Last update 5/30/2012 7:00:00 AM (GMT+7)

Giants hook up to power on

Sojitz-Daelim, a joint contractor between Japan’s Sojitz Corporation and Korea’s Daelim, last week inked a $826 million contract to get the Thai Binh 2 thermoelectricity plant moving.

The contract was signed between the PetroVietnam Construction Joint Stock Corporation (PVC) – the plant’s main engineering, procurement and construction (EPC) contractor and the Sojitz-Daelim.

PVC director Vu Duc Thuan said the contract included equipment supply and a detailed design for the turbine and generator areas.

The plant is located at the Thai Binh power centre in the northern province’s Thai Thuy district.

It has a capacity of 1,200 megawatts and total investment of $1.6 billion, and it is expected to commence operations in 2015 with the output of about 6.7 billion kWh per year.

According to PVC, Sojitz-Daelim met all requirements, submitted a clear implementation plan and met strict capital arrangement commitments to be offered by Japan Bank for International Cooperation and Korea’s EXIM, through commercial banks BTMU, Mitzuho and HSBC.

Investors and contractors planned to put the first turbine into operation after 39 months and the second after 45 months from the signing day. The Thai Binh centre, expected to significantly boost the national power supply system, consists of the Thai Binh 1 power plant invested by state-run Electricity of Vietnam and Thai Binh 2 power plant, invested by state-run PetroVietnam.

Thai Binh 2 started construction in February 2011, while construction work on Thai Binh 1 will kick-off next quarter. PVC has acted as main EPC contractor for many oil and gas sector projects in Vietnam, including the Nhon Trach 2, Ca Mau, Vung Ang 1, Long Phu-Song Hau power plants.

PetroVietnam targets to produce 20 per cent of the country's overall electricity output in 2015. The group has invested in the 1,500MW Ca Mau power plant and 450MW Nhon Trach 1. PetroVietnam is also going to build 1,200MW Long Phu thermal plant 1 in the Long Phu power centre in Soc Trang province and the 700MW Nhon Trach power plant 2.

Sojitz is a Japanese famous trading company which had supplied turbine and supported appliances for the Vung Ang 1 in Ha Tinh province, while Daelim has built many large scale power and nuclear plants in Korea.

Shares plunge despite good news

Shares continued to slide yesterday despite positive news about interest rates and predictions by some analysts that stocks on the domestic market could surge by as much as 65 per cent next year.

On the HCM City Stock Exchange yesterday, the VN-Index retreated by nearly a per cent to 431.44 points, while the VN30 Index, tracking the market's top 30 shares, also shed 0.5 per cent to close at 510.81 points.

The volume of trades reached only 47.7 million shares, however, for a total value of VND720.3 billion (US$34.3 million), a 24.3 per cent decrease from Monday's level.

A few blue chips managed to post gains during afternoon trading, helping constrain the declines of indices, including Becamex Infrastructure Co (IJC), Sacombank (STB), property and entertainment services developer VinGroup (VIC), dairy giant Vinamilk (VNM) and sugar processor Bourbon Tay Ninh (SBT), which hit its ceiling price of VND19,100 per share.

Meanwhile, recently-listed PetroVietnam Gas (GAS) lost 2.4 per cent, sinking nearly back to its initial price on its first trading day.

During a meeting yesterday, State Securities Commission chairman Vu Bang announced some possible changes to boost the market.

"Market liquidity remains a big problem even though trading hours were extended," Bang said. Trading margin ratios had also limited the natural movement of prices, he added. The commission was therefore likely to suspend trading for 30 minutes on stocks that fluctuated over 10 per cent.

To both lure foreign investment and protect domestic benefits, Bang said the ministries of finance and planning and investment should allow foreign investors to put more money into domestic firms by means of a special class of non-voting shares.

On the Ha Noi Stock Exchange, the HNX-Index fell by 0.4 per cent to just 75.30 points. Only 32 million shares were traded, for an overall value of VND333.26 billion ($15.8 million), half of Monday's value.

Real estate developer Sacomreal (SCR) was the most-active share nationwide with around 3.2 million traded.

Foreign investors concluded yesterday as buyers on both bourses but by a net margin of only VND10.3 billion ($490,470).

Free trade fuels business hopes

As Vietnam’s economy slows,  future trade opportunities can give businesses some rays of hope.

While demand in traditional export markets has declined, Vietnam needs to seek new export markets, while working on the implementation of a free trade agreement (FTA) with the EU and nurturing its domestic demand.

Domestically, the figures reveal macroeconomic chaos. Many local companies have filed for bankruptcy, more than 17,000 in 2012’s first quarter. The unemployment rate has surged, while economic growth is sluggish and is expected to be as low as 5 per cent this year. And lastly, domestic demand is still very weak, resulting in high inventory levels.

Vietnam’s exports in 2012 were affected due to its main export partners struggling with economic difficulties and hence their imports reduced sharply. In Europe, the debt crisis and Greece potentially leaving the Eurozone has impacted on confidence. The future of the Eurozone economies is uncertain. The US – the largest export partner of Vietnam – has overcome its recent financial crisis, but is still dealing with economic growth issues.

On the international market, Vietnam as a main trade partner in many traditional markets such as textiles, garments, footwear and seafood, has also been challenged from new competitors, including Indonesia, Sri Lanka, Bangladesh and India, as these economies enjoy preferential tariffs from the EU. Other economic difficulties that Vietnam may encounter will arise from the FTA with the EU, which is expected to be reached next year.

In the cloudy picture of the world economy, there is some light. While year-to-date exports reached 22.1 per cent year-on-year, year-to-date imports sat at only 4.4 per cent. The decline in exports from 23.0 per cent in March to 16.7 per cent year-on-year in April accounts for base effects. After the contraction of 19.2 per cent in March due to mainly the Tet effects, which are not seasonally adjusted, exports increased averagely 3.7 per cent month-on-month.

Though declining since 2011 due to the economic difficulties in traditional markets, exports have sustained their performances thanks to high commodity prices and relative strong demand from Japan and the US. It is forecasted that the export growth could reach 17.7 per cent this year when China’s economy gradually recovers and the economic growth of the US continues performing as expected.

Huynh Buu Quang, head of HSBC Vietnam commercial banking, said: “Although tough economic conditions globally and domestically will lead to slight declines for trade in Vietnam in the next five years, the HSBC forecast for the country’s trade growth up to the end of 2025 remains very healthy. This solid growth will be achieved by Vietnam integrating more closely with the Asia-Pacific supply chain. The real challenge for Vietnam’s enterprises now is weather the current economic storm by making the most of their human resources and innovation potential”.

According to a recent HSBC report, Vietnamese exports to countries including India, Brazil, Saudi Arabia and South Africa are forecast to grow. Exports to Slovakia, a key link in the consumer electronics supply chain, are also set for a rise. This shows the intention of Vietnamese exporters to look further to other traditional markets besides Japan, the US and Europe to exploit opportunities and avoid the current turbulence in the latter ones.

In terms of sectors, Vietnam’s fastest growing large export sector is forecasted to be printing and ancillary machinery, with annualised growth of 12.88 per cent over the next five years. The highly competitive clothing and footwear sector also continues to present opportunities with exports of footwear to the US forecast to grow an annualised 4.41 per cent to 2016. Imports to Vietnam will see an increase of shipments from China with major drivers being petroleum gas and knitwear. China is also stepping up imports of electrical equipment for fixed-line telephony, and inbound shipments for this sector are predicted to increase by 12.64 per cent a year to 2016 as Vietnam’s demand for information and communications technologies rises.

“It is also critical that Vietnam develops its emerging export corridors, such as that with Switzerland, which is currently the country’s fastest growing export destination with anticipated yearly growth of 13.65 per cent to 2016,” said Quang.

The significant slowdown in imports again suggests weak domestic demand. The government’s task now becomes a dilemma of how to sustain economic growth, as domestic demand declines. While implementing policies to stimulate the domestic purchasing power could take a couple of years to get right and Vietnam’s traditional markets are in economic trouble, Vietnam needs to seek new potential markets for exports. Those could include Africa, the Middle East and South America. New strategies for local firms could include looking for new potential markets, new financial or business partners to get their products exported. Here international financial firms with experience and a wide network are able to offer a guiding hand.

HSBC is an example. With a wide network almost in every country especially focusing on emerging markets and a 145 year history of providing financial trade solutions around the global, HSBC is trusted to provide support to local firms in Vietnam seeking trade opportunities in new potential markets.

Alan Keir, group managing director and global head, HSBC Commercial Banking, recently said: “The international business world isn’t prepared to sit back and wait for the outcome of ongoing conversations about economic recovery. Where once businesses followed economic investment, now forward-thinking companies are leading the way. Whether taking advantage of shorter-term growth in international trade, which despite economic uncertainty sits at $1 trillion a year, or by creating new supply chains that open up trade corridors, businesses are connecting themselves to future opportunities”.

It is quite true that this new way of thinking is very suitable amid Vietnam’s current situation. And it becomes more appealing for Vietnam traders to find the best banking partner to connect them with the potential markets to bridge them over the troubles of the uncertainty in traditional trade markets.

Moreover, other than a connection hub, HSBC is itself a reputable worldwide financial institution, where its core business is based on international trade activities. HSBC is working with companies to help them to realise their international business ambitions and full potential. In fact they have committed to facilitating $750 billion of world trade by 2013. Vietnam is not an exceptional story for HSBC.

Here in Vietnam, HSBC is also well-known for giving financial solutions to help local firms in trade. By focusing in providing financial assistance for trade activities to the local firms in Vietnam, HSBC was able to maintain its growth rate of 17 per cent annually in 2011 - an impressive performance.

Faced with such challenges, it seems that the policy-makers are looking for some other solutions instead of directly injecting capital into firms, which could spur another wave of inflation.

By joining the FTA, Vietnam’s policy-makers may aim to use its pressures to renovate the economy by removing business barriers, fading away the influence of groups of interest, opening the market for more capital inflows, attracting management experience and technology from developed economies and most importantly getting more opportunities for local firms. It could be considered as the first step in restructuring the economy.

Historical evidence provides many lessons that trade could be a rescuer to save the economy. It is thanks to the doi moi from 1986 with more free trade, though within the domestic market, that Vietnam’s economy has developed with many successes, until recently. Another body of evidence is Vietnam’s joining of the World Trade Organization, which saw the economy enjoy dramatic growth during the following years. The average income of people in the world has also increased impressively in the past few decades thanks to trade openness.

Small firms move headquarters to homes amid business slump    

Many small enterprises in Hanoi have opted to move their offices to homes due to economic difficulties.

Office space has been moved to the homes of companies' owners or high-ranking staff.

Many other enterprises are trying slim down or move to other places to lower costs. This has added to an increase in the number of empty offices in the capital.

Nguyen Thi Dinh Street is home to over ten offices for lease. These were former headquarters of companies that have rented other places for less money, or even moved into homes.

A real estate company which was headquartered at a villa on Nguyen Thi Dinh Street moved to the director’s house in My Dinh Commune. By doing this, the company saved about VND50 million (USD2,394) per month.

When business was thriving, the company’s director decided to hired a villa in the heart of Trung Hoa Nhan Chinh. However, due to economic difficulties, they were compelled to cut expenses.

The company’s director said his 100-square-metre house is wide enough for around ten people to work, and would help slash expenses.

Another real estate firm was compelled to move their office to the new urban area of Dai Kim due to the business slump. Nearly a year ago they invested nearly VND1 billion (USD47,892) in upgrading their headquarters on Yen Hoa Street.

The company will now have to move their offices again, to the director’s home by the end of this month. They will also have to make compensation for breaking the five-year lease.

Tran Duc Minh, director of an investment company, said, “Moving the office to home is a last resort, as a company’s headquarter plays an important role in our business activities. A change of headquarter may result in loosing long-term clients, and there is also the additional expenses of reprinting cards and notifying clients."

Minh has decided to move his company’s office from Ha Thanh Plaza to Long Bien District in the near future.

According to a recent report by Savills Vietnam, the total area of office space in the capital has reached nearly one million square metres this year, up 32% from the same period last year.

By 2014, Hanoi will have nearly 1.1 million square metres of office space from 80 new projects.

An increase in company bankruptcies and a fall in newly-established businesses is expected to put further pressure on the real estate market.

CBRE estimates that the number of businesses seeking new offices will reach a record low this year despite a sharp rise in the number of available space.

Chinese traders trap local farmers, again

After having bought pineapples from farmers at the Mekong Delta province of Tien Giang’s Chau Thanh District at prices higher than market rate, a group of Chinese traders suddenly disappeared, leaving the farmers behind with a huge stock of the fruit.

As recently as last weekend, farmers were busy collecting pineapples, packing, and loading them into the containers for the traders to transport back to China. Yet now there are only a few farmers bringing the fruits to sell to a domestic company -- the Tien Giang Vegetables & Fruits JSC (Vegetigi).

Asked about the Chinese traders, N., who mainly supplies to Vegetigi, said: “They vanished two days ago, and we don’t know why.”

Earlier, Chinese traders, via the intermediation of Nguyen Thi Nam, a resident in Cai Be District, had bought the Queen type 1 pineapples -- those weighing 1.2kg and above, from farmers at the considerably high rate of VND4,000 – 4,200 a kg.

“We fail to compete with the Chinese as our purchase prices are only around VND3,200-3,400 a kg,” said Vegetigi director Vo Van Bon.

“The traders collected the fruits right in front of our plant,” he added.

Bon said his plant needs around 110 tons of pineapple for daily production, but during the time the Chinese traders bought from local farmers, Vegetigi could manage to buy only 70 tons a day.

“However, we cannot buy at higher prices as exporting prices stay unchanged.

“Farmers have the right to sell to those who pay higher,” he said.

The high prices offered by Chinese traders have sent many local traders to rush to buy the type 1 pineapple in Kien Giang and Tan Phuoc districts.

However, farmers in Tan Phuoc said type 1 pineapples only account for 20 percent of their yield, which they said is one of the reasons for the Chinese traders’ sudden departure.

The traders have reportedly left for the southern province of Long An to hunt for the fruit, but no authorities have confirmed this.

Meanwhile, Bon said Chinese traders loaded the fruit on their frozen containers to transport to Guangdong and Guangxi for consumers to use as fresh fruit, rather than canned.

“What’s strange here is that price of pineapple in China’s Yunnan province is only VND3,000 a kg. So why do the Chinese traders come to Vietnam to buy at such high prices?” said Bo.

“It’s also abnormal that the traders did not get business licenses but are buying the fruits via a Vietnamese intermediary,” he added.
Agro/forestry/seafood exports hit $11 billion

Vietnam earned US$2.3 billion from agro-forestry and aquatic exports in May, raising the sector’s total export revenue for the first five months of the year to nearly $10.9 billion, up 10.1 percent against the corresponding period last year.

According to the Ministry of Agriculture and Rural Development, during January to May, the export of agricultural products earned $6.1 billion, a year-on-year rise of 2 percent. Rice exports alone were worth $1.4 billion alone.

China has become the largest importer of Vietnamese while Malaysia overtook Indonesia to rank second with a year-on-year rise of 30 percent.

Several African countries such as the Ivory Coast , Ghana and Senegal also consumed a large volume of Vietnamese rice during the last five months.

Vietnamese rice exporters are making all-out efforts to seek out new markets for their products.

In the reviewed period, a total of 860,000 tons of coffee worth nearly $1.8 billion was exported, year-on-year increases of 7.8 percent in volume and 3 percent in value.

Vietnam’s biggest coffee importers are Germany and the US. Coffee exports to Indonesia also enjoyed a sudden jump of nearly eight times as much when compared to the same period last year.

The country earned over $69 million from exporting 49,000 tons of tea, a year-on-year increase of 17.2 percent in volume and 14.8 percent in value.

Apart from Russia and Germany , tea exports to other major markets significantly rose, with Pakistan remaining Vietnam’s largest consumer.

Vietnam pocketed $952 million from exporting 317,000 tons of rubber, up 35.2 percent in volume but down 7.2 percent in value. The contraction was attributed to a drop in the average price of rubber exports, now only $3,000 per ton, down $1,365 per ton over the same period last year.

Despite the difficult circumstances, rubber exports still rose to major markets such as China , Malaysia , Taiwan and India.

Vietnam banks should boost lending to spur growth: PM

Vietnamese banks with surplus funds should step up lending to the agricultural and export sectors and part of the real estate market, Prime Minister Nguyen Tan Dung said, after inflation this month eased to single-digit levels.

Despite a funds surplus, the banking system recorded negative lending growth in the first five months of this year so banks must boost lending to certain areas, Dung was quoted as saying by Voice of Vietnam radio in a Monday broadcast.

The government has shifted its priorities to stimulating expansion after the country's gross domestic product grew 4 percent in the first quarter, the lowest in three years, analysts said.

Earlier this year, Hanoi tightened bank loans in a bid to control its rate of inflation, which was one of the highest in Asia last year, and that has curbed growth, analysts said.

Vietnam's inflation rate has fallen below 10 percent for the first time since October 2010, with prices in May rising 8.34 percent from a year earlier after an annual growth rate of 10.54 percent in April.

Fresh loans should go to help farmers and to the export sector, which has recorded strong growth so far this year, Dung was quoted by the radio broadcast as telling a cabinet meeting on Sunday.

Exports in the first five months of 2012 jumped 24 percent from a year ago to US$42.86 billion, helping narrow the trade deficit so far this year by 90 percent to $622 million.

Loans should also go to construct low-cost houses, he said.

Vietnam still aims to keep annual inflation this year at 7-8 percent and strive for growth of around 6 percent, the government said in a statement issued after the cabinet meeting, compared with its earlier growth target of 6.0 to 6.5 percent.

Money supply (M2) at the end of May rose an estimated 4.47 percent from the end of 2011 and deposits grew 5.42 percent in the period, the government said, without giving any values nor the credit growth rate.

In May 2011 money supply edged up just 1.57 percent, deposits increased 1.4 percent while loans expanded 6.92 percent from the end of 2010, based on government data.

As of Monday the central bank has cut three key policy rates by 1 percentage point for the third time since March in a bid to ease business difficulties after economic growth fell to a three-year low in the first quarter.

May’s trade gap hits $700 mln, 7-month high

Vietnam’s trade deficit in May hit some $700 million, a 7-month high, according to the General Statistics Office of Vietnam (GSO).

Specifically, the total export turnover in May is estimated to be $9.1 billion. Of which, the export value of local firms accounts for 40.9 percent, about $3.72 billion, while that of foreign firms is 59.1 percent, about $5.38 billion.

Some kinds of raw materials for the textile, garment and footwear sectors, key export sectors in Vietnam, saw their import value increase from $277 million in April to $ 315 million in May. I Inputs for those key industries, such as yarn and fabric, also saw significantly increased import values, with a respective month-on-month rise of $23 million and $95 million.

A number of products for the agricultural and industrial sectors also saw sharp month-on-month increases in imports with $32 million for fertilizer, $12 million for pesticides, and $5 million for petroleum products.

Conversely, rice and coffee saw a $40 million decline in export value compared with the previous month. Automobile and motorcycle industries also decreased $4 million in export revenues.

With the new figures, the country’s trade gap has widened to $622 million, about 3.5 times higher than that of the first four months, said GSO.

Vietnam earned $42.86 billion from exports during the period, while it spent $43.48 billion on imports, up 24.1 percent and 6.6 percent respectively, over the same period last year.

The surge in imports may signal the recovery of domestic production, as most imported goods were raw materials serving local production, said Le Minh Thuy, director of the GSO’s Trade Department.

The government’s decisions to loosen monetary policy and cut interest rates in the face of reduced inflation can be considered positive factors in boosting domestic production as well as export and import activities, she added.

The trade deficit in the first five months of this year was equal to only a tenth of that during the same period last year.

There are still many signals of a slowdown, however, as the import of many raw materials declined sharply compared with the same period last year.

Imports of cotton, fiber, vehicle parts and fertilizer went down by 33.8 percent, 14.2 percent, 37.8 percent and 13.6 percent respectively in January-May.

Petrol and oil imports also dropped by 13.3 percent in value and 23.2 percent in volume, while imported gas saw a 17 percent and 27.6 percent decrease in value and volume respectively.

However, the import value of electronic and computer components saw robust growth in the first five months of the year.

The import value rose 103.4 percent to more than $4.54 billion, helping the industry gain an export turnover of $6.41 billion from exporting semi-built or completely-built products.

The export of mobile phones alone increased 110.9 percent to $3.67 billion, surpassing the export value of crude oil to rank second among the country’s biggest export earners.

Textiles and garments continued to top the list with earnings of $5.33 billion.

The capital city of Hanoi posted a $5.1 billion trade deficit in the first 5 months of 2012, with export turnover reaching $3.9 billion, up 9.7 percent year on year, while import turnover reached about $9 billion, down 13.3 percent year on year.

The southern economic hub of Ho Chi Minh City posted a $164.3 million trade surplus, with export turnover reaching $10.87 billion, up 6.8 percent year on year, while import turnover reached about $10.61 billion, up 4.3 percent year on year.

Old debts keep firms away from cheap loans

Though now over a month since the State Bank of Vietnam loosened the tightened credit valves of certain industries, and lowered the lending rate cap for four preferential sectors, accessing new sources of capital at low rates is still far from some businesses’ reach.

Businesses, even those operating in the four preferential sectors now enjoying the low lending rate of 14 percent a year, are still struggling to clear old loans they borrowed at exorbitant rates years ago, and are thus failing to develop new business projects to access the cheaper loans.

Meanwhile, banks repeatedly reject other borrowers, such as the Saigon Paper Corporation, in attempts to restructure their debts, or apply lowered rates on their old loans.

“Our creditors said they are yet unable to tell us whether we can enjoy lower interest rates for our old loans,” Saigon Paper chairman Cao Tien Vi told Tuoi Tre.

Saigon Paper invested the huge sum of VND2 trillion (US$96 million) on its paper manufacturing plant My Xuan 2 in 2007, when the lending interest rate was only 12 percent a year.

“But over the last three years, rates have skyrocketed to 22 percent, and, at times, even 24 percent,” lamented Vi.

“While we had to pay only VND45 billion in interest in 2009, interest clearances in 2010 and 2011 were VND60 billion, and VND80 billion, respectively.

"And this year, the figure is expected to be as massive as VND200 billion.”

Meanwhile, T., the director of a mechanical company in District 6, said that although his business is eligible to access a loan at the preferential rate of 14 percent a year, he has yet to consider borrowing the loan.

“As I have already been burdened by the old debt, how could I dare to get a new one?” he said.

“What’s the point of borrowing loans at this time of troubled production?”

T’s company currently has to set aside VND60 million a month on interest clearance for the VND4-billion loan borrowed in 2010.

“There are now only 20 workers left and the facility is likely to shut down operations soon,” he said sadly.

Many real-estate businesses said they are in even a tougher situation, as no preferential lending rate is intended for the sector.

“There is no door for realty firms to access loans at 12 – 15 percent a year,” said Truong Minh Dat, deputy CEO of Khang Nam Co.

“Even when the cheap loans are accessible, properties’ businesses will also stay away from them as they have yet to settle their old debts, while there are no good signs on the frozen market.”

Dat added that although the credit valve on house-buyers was loosened, no customers will take out loans to buy houses as lending rates are still high.

“Thus, even when their financial states allow, realty firms will hesitate to complete their projects since it will be hard to recoup investments due to poor consumption,” he said.

Meanwhile, Le Tan Hoa, CEO of Lilama – SHB JSC, said his company is still unable to access loans needed to complete some projects in HCMC.

“Borrowers are required to develop a solution to settle old liabilities before they can access the new ones, while we are already struggling to clear the old debts,” he explained.

For his part, Nguyen Vu Bao Hoang, deputy CEO of Thu Duc Housing Development JSC, complained that many banks have turned down his proposal to apply the current lending rates to his old debts.

“Banks said they have had to mobilize deposits at high rates, and thus cannot set a lower rate on our loans.”

Vietnam’s economy expected to experience qualitative growth

The Vietnamese economy will enter a cycle of qualitative growth in 2013, said President of the Saigon Invest Group (SGI), Dang Thanh Tam, at the 18th Annual “Future of Asia” Conference which took place recently in Tokyo, Japan.    

The conference attracted heads of state and the world’s leading economists. This was the first time a Vietnamese businessperson was invited to speak at the conference.

According to Tam, the Vietnamese economy is going through a period of wide-ranging restructuring during 2011-2012 to revise its growth model.

From 2000 to 2011 the country experienced an annual GDP growth rate of 7 percent, thanks to increased money supply, borrowing on interest from the private economic sector, public investment and open-door policies to attract foreign investment.

The Vietnamese Government has made great strides towards restructuring the national economy focusing on three main areas:

First, restructuring public investment and stabilizing monetary policies to reduce the supply of money, limiting the budget deficit and increasing the efficiency of public investment.

Second, restructuring businesses, corporations and State economic groups by intensifying transparency, strictly controlling finance and investment, and conducting initial public offerings (IPOs).

Third, restructuring financial systems, particularly the banking system, by reducing the number of banks, dealing with weak banks and their bad debts, ensuring liquidity and improving financial targets in accordance with international standards.

The Vietnamese economy showed positive signs in the first quarter of this year and the consumer price index (CPI) has continued to follow a downward trend.

Over the past five months, the CPI has grown by 2.78 percent, much lower in than the same period last year. As a result, gradually falling interest rates have helped stabilize exchange rates and improve the trade balance while there is a sharp increase in export turnover and a remarkable drop in import surplus.

In the first fourth months of this year, total export earnings reached more than US$33.4 billion, up 22.1 percent, while imports were estimated at US$33.6 billion, up 44 percent, and the import surplus was recorded at US$176 million.

The index of industrial production (IIP) in the reviewed period grew 4.3 percent over the previous corresponding months.

In 2012, Vietnam’s GDP growth is predicted at 5.5 percent and year-end inflation rate at 8.5 percent compared to 18 percent last year.

In 2013, the national economy will enter a cycle of qualitative growth with an improved trade balance and GDP increasing by 6.3 percent and inflation will continue to go down.

The World Bank (WB) has forecast Vietnam’s economic growth for 2012 at around 5.7 percent and year-end inflation at less than 10 percent.

This year’s budget deficit is predicted to account for 6 percent of GDP, down from the estimated figure of 6.5 percent a year earlier.

At the conference, Tam highlighted his group's achievements over the past few years following the Government's revised incentive policies.

SGI has become a leading 60-member private economic group in Vietnam with 6,000 members and total assets estimated at around US$4 billion. The group’s annual investment makes up seven percent of the country’s total FDI.

SGI is currently managing 20 industrial parks nationwide and has won the trust of major Japanese investors such as Cannon, Sanyo and Nippon Steel.

The group is also increasing its investments in telecommunications, mobile services, mining and energy.

Plastics exports to Japan to reach US$100 million

The country’s plastics exports to Japan is likely to hit US$100 million in the second quarter of this year, up 23 percent year-on-year, according to the Vietnam Plastics Association.    

Japan imported over US$81 million worth of Vietnamese plastics goods during the first quarter of this year, an increase of more than 200 percent over the same period last year, making Japan the biggest consumer of Vietnamese plastics products.

However, the association said Vietnamese producers and exporters to the Japanese market could still make use of untapped potential for further growth, by increasing production, improving product quality and diversifying product designs.

BIDV promotes investment in Myanmar

The Bank for Investment and Development of Vietnam (BIDV) plans to implement a key project in Myanmar, says its Chairman of Board of Directors, Nguyen Bac Ha.  

Ha made the announcement while receiving the Chief Minister of Yangon Division, U Myint Swe, in Hanoi on May 28.

He said he hopes Myanmar will approve the project to construct a factory complex for processing sugar cane and producing alcohol, ethanol and fertilizer, of which BIDV is the main investor.

Governor Swe confirmed that he will do his best to boost the approval process for this BIDV project.

He added that experts from the International Monetary Fund (IMF) and the World Bank (WB) have already arrived in Myanmar to help speed up its banking reform.

Myanmar is opening its doors to foreign banks and offering preferable conditions to those that have a representative office in the country, said the Governor, adding that BIDV is one of its leading partners.

U Myint Swe has been in Vietnam for an official visit to seek cooperation opportunities with Vietnamese localities and organisations.  

Seminar discusses economic integration

Vietnam has made significant progress in international economic integration during its 25 years of renewal.    

The view was shared by participants at a seminar in Danang City on May 28 held by the Ministry of Foreign Affairs to review Vietnam’s international economic integration in the 2001-2010 period.

Vietnam has expanded cooperation in all fields and become a member of the World Trade Organisation (WTO). It has established diplomatic ties with 180 of the 193 United Nations member countries and economic and trade ties with more than 220 countries and territories.

The country successfully assumed the position as a non-permanent member of the UN Security Council in the 2008-2009 term as well as the ASEAN presidency in 2010.

Delegates also pointed out recent achievements and challenges in the nation’s process of economic integration.

Dang Dinh Quy, President of the Diplomatic Academy of Vietnam, said the information presented at the seminar is very useful for Vietnam in reviewing its economic integration in recent times and devising measures to make the process more effective in the future.

It will also help the country achieve its development targets and promote the cause of socialist building, said Quy.

Direct air route links Buryatia to Vietnam

A passenger plane, Boeing-767-300, touched down the runway of Cam Ranh airport on May 28, kick-starting direct flights between Ulan-Ude, the capital city of the Republic of Buryatia, and the central province of Khanh Hoa.
Buryatia’s Nord Wind airlines has opened direct flights to famous destinations in China and Mongolia after its international airport Baikal was enlarged and upgraded.

It is scheduled to launch two direct flights to Antalya (Turkey) and Bangkok (Thailand) in June, and plans subsequently to open similar flights from Buryatia to Seoul (the Republic of Korea) and Tokyo (Japan).

Baikal airport received 187,000 passengers last year and aims to raise the figure to 250,000 this year and 500,000 by 2015.

By 2014, Baikal airport will have received total investment of over 1,000 million roubles, equal to US$33 million.

Investment in Myanmar to hit $2b
Viet Nam's investment in Myanmar is expected to reach US$2 billion by 2015 from its current $500 million, said Tran Bac Ha, chairman of the Association of Vietnamese Business Investors in Myanmar (AVIM).

Ha, also chairman of the Bank for Development and Investment in Viet Nam (BIDV), made the statement at the meeting with Myint Swe, chief minister of the Yangon Division, accompanied by a delegation of more than 20 Myanmar businesses in Ha Noi yesterday.

Statistics showed that by the end of last year, Viet Nam had 15 planned investment projects in Myanmar with total registered capital of $514 million.

Several initiatives, including those of Simco Da River Company, Viettel, Vietnam Airlines, PetroVietnam, PetroVietnam Exploration and Production Corporation (PVEP) and Viglacera Corporation, have obtained business licences thus far.

Recently, Hoang Anh Gia Lai Real Estate Development Company invested $300 million in a trading, office and housing complex in Yangon.

"Viet Nam has opened direct flights from Ha Noi and HCM City to Yangon in efforts to promote trade and tourism between the two countries," Ha said.

However, he added that the two sides needed to further promote co-operation, as Myanmar's foreign direct investment into Viet Nam has not yet reached its full potential.

The chairman said HCM City would hold a trade fair in Yangon on the 15th and 19th of next month, to include a local business delegation in search of co-operative opportunities.

He called on the Myanmar Government to approve a Vietnamese sugarcane, wine, ethanol and micro-organism fertiliser complex in Yangon.

The BIDV project is expected to produce 7,000 tonnes of sugar per day in its first phase and 20,000 tonnes in the second phase, 30MW of electricity and 1,000 tonnes of micro-organism fertiliser.

Swe said the Yangon Government would support Viet Nam's investment in Myanmar.

He added that authorities from the International Monetary Fund and World Bank have been supporting Myanmar in improving its banking system.

In addition, the country has opened its market to foreign banks, especially those with already established representative offices.

The AVIM, including 45 leading Vietnamese businesses, was established in 2009. It has organised more than 600 trips for Vietnamese business delegations and around 2,000 entrepreneurs to Myanmar for investment co-operation purposes.

Viet Nam Business Forum opens today

Viet Nam Business Forum will take place in the capital today focused on infrastructure, capital markets, trade and investment, finance, banking and education, according to co-chairman Alain Cany.

He told the press yesterday that Viet Nam Business Forum (VBF) would consist of representatives from the private economic sector consulting with the Government on improving the local business and investment environment.

"We have had working groups in different areas between the private sector and the Government over the last three months. Each will have specific evaluations and outline some recommendations to the Government," Cany said.

Vu Tien Loc, chairman of Viet Nam Chamber of Commerce and Industry (VCCI), also co-chairman of the VBF, said the event this year would offer an opportunity to both domestic and foreign business people to talk with the Government.

"The forum is very important because of the shift in the management role in the VBF. Previously, it was always hosted by the International Finance Corporation, the World Bank and Ministry of Planning and Investment. However, from now, the management role will be transferred to the private sector and include representatives from 14 organisations and associations both domestically and internationally.

At another press briefing, World Bank Country Director Victoria Kwakwa introduced a mid-term consultative group meeting to be held on June 4-5.

She said the event would centre on issues of macro-economic stabilisation in Viet Nam over the year and the process of restructuring the economy. In particularly, this year's CG meeting would be held in Quang Tri Province - a poor region in central Viet Nam faced with many difficulties in the fight against poverty due to the effects of natural disasters.

The meeting would focus on discussing topics such as natural disaster prevention and social security, she added.

HCM City calls for more tax breaks

With businesses still struggling amid the economic downturn, the HCM City People's Committee wants the Government to allow them to pay their tax every three months instead of every month as at present.

The proposal, which is considered to be a pilot measure, was raised at a conference organised in HCM City last week to implement the Government Resolution No 13/NQ-CP issued on May 10 to support troubled enterprises and boost the local market.

The resolution allows certain categories of companies – small and medium-sized and labour-intensive ones involved in sectors such as agriculture, forestry and aquaculture, garments, footwear, electronic equipment, and infrastructure – to defer payment of value-added and corporate taxes due in the middle of this year by six months.

More benefits are offered to some other categories of businesses too.

One of the important measures finding mention in the resolution is the simplification of administrative procedures.

For instance, it says that companies eligible for the six-month deferment of value-added tax only need to submit their tax returns and promise to meet the stipulations to enjoy the deferment, and do not have to wait for official sanction.

The city People's Committee, however, wanted the Government to further simplify administrative procedures by allowing every company to pay tax on a quarterly basis.

This would also enable them to plough back the money into their business.

This would be more helpful to them than the Government's measure to subsidise their loans, deputy chairwoman of the committee, Nguyen Thi Hong, said.

The HCM City Real Estate Association wanted the Government to provide more support to property firms by extending to them the same VAT breaks that small and medium-sized enterprises get since most made big losses due to the market collapse.

Officials from the Ministry of Finance told the conference they would consider these proposals and petition the Government to allow companies not in the financial and credit sectors to lend money to other firms and not to tax profits from such lending.

Australia's CPA signs co-operation deals

A co-operation agreement was signed recently between the Ministry of Finance and the global accounting body CPA Australia in a bid to strengthen the professional standards and legal framework as well as the internationalisation of the accounting and auditing profession in Viet Nam.

"Viet Nam's growth and increasing engagement with the global economy heightens the need for professional accountants and auditors able to operate in this increasingly dynamic and globalised environment," said CPA CEO Alex Malley.

"Viet Nam's membership of the World Trade Organisation and increasing engagement with the global economy have placed greater emphasis on building a legal framework geared to global integration, and this includes accounting and auditing. The importance of a strong legal framework to underpin the accounting profession and a skilled workforce to operate within this framework cannot be overemphasised," he added.

Under the agreement, CPA Australia will provide technical support and international scope to strengthen the legal framework in auditing and accounting to align it more closely with international practices.

It will also facilitate capacity building and human resource development for the finance ministry by providing scholarships to its core staff, enabling them to pursue the CPA Programme.

CPA Australia also signed another co-operation agreement with the Foreign Trade University last Saturday. The agreement will enable the parties to collaborate on professional and career development for students and university teaching staff by providing them access to CPA Australia's global networks and extensive events and seminar programme.

The university's accounting programme is now recognised by CPA Australia, meaning graduates from these universities will get a number of credit exemptions in the CPA foundation programme.