valid dossiers, including eight from traders using crude sugar to produce refined sugar and 14 from traders using refined sugar as production material.

Three of eight companies won the bid to import 40,000 tons of raw sugar while eight of the 14 other companies won the bid to import 45,000 tons of refined sugar.

Dairy firms to get back to price declaration practice

Enterprises will announce their product prices and authorities will oversee what is declared by dairy processors after the price caps on dairy goods for children under six years old fall due on March 31.

The shift from price ceilings to price declarations falls in line with the Law on Price, Decree 177/2013/ND-CP and Decree 149/2016/ND-CP which amends some articles of Decree 177. When the State does not apply price registration measures, the items subject to price stabilization (including milk powder for children under six) must be subject to the price declaration practice, said Vo Van Quyen, head of the Domestic Market Department under the Ministry of Industry and Trade.

The next job for the trade ministry is to issue guidelines for price declaration, similar to how the Ministry of Finance released Circular 56/2014 guiding Decree 177 when this agency was still in charge of dairy product prices.

The document is expected to come out this month, a source told the Daily.

The Ministry of Industry and Trade states on its website that its policy is to let dairy companies decide on their retail prices and make declarations (in case no price stabilization measures are adopted) or price registrations (in case of price stabilization) with the trade ministry.

On the basis of price declaration (or registration), the ministry will do an evaluation and inform local authorities of such prices for monitoring at the retail stage. No store is permitted to sell dairy products at prices higher than declared or registered by enterprises.

This management method is said to help control quality and price, and thus determine the responsibility of producers in case of violation.

In another development, some dairy enterprises said representatives of the Ministry of Industry and Trade had come to work directly with their companies and gathered input for the measures for managing the dairy market.

HCMC frets about Long An power center

A US$5-billion thermo-power center project with a total capacity of 2,800MW to be built in Long An Province has caused anxiety among HCMC authorities who point out that pollution might spread to the city as the project site is in close proximity to the nation’s largest economic center.

The Ministry of Industry and Trade is currently collecting comments on selection of a site for the power center, either Long Huu Dong in Can Duoc District or Phuoc Vinh Dong in Can Giuoc District, the latter is separated from HCMC by a river.

Long An Province and relevant agencies prefer Phuoc Vinh Dong in Can Giuoc District. Long An said at a meeting with the ministry that this location is most suitable for the thermal power center as it is well aligned with the province’s master zoning plan. 

The Ministry of Transport also opted for this site, which is the only one in the province accessible by vessels of up to 50,000 tons. This idea was also upheld by the General Department of Energy at the meeting.

Meanwhile, HCMC expressed concern that air pollution would affect HCMC since the proposed location is on the right bank of the Soai Rap River, the border between HCMC and Long An.

The HCMC government pointed out high environmental risks from dust emissions, coal fly ash and wastewater discharge, even if high technology might be applied at the coal-fired power center.

Also, the proposed site is located between canals, causing environmental pollution to the Hiep Phuoc port complex that has been zoned to become a Grade-1 urban coastal city. Besides, the project might affect the ecological environment of Can Gio District, which is seen as the green lung of the city.

In addition, the city government noted waterways around the suggested site in Phuoc Vinh Dong Commune in Can Giuoc District are narrow, so construction and operation of such a huge power center there would adversely affect waterborne transport.

The Ministry of Natural Resources and Environment said the Long An thermal power center in Phuoc Vinh Dong Commune should take into account environment factors, especially the protection of the aquatic ecosystem.

The Long An power center is included in the national power development master plan up to 2030. The project, currently in the initial stage of site selection and study, is expected to be constructed and put in operation from 2024 with a total capacity of 2,800MW with two power plants, supplying about 17.7 GWh per year to the national grid to help solve power shortages in the south.

Hanoi packaging & label printing expo welcomes 7,000 visitors

The eighth edition of a packaging and label printing expo in Hanoi has thrown open its doors at the International Exhibition Centre ICE in Hanoi with an estimated 7,000 visitors expected to attend the 3-day event.

This year, 100 local and international companies will introduce to the Vietnam market the latest in label printing equipment including digital UV inkjet label presses and white bar digital UV inkjet printers, said Huynh Vinh Ai, deputy minister of Culture, Sports and Tourism.

The digital UV inkjet label presses allow for label printers to produce visually striking, tactile, three-dimensional digitally printed textured labels that enhance shelf presence and make brand owners’ products stand out from the crowd.

He noted they are ideal for a variety of segments – including wine, beer, as well as cosmetics and beauty, representing a cost-effective way to create labels with high visual and ‘feel appeal’ that also help to maximize customer engagement.

Business environment still receives complaints

Commenting on the business environment after one year of implementing Resolution 35 on business support and development, enterprises said few actual changes had been seen.

Nguyen Van Be, chairman of the HCMC Association of Enterprises of Industrial Parks, Export Processing Zones and Hi-Tech Parks, said a number of State agencies had changed since the issuance of Resolution 19 and Resolution 35, yet many circulars and decrees remained the same as before.

Some agencies have even “given birth” to more administrative procedures, which are essentially a sub-license that makes life harder for enterprises, he said at the meeting of the Southern Business Association on the implementation of Resolution 35 last Friday.

Tran Ngoc Han at the Food & Beverage Committee of the American Chamber of Commerce in Vietnam (AmCham) said there were a number of legal documents and regulations still going against the spirit of Resolution 35.

Article 3 of Decree 38/2012/ND-CP stipulates processed food and raw materials for production must be declared to be conforming to regulations and standards prior to their circulation on the market. This is not consistent with the Law on Food Safety (which this decree provides guidelines for), causing overlaps and difficulties for enterprises.

Circular 50/2015/TT-BYT specifies drinking water suppliers must perform a couple of tests at least once a week, while the national technical regulation only asks for this to be done once a month. This rule costs some businesses up to VND500 million per year.

“We are ready to provide proof. This is contrary to the spirit of cost reduction for enterprises in Resolution 35,” she said.

Tran Du Lich, an arbitrator of the Vietnam International Arbitration Center (VIAC), said the recent administration reforms demonstrated the Government actually sought to change their thinking and behavior towards the business community. However, as the law of Vietnam is “ambiguous”, the executives still have to practice prudence to protect themselves and avoid future consequences.

Tran Ngoc Liem, deputy director of the HCMC branch of the Vietnam Chamber of Commerce and Industry (VCCI), said the determination of the Government was strong but there had been few actual changes as a number of State agencies had remained passive and the supervision and guidance of implementation had been still limited.

Lawyer Truong Trong Nghia, a National Assembly deputy of HCMC and a VIAC arbitrator, stressed many issues had been brought up over and over for years and the urgent need now was to turn words into actions.

In this context, business associations must enhance their roles in policy reviews and their participation in the law-making process, he said. It is because there are a lot of things that only enterprises and business associations, who are directly engaged in business in their respective fields, comprehend the problems and have a different view from management agencies.

VCCI is gathering opinions from the business community on the implementation of Resolution 35 to report to the Government. It is expected that Prime Minister Nguyen Xuan Phuc will meet the business community in late March or early April to find ways to improve the business environment.

Multiple barriers challenge PPP projects

Investors and officials have pointed out a slew of barriers to projects implemented under the public-private partnership (PPP), which is touted as an important channel to mobilize capital from the private sector for infrastructure projects.

Inconsistent legal documents and the lack of a clear legal framework are among the major hindrances that investors pinpointed at a seminar in HCMC last Friday. The Ministry of Planning and Investment held the event to collect comments on draft amendments and supplements to the Government’s Decree 15/2015/ND-CP on PPP investment and Decree 30/2015/ND-CP guiding the execution of the Bidding Law.   

Officials of the Department of Planning and Investment in provinces and cities were of the opinion that the status of legal documents regulating PPP projects is no more higher than Government decrees, so the projects are affected by different laws at the same time, including the laws on enterprise, bidding and public investment.

Investors were also concerned about the ad hoc nature of policy changes for PPP projects, pointing out that such projects were long-term but relevant policies were constantly adjusted after several years. The change not only hits investors but also makes officials confused when implementing the revised policies.

A representative of the Khanh Hoa Department of Planning and Investment said it is difficult to use various decrees to deal with an issue. For example, Decree 108/CP regulates how the investor of a project is picked 30 days after the project is made public and the feasibility study of the project is not required, and a company is appointed the investor if it is the only one interested in the project. However, Decree 30/CP clarifies the investor is selected only after the feasibility study is approved.

After a list of projects is announced to call for investors, it usually takes a long time, possibly up to two years, for a project to have the feasibility study completed. As regulations change, such a length of time may cause problems.

The representative of Khanh Hoa said that in such circumstances, only projects whose investors had been approved or contracts initiated before Decree 15/CP took effect are exempt from the investor selection process. This is why Khanh Hoa Province had to seek the Prime Minister’s nod for implementation of the projects whose investors were previously named in line with Decree 108/CP, which is a troublesome process.

Both the State and private investors have difficulty completing necessary procedures for PPP projects, especially procedures for project supervision, handover-and-acceptance, quality management, operation and policy incentives. 

The bidding management department at the ministry admitted that most of ongoing PPP projects were being done during the transitional stage of applying the two decrees. Meanwhile, projects subject to the new legal framework, i.e. Decree 15/CP, are still in the phase of carrying out initial preparations and the feasibility study, and selecting investors.  

Tran Viet Dung, head of the PPP office at the bidding department, said PPP investment must follow many laws and is overlapping with other investment forms, making it hard for State agencies to decide investment forms. 

Dung said the weak capacity of officials in charge of PPP projects, budget constraints and short-term loans are among the barriers to the implementation of the projects.   

The Dong Nai Department of Planning and Investment bemoaned problems with human resources for PPP projects. Contractors should be picked through international tenders for PPP projects capitalized at VND120 billion (over US$5.26 million) or higher, but few officials at the department are fluent in English and none of them can understand well the bidding regulations on PPP projects. Therefore, the agency will not have any official proficient in the language to handle international tenders for PPP projects.

Representatives of other localities said they have to deal with the same problem with most PPP projects which are huge in terms of investment capital.

Investors of PPP projects are required to propose the cost of site clearance for land they bid for, while the prevailing regulations specify site clearance is the responsibility of State agencies.

Investors at the seminar asked whether entities appointed by the State to provide essential public services for PPP projects are considered a party to sign contracts with private partners in the projects or not.

They also discussed capital problems for the projects because medium-term public investment plans of ministries, agencies and localities normally do not include State capital allocation for PPP projects. On top of that, it is hard to take out loans for PPP projects.

Delegates at the seminar also called for the Government to create a favorable legal framework for contractors of the projects to gain access to long-term external loans.

Troubled waters

The People’s Court in Hanoi City suddenly called off the hearing of the OceanBank corruption case on Tuesday, nearly two weeks after its opening, and the judges ordered investigative agencies to gather more evidence to clarify violations in the case. Initial findings at the hearing, however, reveal how irregularities have taken place in the banking industry given the loose supervision by the monetary regulator, and how certain leaders of State enterprises have managed to fish in troubled waters.

The hearing began on February 27 to look into accusations of “violating regulations in credit organizations’ lending activity; abuse of power on public duty; and intentional violations of State regulations” that occurred at OceanBank that caused huge losses of State assets, especially the loss of VND800 billion in paid-in capital as a stake held by Vietnam Oil and Gas Group (PVN) in the bank. Numerous illegal tricks have been uncovered during the court hearing.

As reported in local media, irregularities took place at the bank during a long period since 2009. Court documents point out that as the bank wanted to boost capital mobilization, Ha Van Tham, the then chairman, colluded with then CEO Nguyen Xuan Son of the bank to offer extra interest under the counter on top of the highest permissible interest rate set at 14% a year by the central bank for all major depositors. The extra interest was not stated in the deposit certificates and between 2010 and November 2014, the total sum used to pay extra interest under the counter amounted to as much as VND1.6 trillion, or roughly US$80 million based on the then exchange rate, Tuoi Tre reports.

Since the State Bank of Vietnam’s ceiling interest rate regulation at the time was legally binding, and any breach of the rule would lead to harsh penalties, OceanBank leaders managed to find legal loopholes to pay extra money for its privileged customers. Ha Van Tham established a company named BSC Vietnam, which provided services for those people wanting to take out loans from OceanBank. The fees charged on such customers contributed to a fund used to pay extra interest.

Nguyen Xuan Son, a representative of PVN who was sitting on the board of the bank and serving as OceanBank CEO, took VND69 billion from BSC, which was a sign of abusing power to appropriate assets, says Vietnamnet.

Between 2011 and 2014, hundreds of organizations and thousands of individuals had received huge extra interest from OceanBank. Therefore, the court decided to halt the hearing to find out who benefited from the illegal interest rate policy of the bank, Vnexpress reports, referring to the court’s decision. The court’s judges suggested that “there are signs such organizations conspired with OceanBank to receive those sums as illegal gains,” according to Tuoi Tre.

Despite the court’s documents lay special emphasis on the illegal interest rate policy at OceanBank, Nguyen Xuan Son denied such policy, explaining that extra interest payments were part of the bank’s customer care program.

A big question that the court wants to look into is the list of individuals and organizations benefiting from this interest rate policy, and this is also the key reason behind the decision to call off the hearing.

As the case unfolded at the hearing, all the extra interest sums were not stated in the deposit contracts, nor manifested in any book-keeping documents of organizations that deposited money at the bank. That means such huge interest sums may have been taken by certain individuals at such organizations.

The news magazine Thoi bao Kinh te Sai Gon remarks that the illegal practice of paying extra interest under the counter was commonplace a few years back. To find a legal reason to pay it, banks could sign other bogus contracts with special customers, such as money dealing or gold trading contracts, whereby such banks always incurred losses and customers earned profits. Such profit was in fact the extra interest for customers.

At the court, several defendants blamed the central State Bank of Vietnam’s inspectors for their failure to prevent such practices, according to Tuoi Tre. The central bank’s inspectors should have warned OceanBank of the illegal practice when paying extra interest. Defendant Nguyen Thi Nga, former chief accountant at OceanBank, even “accused” the State Bank of Vietnam for confusion in their policy, according to Tuoi Tre.

According to Thoi bao Kinh te Sai Gon, the illegal practice was known to many bankers at the time, and was nothing strange or abnormal. What is abnormal in the case of OceanBank is so many subsidiaries of PVN deposited money at this only bank.

“Not only one, two or three companies (under PVN), but scores of its subsidiaries have maintained tens of trillions of Vietnam dong in their OceanBank accounts,” says Thoi bao Kinh te Sai Gon. According to the paper, the big question is why such companies chose OceanBank to deposit money while the ceiling interest rate was the same at 14% at all other banks, many of which were far bigger and much more prestigious than OceanBank.

The public is awaiting an answer from the court, ponders Thoi bao Kinh te Sai Gon.

The court hearing will resume when evidence of irregularities is further gathered, and culprits are convicted. But the case is also a wake-up call. In the case of OceanBank, many have fished in troubled waters, so the central bank as the supervisor of credit organizations must ensure that such troubled waters cannot exist.

La Residence Hue appoints two new managers

La Residence Hotel & Spa, one of Vietnam’s acclaimed hospitality properties, has hired two new managers to head up operations and manage sales.

Adrien Marie has joined the hotel as operations manager, and Huynh Xuan Hanh comes aboard as director of sales. Each reports directly to general manager Phan Trong Minh. Marie will be based on site in Hue, and Hanh will work out of HCMC.

The additions come at an auspicious time for the Sofitel MGallery property, which in November won placement on a list of Southern Asia’s top hotels in Condé Nast Traveler’s Readers’ Choice Awards for the second year in a row.

Marie relocates to Hue from Beijing where he worked in sales and business development at the Sofitel Wanda. Prior to those appointments, he worked at hotels in his native France and in the United States. He was educated in Paris, Chicago and Berkeley.

Hanh has worked at a number of leading hospitality concerns across Vietnam, including Vinpearl, the Sofitel Saigon Plaza and the Renaissance Riverside Hotel Saigon. She also worked as a relationship manager at HSBC Bank. Hanh studied physics and accounting in college.

Are we ready after Kong?

A phenomenon has been seen just days after the movie “Kong: Skull Island” was premiered last Friday. Hundreds of thousands of locals have rushed to cinemas and the number is expected to shoot up to millions in the next few days.

It is reported that as of the end of last Friday, up to 163,000 tickets had been sold in Vietnam, generating total box office revenues of VND18.2 billion and setting up an unimaginable record for a movie in the local market.

It is also estimated by international media that the film could have fetched as much as US$47 million worldwide after the weekend, with the United States, Russia and South Korea said to be contributing the most.

The movie has immediately become a success story for the filmmaker, so to say. But it also leads to a big question as to what Vietnam should do to benefit from the positive ripple waves that the film has sent.

The movie shows numerous magnificent sceneries in Vietnam, especially Quang Binh, Ninh Binh and Halong Bay, all endowed with lots of magnificent natural sites like ponds, caves and grottos. Spectators enjoying the movie may be lost in admiration of the beauty of nature, and it is apparent that many from around the world might be incentivized to make a trip to Vietnam to eyewitness those places. That is a huge opportunity for the local tourism sector.

On the day the movie was premiered, the Ministry of Culture, Sports and Tourism swiftly named the movie director Jordan Vogt-Roberts as tourism ambassador to Vietnam. In Tuoi Tre, Nguyen Van Tuan, head of the Vietnam National Administration for Tourism, says there will be a tour taking in the three destinations of Quang Binh, Ninh Binh and Quang Ninh.

Similarly, scores of tour operators have quickly grabbed the opportunity by launching new tours to the sites to offer visitors chances to experience such beautiful sites first-hand. The movie, therefore, is undeniably a strong boon for local tourism.

However, to make the most of the special effect that the movie has created for local tourism, new tours alone to tap such sceneries alone are not enough.

Quanh Ninh, Ninh Binh and Quang Tri should quickly map out concrete plans to develop tourism infrastructure to cater to tourists, if they are to pursue sustainable development, if they are to enhance the merits of their tourism treasures, and if they are to lure tourists back after such first visits. National authorities should also lend a helping hand to this effort, now that “Kong: Skull Island” has become an invaluable vehicle to tap into the country’s tourism potential.

Over a decade ago, when it was learned that the total solar eclipse was best observed in Phan Thiet in the coastal province of Binh Thuan, tens of thousands of people rushed there to watch the phenomenon. Business-minded people saw this as a huge chance, and hundreds of resorts sprang up there afterwards, making Binh Thuan a prominent destination like now with annual revenue of some VND10 trillion. The special effect from “Kong: Skull Island” could be greater, but the question is whether we are ready to go after Kong.

VCCI set to announce PCI

The Vietnam Chamber of Commerce and Industry (VCCI), in collaboration with the U.S. Agency for International Development (USAID), today announces the annual Provincial Competitiveness Index (PCI) for 2016.

This will be VCCI’s twelfth release of the PCI which shows how competitive the country’s 63 provinces and cities are based on a set of indicators.

According to VCCI, the 2016 PCI survey received feedback from 10,037 private enterprises nationwide, including 2,042 established between 2015 and 2016 and 1,550 set up in 14 provinces and cities by foreign investors from 46 countries and territories.

In addition to the PCI rankings, the report this year has a chapter to assess Vietnam’s business environment in the eyes of investors.

In particular, the report includes a chapter on enterprises’ perceptions of environmental issues.

Investors advised to stay cautious

Securities enterprises have advised investors to take caution because market turnover has soared in recent times, leading to a possible deep correction in near future.

Nguyen Hong Khanh, head of analysis at Sacombank Securities Company, said that steel stocks attracted a large amount of capital in 2016 with most investors obtaining positive earnings. This year, construction and real estate firms have drawn the most attention alongside stocks in the banking, rubber, services and petroleum sectors.

Many stocks have bounced back and strongly attracted investment such as TTF, OGC, FLC and ITA. Market turnover has doubled in a short period, suggesting high margin ratios and possible correction. Therefore, investors should be cautious, Khanh was quoted by as saying.

Chau Thien Truc Quynh from Viet Capital Securities Company classified the current favorite stocks on the market into three groups. The first includes State-owned and large companies like Petrolimex, VEAM and Thaco that are going to list on the official exchanges. These stocks grow fast but expose high risks as the listing dates remain unknown.

The second group is newly-listed outstanding firms like VJC and the third includes speculative stocks expected to be picked by exchange traded funds (ETFs) such as ROS, DXG, HBC and CII. The stocks often rise sharply before ETF quarterly rebalancing but they suffer strong selling pressure upon official announcements of portfolio restructuring results.

After hovering just below a nine-year high last week, the VN-Index fell 0.5% on Friday at 712.21, ending the week down slightly for a consecutive second week of losses. GAS dropped 4.8% during the week to a 10-month low after Brent crude prices had extended a two-day 6.8% pullback in overnight trading.

Van Eck Vectors Vietnam ETF (VNM ETF) last week announced it will add NVL with a ratio of 7% to its MV Index Solutions while removing ITA, whose weight was 1.62% on March 9. Listed on the HCMC in late 2016, NVL had jumped 13% at VND68,000 each share last Friday with trading volume averaging out at 1.3 million shares each session.

The combined weight of Vietnamese stocks in the portfolio was reduced to 73.32% compared to 76.78% at the previous rebalancing period, prompting VNM to sell 3.3% this week.

According to, the ETF is expected sell US$4.64 million worth of ITA shares, US$2.96 million of SSI shares and US$2.85 million of BVH shares. Meanwhile, it would buy US$20.02 million worth of NVL shares, US$1.83 million of VNM shares and US$230,000 of VIC shares.

Vietjet Air wants to upgrade Chu Lai Airport

Vietjet Aviation Joint Stock Company (Vietjet Air) is seeking the Ministry of Transport’s permission to carry out a project to upgrade Chu Lai Airport in Quang Nam.

The low-cost carrier proposes the ministry grant approval in principle for it to do a pre-feasibility study for development of a passenger terminal with an annual capacity of 4-5 million passengers, says a report by Vietjet to the transport ministry last week.

Vietjet has joined hands with the U.S.’s Parsons Corporation to map out a plan for upgrade of Chu Lai in four phases.

In the first phase until 2020, the terminal will be built with an annual capacity of 4-5 million passengers. The existing runways and parallel taxiways will be expanded to handle large aircraft.

The passenger terminal will get a facelift to achieve an annual capacity of 8-10 million passengers a year during phase 2 (2020-2025). In this stage, the apron will be expanded, and a hangar, a cargo station and a logistical area will be developed.

During phase 3 (2025-2030), two other hangars will be built, with an accompanying system of taxiways and parking slots. The cargo station will be further expanded in this period.

For the last phase (after 2030), Vietjet proposes construction of a new runway to the east and the second passenger terminal with a capacity of 10 million passengers per year, along with new hangars, cargo terminal and logistical area in the northwest.

If approved, Vietjet will start work on the passenger terminal right in the third quarter of 2017 and put it into operation in late 2018 to meet the urgent need of passenger transport demand.

The airline proposes Chu Lai Airport be developed under a business cooperation contract (BCC). Vietjet looks to become the major investor of this project and select a few suitable components for investment, while the rest will be assigned to other qualified investors.

The Department of Planning and Investment under the Ministry of Transport believes the proposal of Vietjet, if approved, could affect the equitization plan of the Airports Corporation of Vietnam (ACV) that has already received the nod. ACV is currently the owner of this airport.

Another problem is that Chu Lai Airport is currently planned as a cargo transshipment hub rather than a passenger terminal, but the proposal of Vietjet is mainly for development of passenger transport in the first stage.

Similarly, the Civil Aviation Authority of Vietnam said Vietjet’s proposal would require planning adjustments and affect ACV as the port operator.

Deputy Minister of Transport Le Dinh Tho disagreed with the proposal and asked Vietjet to join hands with ACV for investment.

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