BUSINESS IN BRIEF 23/8

Tycoon Kien’s family receive VND164 billion hit in share values

The family of arrested of business, football and banking tycoon Nguyen Duc Kien took a VND164 billion (USD7.8 million) hit to their share holding yesterday (August 21), as stock markets plummeted.

Stocks tumbled on the benchmark Ho Chi Minh Stock Exchange VN Index and Hanoi’s HNX-Index on the day. The southern bourse closed 15.24 points (3.49%) down and the northern exchange dropped 3.01 points (4.26%) on Tuesday morning, causing a total value loss of USD1.7 billion.

As a result, Kien’s family members lost up to VND164 billion when ACB-coded share of Asia Commercial Joint Stock Bank (ACB) shares went down 6.9% in value to VND24,100 per share by the end of transaction session on August 21 morning.

Kien, who owns 35.2 million shares, lost VND63.3 billion (USD3 million). Based on the current value of ACB shares, his total assets are valued at VND847.4 billion (USD40.35 million).

Kien’s wife Dang Ngoc Lan, who holds 38.51 million shares of ACB, lost VND69.3 billion (USD3.3 million), while Kien’s younger brother Nguyen Duc Cuong (170,481 shares) and two younger sisters of him Nguyen Thuy Huong (8.7 million shares) and Nguyen Thuy Lan (8.7 million shares) also took hits.

However, EIB-coded shares of the Vietnam Export and Import Bank (Eximbank) also dropped to the lowest price yet.

Nguyen Van Kien is a major shareholder in commercial banks such as ACB, Eximbank, DaiABank and Kien Long. The 48 year-old is also Vice Chairman of the Vietnam Professional Football Joint Stock Co (VPF) and Chairman of Hanoi Football Club.

He was taken into custody on August 20 on unannounced charges. The police conducted a one-hour search at his home in Hanoi, seizing several documents.

According to official information released so far by inspection agencies and the State Bank of Vietnam, Kien was arrested due to illegal activity by three firms he owns.

The companies, B&B Trading and Investment Joint stock Company, ACB Hanoi Investment Joint Stock Company, and Asia Hanoi Finance Investment Co. Ltd are all located in Hanoi and mainly operate in real estate and the service sector.

Gold jumps to nearly VND45 million/tael

Gold rose VND1 million to hit a five-month record high of nearly VND45 million/tael on the morning of August 23.    

SJC gold was listed at VND44.33/tael (buying) and VND44.68 million/tael (selling), up VND930,000-1,080,000 more than August 22 transactions.

PNJ gold also surged to VND44.30 – 44.55 million/tael for the first time since March 2012.

Experts attributed the sudden market rally to a sharp increase in the global gold price, rallying for the fifth consecutive day on August 22, reaching US$1,655/ounce.

Some traders explained that domestic gold prices were also fuelled by a sharp increase in the VND/US$ exchange rate and a scarcity of gold bars on the market.

Commercial banks also raised the exchange rate between VND and US dollar. Vietcombank listed the rate at VND20,860/US dollar (buying) and VND20,910/US dollar (selling). Eximbank even exchanged US$1 for VND20,920.

However, the central bank maintained the rate at VND20,828/US dollar.

ACB sets aside VND5 trillion for property loans

Asia Commercial Bank, or ACB, has set aside VND5 trillion worth of preferential loans for customers having demands to buy real estates.

The loans aim to support local customers or Vietnamese overseas to buy houses, condos, warehouses, factories, farming or forestry land. ACB will provide loans of up to 99% of the value of the real estates while borrowers are subject to lending rate of 14.5% per annum in a maximum term of 20 years.

The bank from early this month has also expanded a consumer loan program for customers having assets as collateral. Accordingly, borrowers will be informed about the bank’s credit approval within 24 working hours and are able to access loans of up to VND500 million. Customers can prove their incomes from salary, production, business, house and car leasing.

ACB also gives consultancy to help customers borrow suitable sums of money and debt payment methods.

Scandal fallout clouds market

Declining shares for a second day on the nation's stock exchanges yesterday confirmed the fears of analysts that the arrest of banking tycoon Nguyen Duc Kien on fraud charges would continue to have a negative impact on the market.

On the HCM City Stock Exchange, the VN-Index lost another 1.6 per cent on top of Tuesday's steep decline to close at 410.23 points. Decliners outnumbered advancers by almost four-to-one.

The value of trades remained high due to heavy sell volumes, reaching VND1 trillion (US$47.6 million) on a volume of over 74 million shares.

Many blue chips bottomed out. Of the exchange's leading shares tracked by the VN30 Index, 13 plunged to their floor prices – and over half of those were financial stocks. Only four codes in the VN30 basket managed to add value: Phu My Fertilisers (DPM), commercial baker Kinh Do (KDC), PetroVietnam Drilling Services Co (PVD), and Vinamilk (VNM). The VN30 closed down by 2 per cent to 486.32 points.

Despite all the red, yesterday's declines were less dramatic than Tuesday's, suggesting that the worst of the impact was over, said HCM City Securities Co's head of analysis, Fiachra Mac Cana, who expected buyers to return today.

"From a medium-term perspective, [the arrest] looks like the beginning of a clean-up and a clear message that any activity which ignores the law will not be tolerated," Mac Cana wrote in a note.

On the Ha Noi Stock Exchange, the HNX-Index plummeted by another 3.4 per cent to conclude yesterday's session at 64.65 points, with nearly half of all codes retreating. The overall value of trades totalled VND535 billion ($25.4 million) on a volume of 61 million shares.

Asia Commercial Bank (ACB), of which Kien was a co-founder, continued to hit fall to its floor price amid heavy selling.

The HNX30, representing the capital city's top shares, fell 4.15 per cent to 121.73 points.

VNDirect Securities Co (VND) was the most-active share, with 7 million traded.

Nervous investors began to shift capital into gold, pushing the precious metal yesterday to its highest level since April. Prices posted by Sai Gon Jewelry Co and Bao Tin Minh Chau Jewelry Co rose by VND600,000-700,000 ($28-33) per tael to around VND42.2-43.7 million (about $2,000). One tael equal 1.2 ounces.

While investors have yet to regain confidence in the market, rising global oil prices also stirred fears of a fourth hike in domestic petrol prices in as many months. Petrol distributors were already complaining of losses of around VND1,000 per litre.

"If world prices keep on going up but we halt any increases, petrol businesses be in even more of a bind," said Petrolimex Group deputy director Tran Ngoc Nam.

Few local firms attend to self-defense tools in int’l trade

Many regional developing countries such as Malaysia are increasingly initiating anti-dumping and self-defense lawsuits to protect their production while Vietnam has had the first and only one since 2009.

According to Nguyen Chi Mai, head of the trade protection board under the Vietnam Competition Authority, enterprises in regional countries, including Vietnam, have now been more aware that the lawsuit of anti-dumping and self-defense are tools to protect their domestic productions, especially amid the current economic downturn.

Mai said that Vietnamese firms have known about these trade protection tools. However, to initiate such lawsuits, they need to verify a connection between damages and imported goods, and damages must be enormous, she added.

Therefore, in the absence of such measures on the part of local enterprises, perhaps local firms have yet to incur severe damages, according to Mai.

Besides, it is likely that damages of local firms do not result from foreign exporters dumping goods in the Vietnamese market. It is because foreign goods despite being sold at the normal price may still have a lower price compared to Vietnamese goods, and thus Vietnam cannot compete.

Enterprises of other countries when suffering big damages in a long time often have collected information in many years to prove such damages are caused by imported goods, according to Mai.

In 2009, Vietnam for the first and only time brought the self-defense lawsuit against imported float glass, with Viglacera Float Glass Co. (VIFG) and Vietnam Float Glass Co. (VFG) as the petitioners representing over 90% of the total domestic production volume of this product. The defendants were an Indonesian firm and a Thai firm.

After seven months of investigation, the Vietnam Competition Authority said that damages to the local production did result from the import increase, but not from dumping. Rather, the damages were due to economic crisis in 2008 and 2009 and the price fluctuation of fuel oil in Vietnam compared to the global price.

Besides, the market share of local producers recovered in the second quarter of 2009 while the import started to decline.

HCM City warned of obsolete wind turbine import

The Energy Conservation Center of HCMC on Monday called for the second though of the municipal government on licensing a wind power project in Can Gio using 1.5-MW wind turbines, stressing this project might use outdated technology.

In a report to the HCMC government on the implementation of the city’s green energy program, ECC-HCMC director Huynh Kim Tuoc said many wind power projects in Binh Thuan and Bac Lieu were found to be using wind turbines with a capacity of some 1.5 MW each.

These are turbines stockpiled in developed countries, which have cheap prices but cannot generate much electricity, Tuoc stated.

He said a number of developed countries had produced wind turbines with a capacity of 6-7 MW each. However, many ODA-funded wind power projects in Vietnam are still applying outdated technology.

He underscored if the project of Cong Ly Company with 100 wind turbines was approved for development in Can Gio District, other projects with more advanced technology would have no room to get going in the future.

“Other countries in the world no longer develop wind power projects using 1.5-MW turbines. Several groups in Germany, Spain and the U.S. have a lot of wind turbines of this kind in stockpile, so they want to sell off their products to Vietnam,” Tuoc remarked.

Speaking to the Daily, To Hoai Dan, general director of Cong Ly Trading-Construction Co. Ltd., said the wind turbines supplied by the U.S. firm G.E apply the world’s leading technology. At present, Cong Ly is conducting geological survey in Can Gio to carry out the wind power project covering 2,000 hectares of sea surface with equipment also provided by G.E.

The geological conditions of Vietnam are appropriate to install wind turbines of below 1.6 MW. A 1.6-MW wind turbine weighs some 80 tons, while a 2.5-MW turbine weighing 130 tons is beyond the endurance of local geological conditions.

Dan stated the 100-MW wind power project worth VND5.2 trillion in Bac Lieu would recover capital within ten years. Apart from equipment supply, installment and maintenance, G.E also mobilizes funds for the project of Cong Ly.

On September 15, Cong Ly will inaugurate the first ten offshore wind turbines in Bac Lieu, with a capacity of 1.6 MW each.

Vinatex stitches up shake-up plan

Leading garment maker Vinatex is mulling a comprehensive shake-up plan to bolster efficiency.

Vinatex’s restructuring plan was finalised and has been submitted to the government for approval.

Accordingly, from 2012-2015 Vinatex will channel capital into core business areas as developing complete textile dyeing projects, promoting garment export, material supply and training.

The group set forth the targets of reaping $3.6 billion in export value by 2015 which will be scaled up to $5 billion by 2020, playing a central role in local textile garment development.

The plan has made textile dyeing investment a strategic move to help the textile garment sector establish a complete supply chain.

Under the restructuring plan, from now up to 2015 Vinatex will need more than VND20 trillion ($952 million) of this equity capital VND7.5-8 trillion ($357-$380 million) to materialise major textile dyeing projects.
Industry experts assumed sourcing such a tremendous investment amount in the next three years would be very challenging for Vinatex in current context of scarce financial sources.

Compared to other economic groups, the capital Vinatex injected into non-core areas was modest at VND225 billion ($10.7 million) out of VND34 trillion ($1.6 billion) state investment.

This amount was put into seven banks and one securities firm.

Vinatex’s deputy director Le Tien Truong underscored the group’s commitment to complete divesting from non-core areas before 2015.

The taken sum will then be pumped into strengthening its effective member firms operating in core areas.

However, how to divest to retain and further promote capital sources is extremely hard to Vinatex in current context when most firms are in the woods and the stock market sharply slid.

The group’s leadership reportedly weighed over finding partners to sell stake it has invested into firms outside core areas. Besides, the group faces big pressures associated with human resources and the time frame for developing a complete value chain.

Besides, Vinatex’s restructuring plan is being hurt by sinking global textile and garment consumption which is forecast to shed 10-15 per cent this year compared to in 2011.
This will bite into firms’ export value.

Vinatex is a leader in Vietnam textile and garment industry. The group consists of 33 fibre and textile firms, 30 garment, 3 mechanical, 3 cotton growing and finance firms, 12 material supply and trading firms, 9 research, training and medical care units and 20 businesses doing other services. (Source: Vinatex)

Park managers abuse license   

Company which manages Youth Park in Hanoi admits that due to financial difficulties, it has to lease space in the park to service providers.

Most of the land in the park is leased to service providers to provide tennis courts, football fields, parking lots and karaoke bars while the gardens and benches are neglected. The smell from the lake has warded off many visitors.

Hanoi People's Council deputies have requested local authorities strictly deal with the violations. Nguyen Van Khoi, Vice Chairman of Hanoi People's Committee directed the inspection.

Director of Youth Service and Investment Company, Nguyen Hoai Van, who directly manages Youth Park admitted his wrongdoings.

Van said the park had lain mostly abandoned before and had become a favoured place for drug users prior to his renovation and illegal renting out land for commercial services.

Van claimed the park had racked up losses of VND25 billion (USD1.2 million) in 2006 and that the park had owed banks nearly VND50 billion and tax arrears of VND11 billion. Staff salaries were three months overdue and the park owed VND700 million in insurance payments.

The company's assets have been frozen while the visitors don't have to pay fees to enter Youth Park.

Van said he would remove the services when the park received additional investment. "Why do we have to remove these services now when the city hasn't assigned any replacements yet? The park would become abandoned land again and our staff face financial difficulties."

Pham Duc Hung, Director of Hanoi Tourist Company, parent company of Youth Service and Investment Company assured that the incomes from services providers were controllable and will not cause tax losses to the state. The company often audits and inspects the services.

However, he admitted the Hanoi People's Committee complaints were accurate and the company could still fix the problems.

"We absolutely are at fault." he said. "But because the company and the staff in Youth Park have to face many difficulties. We also told the Youth Company to do business carefully."

To deal with the problem, Hung said the Youth Company must be a public company and have basic salaries like other parks in the city.

On August 13, Nguyen Van Khoi, Vice Chairman of Hanoi People's Committee asked the Department of Construction to draft a management and operational plan for Youth Park. The Department would have to return their results by the end of August.

Female enterprises seek to penetrate RoK market

The Vietnamese Businesswomen’s Council will organize a trip to exploit the Republic of Korean market from September 23-28.

The trip aims to help local firms seek business opportunities and find new trade partners in the RoK, said the Council.

With the two-way trade turnover of US$17.8 billion last year, the RoK is Vietnam’s fourth largest trading partner after China, the US and Japan.

August CPI increases slightly

The consumer price index (CPI) in August is predicted to rise slightly after decreasing for two consecutive months.
    
Economic experts attribute this to loose monetary policies and rising prices of some essential commodities, such as petroleum, gas, sugar and livestock feed. However, the increase will not affect the Government’s inflation control target from now till the end of the year.

Dr. Vo Tri Thanh, deputy director of the Central Institute for Economic Management, said inflation will be kept at around 7-8 percent without sharp fluctuations, but it could rise as high as 9.9 percent if there are sudden price hikes in the market.

He forecast that inflation is not likely to reach double digits between now and the end of the year because of low economic and credit growth.

Vietnam, Laos boost kali salt mining project

A conference to review the results of a geological survey for kali salt exploration was held in Vientiane, Laos on August 20.   

In 2008, the Lao Government granted the Vietnam Chemical Group (Vinachem) a 20 year license to exploit and process kali salt on nearly 200 square kilometers of Khammouan province, Laos. The project costs US$450 million.

Domestic and foreign experts confirmed that the two-period survey showed conditions in the area are suitable for exploiting KCL and NaCl with estimated reserves of 350 million and 2 billion tonnes, respectively.

Vinachem was also licensed for another kali salt processing project on 10 square kilometers, which is scheduled to get off the gorund in 2013.

The project will provide enough kali salt for the Lao market, reducing its salt imports and boosting economic development in Khammouan province.

Bank credit quality comes under scrutiny

Experts have recommended that the State Bank of Viet Nam (SBV) adopt measures to inspect credit quality at banks, along with increasing credit-growth quotas for credit institutions.

Of the nation's 62 credit institutions, 23 have petitioned the SBV to increase their credit-growth quotas, Tuoi Tre newspaper reported.

Last week, SBV increased the quotas for 10 financially healthy banks that have met more than 50 per cent of credit-growth quotas allocated by the SBV earlier this year.

TienPhong Bank and Dai Duong Bank (Ocean Bank), for instance, were allowed to enjoy the credit-growth limit of 27 per cent, while HCM City Development Bank (HDBank), a quota of 30 per cent.

According to the SBV, it would be difficult for banks to meet the new credit-growth target in current economic difficulties, as it would depend on how enterprises solve their unsold inventory and on their capacity to expand in the markets.

If banks meet their credit-growth quotas, credit growth for the entire banking sector this year would not exceed 8-10 per cent. Inflationary pressure would not occur, according to the SBV.

However, experts said that it could cause inflation next year, and they have asked the SBV to enhance the inspection of credit quality.

Vu Dinh Anh at the Institute for Economics and Finance under the Ministry of Finance said this year's credit growth target of 8-10 per cent was not high.

However, in the first half of the year, credit in the commercial banking sector grew by an average of only 1.51 per cent.

So, to meet the credit-growth target, the commercial banking sector needs a rapid increase of credit growth for the remainder of the year, which could cause inflation.

Anh said that inflation would probably not occur until next year since monetary policies always have a delayed effect.

Loosening credit would affect the property market, but it would not cause a property boom, according to Anh.

In addition to inspecting credit quality at banks, he said the SBV should also check credit growth for the property sector.

Economist Huynh Buu Son said expanding credit growth was necessary if the economy showed signs of deflation and low credit growth.

However, he cautioned that banks must offer loans to the right customers.

In current conditions, banks are reluctant to pump more capital in the property sector, and will only lend to production and trading companies, according to Son.

Increasing credit growth by 30-40 per cent at small banks does not equal to a few per cent of credit growth at large banks, so this would not adversely affect the economy or worsen inflation, another expert said.

The problem is the quality of loans. The SBV should have regulations stipulating clearly the lending conditions in each sector and the limitations on lending in certain sectors, he said.

A bank general director, whose bank was approved to increase credit-growth quotas, said his bank would control its credit-growth rate in accordance with its capital mobilisation capacity, and would improve credit quality to ensure safety for its banking system.

He said his bank would not meet the credit growth target at any cost.

Nguyen Huu Dang, general director of HDBank, said his bank had plans to allocate more credit to the agricultural sector, small- and medium-sized enterprises and household businesses.

Trinh Van Tuan, chairman of the board of directors of the Orient Commercial JS Bank (OCB), said his bank had credit growth of about 7 per cent since the beginning of the year, compared to the credit limit of 15 per cent set by the SBV in earlier this year.

The bank achieved its highest credit growth in two recent months, thanks to lower interest rates.

Tuan said OCB planned to petition the SBV to raise its credit-growth target, with capital focusing on the sectors of production and trading, services and import-export.

While small banks have raced to petition to increase credit-growth quotas, large banks have made no requests.

A deputy general director of a large bank said his bank did not plan to increase its credit-growth quota because the quota set earlier this year by the SBV was already too high.

Earlier this year, the State Bank divided banks into four groups, depending on their performance in the prior year. Banks were allocated credit growth quotas according to their group designations.

Group 1 (healthy banks) were given a quota of 17 per cent, while Group 2 (average banks) received a quota of 15 per cent. Group 3 (below-average banks) were give a quota of 8 per cent, and Group 4 (weak banks) were not allocated a credit-growth quota.

Viet Nam plans to import 357,000 tonnes of cashews
 
Viet Nam has to to import about 200,000 tonnes of raw cashew nuts in the remaining months of the year to fulfill this year's target of shipping 150,000 tonnes for an export turnover of US$1 billion, according to the Viet Nam Cashew Association (Vinacas).

Domestic enterprises imported nearly 157,000 tonnes of raw cashew in the first seven months of the year, mostly from Cambodia, Ivory Coast, Ghana, Nigeria, Guinea Bissau and Indonesia due to insufficient domestic supply, the association said.

Both cashew plantation area and output reduced this year, the association said.

Cashew output was only 264,810 tonnes this year compared to 301,730 tonnes in the last crop.

"Demand for cashew in the world market, especially in the US and China, will increase from now to the end of the year since many festivities will take place at this time. So local cashew exporters need more material to processing for export," Vinacas said.

When cashew nut consumption went up, cashew export prices would also increase, it added.

During the first seven months of this year, the country shipped 105,000 tonnes of cashew nuts abroad, earning $713 million, an increase of 25 per cent in volume and 9.7 per cent in value.

The average export price in the period was lower than that last year, the association said.

The US remained the largest buyer of Vietnamese cashew, followed by China.

Last year, Viet Nam exported 166,109 tonnes of cashew, earning $1.35 billion, a drop of 16.46 per cent in volume but an increase of 20.13 per cent in value over 2010.

Given current market difficulties and a shortage of raw material, the association has lowered its export target for this year. This is a reduction of 9.7 per cent in volume and 24.3 per cent in value compared with 2011.

Tighter internet could harm Asian flexibility

Some countries are calling for the internet to be brought under the control of the UN International Telecommunications Regulations, but experts warn that a more tightly regulated regime could have a significant and detrimental impact on Asian countries, including Viet Nam.

The 2012 World Conference on International Telecommunications (WCIT), to be held in Dubai on December 3-14, is slated to discuss the future of internet regulation, and Viet Nam will participate in this event.

According to the chair of the ad hoc WCIT working group, Ambassador David A Gross, increased regulation of the internet should be troubling to both goverments and the private sector since it would threaten the innovation and commercial flexibility that has allowed the telecommunications sector to flourish in such countries as Viet Nam, Indonesia and Singapore.

"Increased regulation threatens successes that liberalisation and competition have enjoyed in recent years [and] could have adverse impacts on commercial businesses involved in international telecommunications and slow the dramatic growth of ICT revenue and e-commerce in developing nations," Gross said in Bangkok.

According to Ministry of Information and Communications, internet penetration in Viet Nam now reaches 30 million people, representing a third of the country's population. Internet use in Viet Nam has recorded the most rapid growth in Asia, with an average annual rate of 20 per cent from 2000 to 2010.

Meanwhile, while e-commerce currently accounts for just 2.5 per cent of national GDP, online payment transactions are estimated to reach US$6 billion by 2015.

The Vietnamese Government is currently drafting a new decree on the management of internet services and electronic information on the internet, which would replace Decree No 97/2008/ND-CP of August 2008.

The draft decree would require foreign internet service providers to set up primary servers and representative offices in Viet Nam, or appoint a Vietnamese individual or institution to represent them. It would require internet users to use their real names when using services and would include other regulations on internet content.

The draft has attracted opposing viewpoints from the public and the business community, but Government officials have said that the new decree would be necessary to keep up with the internet's rapid development in Viet Nam and to help stabilise the socio-economic situation.

Global interbank payments up 13%

International payments from Viet Nam via SWIFT had increased by 13 per cent a year, it was announced yesterday during the annual seminar on the Society for World-wide Interbank Financial Telecommunication.

The seminar aimed to provide latest information about SWIFT's performance and discuss the upcoming Singapore Inter-Bank Offered Rate 2012 - (Sibos 2012) conference and exhibition to be held in Osaka, Japan.

Speaking at the seminar, Pham Bao Lam, director of the transaction department of the State Bank of Viet Nam, who is also chairman of VIETSWIFT, said SWIFT Viet Nam was established in 1996 after six local banks became members of SWIFT in March 1995. They included the State Bank of Viet Nam, Vietcombank, BIDV, Agribank, Vietinbank and Eximbank.

The State Bank of Viet Nam and about 80 commercial banks had since joined in SWIFT Viet Nam with 88 SWIFT codes.

Of this figure, 44 were SWIFT codes of joint stock banks and 43 others from foreign banks and overseas branches.

According to statistics from SWIFT, Viet Nam ranked 63 out of 212 countries in the volume of money transfer messages a day, posting a growth rate of nearly 13 per cent per year.

Metro adds more products to weekend promotion

German retailer METRO Cash&Carry has added 10 items, mostly food and foodstuffs, to its "Weekend Promotion Programme" focusing on Vietnamese food products.

It has been selling 500 items at discounts of 15 to 25 per cent to retailers at its 17 outlets around the country.

Binh Phuoc to revoke land-use rights from failed projects

The People's Committee of southern Binh Phuoc Province has allowed the provincial Economic Zone Management Board to revoke land use rights of slow-moving projects in its industrial and border-gate economic zones.

The committee has approved to withdraw a total of 30ha in the Hoa Lu Border-gate Economic Zone which was handed over to five domestic and foreign-invested firms.

The committee also asked the provincial Economic Zone Management Board to work with enterprises registered to invest in Dong Xoai 1 Industrial Zone and submit reports on the implementation of their projects not later than the end of this month.

Enterprises seek business openings in South Korea

The Vietnamese Businesswomen's Council will organise a trip to exploit the South Korean market from September 23-28.

The trip aimed to help local firms seek business opportunities in South Korea and find new trade partners, the council said.

Bilateral trade turnover between Viet Nam and South Korea reached US$17.8 billion last year, making South Korea Viet Nam's fourth largest trading partner in terms of two-way trade turnover after China, the US and Japan.

Viet Nam promotes farm exports to Russia

A series of events to promote Vietnamese agricultural exports will be organised on September 15-23 in Moscow, according to the Ministry of Agriculture and Rural Development.

It was a good opportunity for Russian investors to gain information about Viet Nam's potential while Vietnamese businesses would have a chance to introduce their forestry products to the Russians.

During the event, agencies would work to strengthen bilateral co-operation on human resources training and quality regulations.

Northern Laos to take part in Son La trade exhibition

An exhibition of industrial, forestry and agricultural products and handicrafts from mountainous Son La Province and northern provinces of Laos is taking place in Son La.

The exhibition provides a good opportunity for the participating localities to promote their economic potential and boost trade and investment.

The event will end on Saturday.

Work begins on industrial plants in Ninh Thuan

Construction of high-tech plants – one treating waste and others producing motors and bricks – with capital totalling US$104 million, started late last week in the central coastal province of Ninh Thuan.

Located in the Phuoc Nam Industrial Zone, the Semar Motors plant on 10ha will cost $11 million; the environmentally friendly plant making heat-resistant bricks will cost $28 million; the plant turning industrial waste into renewable energy will be capitalised at $65 million.

The plants are being developed over eight months by the Slovakia MBM Group and Viet Nam MBM Corporatio.

Drastic measures needed to help weak banks

The State Bank's goal of helping struggling banks will become more difficult if the Government does not initiate more drastic measures, according to economist Le Xuan Nghia, ex-vice chairman of the National Commission for Financial Supervision.

Meanwhile, other economists expressed worry that the process of restructuring commercial banks has come to a standstill. They said if commercial banks overcame the risk of liquidity, they would try to get benefits as a group by delaying the restructuring process.

If this problem continues to take place, the whole banking sector may become insecure. Therefore, the central bank needs to put more pressure on weak banks to accelerate the restructuring process.

Early this year, State Bank announced that it would implement mergers and acquisitions (M&A) for 5 to 8 badly performing banks in the first quarter. Ha Noi Housing Commercial Joint Stock Bank (Habubank) officially merged into Sai Gon-Ha Noi Joint Stock Bank (SHB) this month to become the first M&A deal in 2012.

The newly-formed bank will be named Sai Gon-Ha Noi Commercial Joint Stock Bank, with a charter capital of nearly VND9 trillion (US$428.57 million) and total assests of over VND100 trillion ($4.76 billion). It will have around 500,000 customers and 5,000 staff. After the merger, one share of Habubank will be equal to three-quarters of an SHB share.

Dao Minh Tu, deputy governor of the State Bank, said that no optimal plan to restructure weak banks was sent to the central bank for consideration.

The central bank was active in the process of restructuring weak banks; however, this process depended on optimal plans made by the banks. Some banks were now negotiating spontaneously for their M&A process. The central bank expected that the M&A process of badly-performing banks would reach its target this year, said Tu.

A banking official said that to avoid information leaks about M&A deals between banks like the merger of Habubank and SHB, most banks keep their search for partners quiet. The State Bank requires this silence to keep any information about M&A deals confidential before it is made public.

Over the years, some commercial deals have fallen to pieces after both sides failed to reach an agreement, the official said.

Nguyen Thi Mai Suong, director of the State Bank's branch in Ha Noi, said at least three banks were now required by the central bank to undergo M&A.

TienPhong Bank has permission from the State Bank to restructure itself, while Habubank officially merged into SHB after seven months of preparation. And GPBank has not yet sent its official restructuring plan to the central bank, said Suong.

In another development, rumour has it that PetroVietnam Finance Corporation (PVFC) will merge with Western Bank. Nguyen Thien Bao, director general of PVFC, told theVnExpress that he did not reject, but also did not confirm, the existence of an ongoing negotiation between the two sides.

PVFC is previously responsible for arranging financial deals for PetroVietnam and member companies, so it has less experience in retail banking services. Experts said that a merger with a badly-performing bank could be a smart choice for PVFC. PVFC could take advantage of that bank's client network and experience to develop.

Earlier, the central bank reiterated that it encouraged voluntary mergers and acquisitions among local lenders to improve their financial capability and operation as well as to ensure the safety and sound development of the whole system.

In December 2011, Sai Gon Commercial Bank (SCB), Viet Nam Tin Nghia Bank (TinNghiaBank), First Commercial Bank (Ficombank) announced their merger into one entity named [new] SCB with charter capital of VND10.58 trillion (US$503 million).

Saigontourist wins best tourism business award

Leading tour operator, Saigontourist Travel Services Company, was honoured in Vung Tau city on August 18 by The Guide Awards 2011-2012 for its outstanding service and business records in 2011 and the first eight months of 2012.

This is the eleventh consecutive year the company has received the award, which is based on votes from tourists, as well as readers of the Vietnam Economic Times and its monthly publication ‘The Guide.’

In the current economic downturn, Saigontourist has maintained sustainable growth and steadily increasing turnover, thanks to its top quality service, strong competitiveness and long-term investment strategy.

The company has recently served over 300,000 visitors, a year-on-year increase of 55%.

Businesses prepare to lure consumers for ‘Sale Promotion Month’

Many businesses are gearing up with promotional plans to attract more customers for the annual ‘Sale Promotion Month’ in September in Ho Chi Minh City.

Big C supermarket chain has launched a promotional discount offer of upto 49 percent on nearly 1,200 products. The supermarket has also spent VND3.5 billion (US$166,000) to design gift options for customers during the sale month.

Meanwhile, Co-op Mart supermarket chain has offered a discount of 49 percent on 2,000 products. More than 600 suppliers will take part in the program this September, investing more than VND100 billion.

The supermarket has spent VND20 billion on gift vouchers worth VND30,000 per voucher and is offering special prices on many items within two weeks.

In addition, Co.op Mart supermarkets will organize 200 mobile markets in remote areas, industrial zones and hostels for residents, workers and students to buy good quality goods at reasonable and stable prices.

Electronics department stores such as Nguyen Kim, Thien Hoa, and supermarkets including Satramart, Tax, Convenience Food Stores, and traditional markets will be offering many big promotions.

Around 750 enterprises will participate in an annual ‘Sale Promotion Month’ in September in Ho Chi Minh City.

The program will begin with a fair featuring more than 430 display booths for 250 businesses in fields such as garments and textiles, leather, cosmetics, food, electronic goods, plastic and agriculture-forestry-aquaculture products. The fair will be held from August 30-September 3.

The annual ‘Sale Promotion Month’ aims to promote consumer spending and production, and maintain the socio-economic growth rate.

The program will also be an opportunity for enterprises to introduce their products to consumers at reasonable prices and offer attractive discounts, lotteries and free services.

The opening ceremony of the ‘Sale Promotion Month’ will be broadcast live on HTV1 channel on August 30.

VASEP optimizes situation on seafood exports

Vietnam Association of Seafood Exporters and Producers said that shrimp exports might climb to US$690 million in the third quarter of this year, down by 4 percent compared to the same period last year but up 19 percent compared to the previous quarter.

Since the beginning of this year, Vietnam shrimp exports earned US$1.7 billion. It is expected that shrimp exports will gradually recover during the last months of this year as global market showed signs of increasing import of shrimps.

Although the quality of Vietnamese shrimp has improved, it still faces fierce competition from India, Indonesia, and Thailand in the EU market. Thus, shrimp producers still need information and financial support from the government to collect material shrimps for processing to be well-prepared for market demand.

In related news, the association said that seafood export turnover is likely to reach $1.8 billion in third quarter of this year, raising seafood exports to $4.7 billion by September as market usually becomes vibrant at the end of the year while seafood sources are rather profuse.

At the same time, the newly-approved stimulus package of VND9 trillion for Vietnam pangasius industry is expected to boost breeding of pangasius fish, as well as create favorable conditions for seafood processing firms to buy materials.

Vietnam seafood industry is seeing increasing demand from the US, and other potential markets, including South Korea, Australia, Mexico, countries in the ASEAN, and China. If things go smoothly, the country’s seafood industry will possibly achieve this year’s goal of $6.5 billion.

Vietnam posts trade surplus to Russia

According to latest statistics by Vietnam Customs, trade between Vietnam and Russia in the first seven months of this year reached US$1.34 billion, up 34 percent compared to the same period last year.

Of which, export turnover was $821 million, an increase of 34 percent, while import turnover was $516 million, up 39 percent over the same period last year. Thus, in the first seven months of this year Vietnam posted a trade surplus of US$305 million.

Mobile phones and spare parts accounted for about 40 percent of the total export turnover of Vietnam to Russia. Meanwhile, Vietnam mainly imported gasoline and steel from Russia.

In 2011, Russia was the 22nd biggest trade partner of Vietnam.

Danang seeks to improve PCI ranking this year

Danang City and the Vietnam Chamber of Commerce and Industry (VCCI) have garnered suggestions from enterprises and relevant agencies to help the central city improve its ranking in the Vietnam Provincial Competitiveness Index (PCI) this year.

Speaking at a seminar on how to raise the city’s PCI position last week, Van Huu Thiet, deputy chairman of Danang City’s Small and Medium-Sized Enterprises (SMEs) Association, said the city continuously secured the second place between 2005 and 2007 before taking the lead for three years in a row.

But the city last year ranked fifth with its scores falling to 66.98 points, indicating the provincial governance failed to satisfy local enterprises’ expectations.

Among nine indexes of the PCI, the city saw its score dropping in informal charges, business support service, time costs for implementation of government regulations and access to land. Therefore, Danang needs to identify what is the cause and solutions to fix it, Thiet said.

Trinh Bang Co, general secretary of the city’s Tourism Association, shared the same view, saying SMEs in Danang were having greater difficulty accessing land than foreign enterprises or those from other localities.

Businesses still meet challenges with unclear time of land lease, making it hard to work out a long-term investment plan. Land use right transfer fees vary for different projects while land evaluation is still haphazard.

The city’s transparency and information access scores dipped last year as well. Co suggested authorities clearly inform residents and businesses, especially of planning, land policy and industry development plans.

Le Van Hieu, vice chairman of the Vietnam Young Business Association in Danang, meanwhile, said the sharp decline in the labor training index dragged down the competitiveness of the city. The index dropped from 7.43 to 5.69 points as labor demand rose suddenly while supply failed to meet foreign language and labor skill requirements of investors.

Secutech Vietnam to lure 130 firms

There will be 130 companies from 14 countries and territories coming to HCMC for the International Security, Fire and Safety Exhibition and Conference (Secutech Vietnam 2012) slated for Wednesday to Friday.

Participating enterprises will introduce over 500 latest products and applications at 200 booths such as security monitoring and fire alarm systems for buildings, industrial parks and banks.

This will be the largest such event in Asia, said organizers at a press conference last Friday.

Producers from the U.S., the United Kingdom, France and Japan will have technological shows besides a series of 15 specialized forums and conferences.

The annual event debuted in 2008. It last year attracted the participation of 110 firms with 200 booths.

Tran Trong Vinh, chairman of the Asian Professional Security Association in Vietnam, said the local security business sector has grown strongly with over 800 enterprises active. However, they are able to meet around 5% of demand, and most of security devices are imported.

Some enterprises after a period of distributing devices have switched to importing technologies and assembly lines to produce devices locally. Meanwhile, the Ministry of Defense and the Ministry of Public Security are considering opening a plant to produce these devices for the security and defense sectors, according to Vinh.

First BOT coal-fired power project gets steam drum

The lifting of the Unit 1 steam drum into the Mong Duong 2 power station, the first and largest such BOT project in Vietnam, commenced on Friday in the northern province of Quang Ninh.

In a coal-fired power project, the steam drum is considered as the heart of the boiler as it provides steam to spin the turbine and the generator. The steam drum installation is one of the most important milestones in determining the installation schedule of the boiler and subsequently the overall project schedule, said a statement of AES-VCM Mong Duong Power Company Limited, the owner of the Mong Duong 2 Power Project.

For Mong Duong 2, the installation of the steam drum, which has a weight of around 230 tons, marks a significant achievement during the construction stage of the project since it signifies the completion of the boiler steel structure and commencement of the boiler erection process.

David Stone, managing director of the company, said in the statement, “We are extremely happy to witness the commencement of lifting of the Unit 1 Steam Drum. … With more than 3.5 million man-hours achieved without any Lost Time Incidents to date, we are confident to complete the project on schedule to support Vietnam in meeting the energy demand of a fast growing economy.”

The project started construction in August 2011 and has achieved an overall progress to date of approximately 40%. There are nearly 180 experts and 2,350 local Vietnamese people currently working at the site.The project is expected to enter into commercial operation in the second half of 2015 and will generate 7.6 billion kWh of electricity a year. After 25 years of operation, the Mong Duong 2 Power Project will be handed over to the Vietnamese Government per the BOT contract.

AES-VCM Mong Duong Power Company Limited was formed by three shareholders from subsidiaries of the AES Corporation from the United States with an interest of 51%, Posco Energy Corporation from South Korea (30%) and China Investment Corporation from China (19%). The project’s EPC contractors include Doosan Heavy Industries Vietnam Co. Ltd. and its subsidiaries.

Banks say to maximize lending

Banks have said they are ready to increase lending as much as possible as the new credit ceilings of 25% to 30% have been permitted, indicating the banking system is sitting on huge amounts of cash.

Last week, 23 banks sought central bank permission to raise their credit growth targets for this year, and ten have got approval for new caps of 25-30%, with most of them being small.

For these small banks, the percentage looks high but their loans are believed not to affect the credit growth picture since they account for a fraction of the total of the banking system. Moreover, State-owned commercial banks and joint stock commercial banks with dominant State stakes have posted low credit growth.

Among the banks whose credit growth targets are up are Military Bank (MB), one of the largest banks. MB deputy general director Dang Quang Tien said in the first six months, MB credit growth was some 12%, so the bank had applied for a 25% rise in credit, instead of 17%.

Tien said banks should ask for appropriate new credit growth targets based on their current loan contracts, rather than simply having their targets raised and then rushing to find borrowers. “An additional VND6 trillion in loans is enough for MB to reach the new credit ceiling,” he said.

He added MB was promoting a loan program with preferential interest rates for priority groups. A debt restructuring program is also being implemented to further accelerate lending in the final months.

As for HDBank, since the bank breached the interest rate ceiling last year, it was originally assigned with credit growth of only 10% this year. However, the cap is now removed.

The central bank has allowed HDBank to increase lending by 30% in all of 2012. Le Thanh Trung, deputy general director of the bank, told the Daily that the bank’s credits picked up 8.8% in the first half, so the need to boost lending is huge for the bank in the last six months.

HDBank clients are mainly individuals and businesses in great need of loans for consumption and business, plus the current pace of corporate loan disbursement. Therefore, the 30% goal is achievable, Trung said.

A small banker said his bank’s credit had been rising sharply over the past three months, from negative to some about 7-8%, equivalent to VND1 trillion. Given the target of 15% for this year, the bank will give out an additional VND3 trillion.

He said at small banks, several trillion dong could secure a high growth rate. He suggested the central bank further relax regulations to allow banks to increase their targets at will as there was little chance of triggering inflation.

At large banks, credits are growing slowly. Credit growth of the entire sector in the first seven months was only 1.5% while the year’s target is 8-10%.

According to a statement from the central bank, if banks manage to achieve their revised credit growth rates, lending in the entire system would not exceed 15% this year, just in line with the target set at the year’s beginning.

However, the central bank admitted it would be difficult for banks to obtain the new goals since it depended on several factors such as reducing inventory, expanding markets, spurring cash flows, and supporting businesses.

If these solutions produced results, the system’s credit growth would not exceed 8-10% this year. Therefore, credit growth cannot increase inflationary pressure.

According to the central bank, in the first six months, credits in the banking system inched up 1.51% against end-2011, with 69 banking institutions reporting negative growth and 57 others achieving positive growth.

Source: VNN/VNS/VOV/VIR/SGT/Dtnews/SGGP/VNA

 
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