Urban upgrade project in city risks capital cut

The Urban Upgrade Project in HCMC might be disqualified for continued capital support from the World Bank due to slow progress caused by site clearance and compensation, and sluggish procurement, according to the bank.

The warning was repeated several times by the World Bank’s representatives in a meeting on Wednesday morning with the city’s government. The global lender said its Official Development Assistance (ODA) capital for the project could be ceased due to the problems.

According to the bank’s judgment, the project of rehabilitating Tan Hoa – Lo Gom Canal Basin was one year behind the schedule and it could be even slower.

Hoang Thi Hoa, the bank’s team leader in charge of the project, said the bank hoped all civil works would be completed by 2014 as mentioned in the agreement between the World Bank and the city. However, she stressed the city should carefully calculate the implementation of underground projects to avoid traffic congestion.

Besides, Hoa also proposed the authorities to have a source of counter capital for site compensation and on-time site handover.

HCMC chairman Le Hoang Quan said he had instructed related agencies to quickly conduct the site clearance and compensation.

“Contractors must speed up implementation progress of projects for disbursement on time. There are some project components whose disbursement rate is just 27%,” he said.

At the meeting, the two sides also discussed problems facing two other components of the project, including upgrading infrastructure of low-income people residential quarters as well as improving housing and living conditions for residents.

The urban upgrade project of HCMC, having six components, has been carried out since 2004 with the total investment capital of US$592.7 million, US$266.8 million of which was loaned by the World Bank.
Gas import facility to be built in Binh Thuan Province

The Government has approved a project by PetroVietnam Gas Corporation (PV Gas) to develop a port for importing gas in Binh Thuan Province’s Ham Tan District with such key components as a port, storage and re-gasification areas, the company said.

Do Khang Ninh, director general of PV Gas, said the Government approved the project site after the company in April had proposed five locations for the port, including three sites along the Thi Vai River in Ba Ria-Vung Tau Province.

PV Gas will complete the building layout of the port by the year’s end which will later be submitted to central authorities for approval. Construction will be deployed next year, Ninh added.

The project with a total estimated investment of over US$1 billion will be capable of receiving around two to three million tons of liquefied natural gas a year.

At present, the demand for gas nationwide reaches some ten billion cubic meters a year while the local gas industry could supply merely around 8.5 billion cubic meters, meaning the country is still short of over one billion cubic meters a year.

Ninh said PV Gas was in talks with partners from Qatar and Australia for contracts to buy gas in the next several years.

In addition, PV Gas also has intensified the exploration as well as exploitation activities off the northern, central, and southern regions in order to meet the increasing need of gas in the country.

Economic laws to be revised for more liberal environment

A project to amend 16 economic laws and related legal guidelines has been kicked off to improve Vietnam’s business environment, and special seminars will take place from next week to look into current impediments.

The project is carried out by the Government Office, the Vietnam Chamber of Commerce and Industry (VCCI) and the U.S.’s Star Project from now to November, 2011. Thoi bao Kinh te Sai Gon under Saigon Times Group serves as the media sponsor.

Lawyer Tran Huu Huynh of VCCI said each of the laws and instructions will be reassessed by three expert groups from VCCI, Star Project and ministerial agencies invited by the Government Office. These groups will analyze the pros and cons of each law as well as gather petitions from business associations to compile 16 reports in total.

These reports will be then merged into a comprehensive report to submit to the Prime Minister, the National Assembly and related ministries, suggesting specific changes in law making and practice to provide a more liberal business environment for Vietnam’s enterprises.

Dinh Dung Sy, deputy head of the Law Division under the Government Office, said “now is the critical moment to reconsider the law system to create a corridor leading the economy to the next development stage.”

During the progress of the reports being prepared, many seminars will be held by related parties in Hanoi and HCMC to collect enterprise public opinions. The first seminar is estimated to take place on August 16 in Hanoi to cover the ideas on the Enterprise Law.

The first seminar will have the participation of prominent experts Nguyen Dinh Cung and Cao Ba Khoat, who had contributed greatly to the compilation of the Enterprise Law more than a decade ago. Later on, similar seminars on other economic laws will be held in August and September.

The 16 laws and guidelines proposed to be revised include the Enterprise Law, the Investment Law, the Trade Law, the Intellectual Property Law, the Civil Code, the Land Law, the Value-Added Tax Law, the Corporate Income Tax Law, the Tax Management Law, the Custom Office Law, the Audit Law, the Marine Law, the Construction Law, the Real Estate Law, and the Environment Protection Law.
Intel strengthens ties with Nguyen Kim

Nguyen Kim Joint Stock Commercial Company, a leading Vietnamese retailer of home appliances, on Thursday signed a second cooperation agreement with Intel Vietnam affirming bilateral strategic cooperation in building and developing computer retail outlets.

General director of Intel Vietnam Pham Do Tuan said this second agreement, which lasts until the end of 2015, marked important advances of the two companies in improving IT applications in the daily lives of Vietnamese people.

Under the agreement, Nguyen Kim and Intel are committed to carrying out programs and projects for the benefit of customers, supplying basic knowledge of information technology for students, teachers, workers and even housewives, said Hoang Thi Nhan Vy, deputy director general of Nguyen Kim.

Nguyen Kim will also give support to Intel to display and introduce new products and technology at its stores nationwide.

In return, Intel Vietnam will organize training programs for Nguyen Kim employees and support after-sale services. The two parties will jointly conduct studies to develop new products at Nguyen Kim.

Plastics industry may not be as durable as its product
Despite high export growth in recent years, the plastics industry faces a number of difficulties including the need to import 80-85 per cent of raw materials and additives for production.

High interest rates on loans, technical barriers set by import countries, and a labour shortage are also slowing down export growth.

Speaking at a conference on the future of the plastics industry, Ho Duc Lam, deputy chairman and general secretary of the Viet Nam Plastics Association (VPA), said the industry from 2005-2010 experienced an annual growth rate of 20-25 per cent, making it one of the fastest-growing industries in Viet Nam.

However, high interest rates on loans and a rise in input costs have led to problems for many companies, especially small – and medium-sized firms, Lam said.

Nearly 20 per cent of the members of the association has stopped operating because of financial difficulties, he said.

More than half of enterprises involved in the plastics industry are small, with investment capital under VND1 billion (US$48,050).

As a result, they are often short of capital to expand production, trading, and import of raw materials.

In addition to trade barriers and high interest rates, a labour shortage has created an unhealthy market in which local firms are competing to attract workers.

Lam said the number of exports to the US and EU, the two largest markets for Vietnamese plastic products, had fallen in recent times because of economic uncertainty in both regions, as well as the US's high anti-dumping tax levied on Vietnamese plastics bags and shopping bags.

Despite difficulties in the first half of the year, the industry still achieved 10-12 per cent growth in the period, Lam said, adding that Vietnamese plastic products are exported to more than 55 countries and territories.

He said export growth for the remainder of the year was not expected to be robust since many importing countries would impose technical barriers to protect local production amid global economic difficulties.

Speaking at the conference, Leon Chee, director of Dun&Bradstreet for the Asia-Pacific region, said the US was still an important market for Vietnamese plastics products, but that new export markets were needed to ensure sustainable exports.

The Middle East and Africa, for instance, have less strict standards and fewer trade barriers for exports.

Chee also promoted the use of IT tools with databases that companies can use to find more customers and suppliers and assess the credit risks of other companies worldwide.

Le Dang Doanh, former director of the Central Institute for Economic Management, said current difficulties in the industry presented an opportunity for companies to restructure, save costs, and change their products to raise operational efficiency.

At the conference, Le Quang Thang, deputy general director of Techcombank, announced that the bank would provide specific financial solutions for plastic companies to reduce their financial pressure.

It also promised to create the best conditions for plastic companies to access foreign currency sources to serve their trading, he said.

Last year, the country earned $1.49 billion from plastic exports. The figure is expected to reach more than $1.5 million, Lam said.

There are 2,000 firms involved in the plastics industry, employing more than 118,900 workers in the country.

The conference was jointly organised by the VPA, Dun&Bradstreet – a global business information provider and Techcombank.

Shoemakers face shortage of capital
The leather and footwear industry has been facing increased difficulties in sourcing capital towards development due to the current economic crisis.

At the end of 2010, the Ministry of Industry and Trade approved a development strategy aimed at the leather and footwear industry with a total investment of VND60 trillion (US$2.9 billion).

Diep Thanh Kiet, deputy chairman of the Viet Nam Leather and Footwear Association (Lefaso), said that VND2.5 trillion ($180 million) of investments would be spent annually for the next 10 years with 43 per cent of the total amount coming from local funds and 57 per cent from abroad.

The investment would be deployed in developing projects related to the leather tanning industry, industrial zones and support material centres, he said.

However, because of high inflation, many industries have cut investment alongside declining foreign investment caused by the world economic crisis, he added.

Nguyen Thi Tong, Lefaso deputy general secretary, said that it had been extremely difficult to attract investment for development purposes against the current financial situation.

There was currently not enough investment in key projects, which has meant the industry has not been able to achieve its targets, she said.

Under the new strategy, the industry's export value would reach $9.1 billion in 2015 and $14.5 billion in 2020 and the localisation rate 60-65 per cent in 2015 and 75-80 per cent in 2020 while the industry would utilise 838,000 workers and 1 million workers in 2015 and 2020, respectively.

Over the past few years, production capacity has improved while investment in the production of material has remained due to dried up investments.

Firms have been focusing on producing footwear with the minimum amount of capital at the maximum amount of profit, needing only $1-1.5 million per production line with an annual capacity of 500,000-600,000 pairs each, she said.

Viet Nam was currently able to meet only 40 per cent of leather and footwear industry demand, she added, saying that the industry would have to import material, chemical products and equipment for production purposes.

The industry has only reached 85.5 per cent of its 2000-10 target on the export of footwear and only 40 per cent in terms of localising materials used in footwear production.

During this period, no industrial complexes were built, no trading promotion centres developed and no automated production lines designed.

Nguyen Huu Thuan, Lefaso chairman, said that the industry's development over the next five years would depend on the development of leather tanning technology in Viet Nam, which still has no facilities locally.

Seeing as material has accounted for around 68-75 per cent of total production costs, producing material domestically would play an important role in the development of the industry and the increase of export values, Thuan said.

Therefore, industry enterprises would have to set up specific projects focused on building industrial complexes with good water and waste treatment systems in order to attract sufficient foreign investment in satisfying domestic material demand, he said.

Slovaks come marching

BTG Slovensko Group, one of the Slovak Republic’s leading construction firms, is looking to locate its projects in Hoa Binh province’s new Lac Thinh Industrial Park.

BTG Slovensko and the Hoa Binh Provincial Mangement Broad of Industry Parks recently announced detail 1/500 scale of Lac Thinh Industrial Park plan in which BTG Slovenko was the investor for these projects and the developer of the park’s industrial infrastructure.

Lac Thinh Industrial Park which covers 200 hectares is expected to come online in 2013’s third quarter.

Do Ho Hai, head of Hoa Binh Industrial Parks Management Authority, said: “BTG Slovensko is preparing to lodge application for licences to develop five projects in the new industrial park.”

In May this year, BTG Slovensko signed a memorandum of understanding with the lcoal government for implementing five investment projects worth €378 million comprising a beer plant, an insulation materials factory, electronic battery manufacturing, a solar battery manufacturing and dairy processing factories.

In its plan, the group would invest €38 million in the solar battery factory and €40 million dairy processing factory.

BTG Slovensko would make it a priority for building a beer plant with investment fund of €45 million for the first phase and a €75 million thermal power unit, which would become operational in 2013.

The other projects would be carried out after the completion of the industrial park’s infrastructure.

Hai said BTG Slovensko’s projects would help attract more foreign investors to the province.

Hoa Binh People’s Committee said that it would also arrange land for the group to build housing for the local workers and train workers for its projects.

Hoa Binh province, about 70 kilometres from Hanoi, has eight planned industrial parks. The province is calling for investment in clean water supply, electric power supply, tourism and construction of transport systems.

Coffee sector is close to right blend

Interest in Vietnam’s lucrative coffee industry is brewing among foreign firms.

Thai Hoa Vietnam Group chairman and general director Nguyen Van An said a number of South Korean and Japan investors were eying up investment opportunities at the company’s $32.5 million coffee processing complex in the Central Highlands province of Lam Dong.

Thai Hoa, known as Vietnam’s leading private coffee firm, is currently aiming to mobilise more investment capital for the complex where a number of coffee processing facilities are already operational.

An said a group of South Korean investors were working with Thai Hoa on a project to plant 300 hectares of coffee trees.

Last week Swiss Nestlé trumpeted a plan to build a $270 million coffee processing plant in southern Dong Nai province’s Amata Industrial Park.

Development of the plant was licenced in late 2010 and work has just begun with the completion date set for 2013. The new plant will be able to process 46,000 tonnes of coffee beans for local consumption and export a year and employ 200 local workers, while generating employment for tens of thousands of coffee farmers.

Vietnam Coffee and Cacao Association’s (Vicofa) chairman Luong Van Tu said the examples of Thai Hoa and Nestlé were just two among foreign firms ready for investment in Vietnamese coffee industry.

Vietnam is now home to 24 foreign coffee firms engaging in trading, purchasing and processing coffee beans.

“Many of them are boosting their investments into Vietnam,” Tu said. Five of the 10 biggest coffee traders in the world had penetrated Vietnam’s coffee market in the form of joint ventures or wholly foreign-invested companies, according to Vicofa. These firms include Dak Man Coffee Processing Export Joint Venture Company, the Netherlands’ Nedcoffee and Olam.

In September last year, Indian-backed Ngon Coffee Company Limited, an affiliate of leading Indian coffee processor and exporter CCL Products Group, kicked off its $18 million project to build a large instant coffee processing plant in Central Highlands Dak Lak province.

Dak Lak is home to Vietnam’s largest coffee growing areas and Ngon’s plant is one of the first foreign instant coffee processing projects in the province.

Licenced in early 2009, the 24ha European-technology project will source all of its coffee materials in Vietnam. The plant will churn out 10,000 tonnes of high-quality coffee per year and is expected to come online at the end of this year. The plant’s revenue will be $27 million for the first year of operation and $40.5 million by 2014.

In a similar development, in April last year Singaporean-backed Olam International Group opened its $50 million instant coffee manufacturing plant in southern Long An province’s Nhut Chanh Industrial Park.

The 5.3ha plant has 500 local workers and can pump out 4,000 tonnes annually and the output will be doubled by 2012. Olam now operates six coffee and spice processing factories in Vietnam.

In January 2010 Japanese-backed Mizuho Bank inked a contract to provide capital for Tay Nguyen Coffee Investment Import and Export Company, Vietnam’s biggest coffee exporter. Under the terms of the contract, the Vietnamese company will export coffee to Japan through Marubeni, Japan’s biggest coffee importer.

Bangladesh to import fuel oil from Vietnam

Bangladesh will import 120,000 tonnes of fuel oil from Vietnam’s Petrolimex as part of efforts to ease its electricity shortage by using oil-based power plants, a senior Bangladesh Petroleum Corp (BPC) official said Thursday, reports Reuters.

“Petrolimex will supply the fuel oil during July-December at a premium of $32 a tonne to Singapore spot quotes,” the official said.

BPC had paid the same premium to Petrolimex in the first half of this year and paid the same to other companies for fuel oil imports in the second half.

The Vietnamese national import-export company, normally a fuel oil buyer, turned seller for the first time and supplied 20,000 tonnes of fuel oil to BPC in the first half of this year.

Bangladesh is receiving oil supplies from a number of national oil companies including Petronas, PetroChina, Philippines National Oil Company, Kuwait Petroleum Corp, Emirates National oil Company, Maldives National Oil Company and Egypt’s Middle East oil Refinery (Midor).

BPC, the country’s sole oil importer and distributor, bought about 230,000 tonnes of fuel oil in the first-half of the year and has an expected requirement of up to 700,000 tonnes for the second-half, the official said.

Bangladesh is buying large volumes of fuels for power plants burning diesel or fuel oil, even though these are costly, as domestic gas supply have failed to keep pace with demand.

Until early 2010, Bangladesh was an occasional seller in the Asian fuel oil market, offering small volumes of about 30,000 tonnes irregularly.

High petrol price outcry

Calls are getting louder for lower petrol prices despite Ministry of Finance claims that petroleum traders are still chalking up losses.

Nguyen Minh Phong, head of the Economics Department at the Hanoi Institute for Social Development Studies, said given current global petrol prices, there was scope for domestic fuel prices to be cut.

“The issue here is whether state management entities and enterprises are ready to do this,” he said.

A92 petrol prices in Singapore – Vietnam’s main import market – have fallen nearly $13.6 per barrel this month, a drop which could help lower the local petrol price by about VND1,780 per litre. However, the retail petrol price in Vietnam remains at VND21,300 per litre.

Commenting on these figures, Phong said market authorities should consider the benefits for consumers instead of stressing the state or enterprises’ benefits. He said the price should be adjusted in line with the market mechanism.

If the petrol price was managed more flexibly, even a small decrease in petrol prices would pick up consumer sentiment while positively impacting on the price level of many other products, Phong added.

However, petroleum traders and state management agencies said petrol prices over the last 30 days were still high enough that enterprises were trading in the red.

Vuong Thai Dung, deputy director of Petrolimex which holds a 60 per cent petroleum retail market share, said in the 30 days from July 7, the average price of petrol imported from Singapore was around $123 per barrel.

“With this price level, Petrolimex is suffering a loss of VND500-600 per litre for all kinds of petrol and fuel,” said Dung.

A Military Petroleum Corporation representative said from August 1 to August 4, the company had imported A92 petrol at an average price of $123.26 per barrel. Once the firm factored in the transportation fee of $2.3 per barrel and the VND/USD foreign exchange rate of 20,680 and other taxes and fees, the gross cost was VND21,959 per litre.

Nguyen Tien Thoa, director of the Ministry of Finance’s Price Management Department, also agreed that the retail price was still VND500-600 lower than the gross cost per litre, thus, there had been no real opportunity for enterprises to lower their prices.

Hanoi builds supporting industry park

Hanoi has set up a supporting industry park aiming to double the percentage of industrial production value of its supporting industry in the total within the next five years.
Hanoi is striving to increase the industrial production value of its supporting industry in the total to 50 per cent in the next five years from the current 25 per cent
The industrial production value of the capital city’s supporting industry currently accounts for 25 per cent of the total industrial value.

Construction of the Hanoi Southern Supporting Industry Park (HANSSIP) on an area of some 600 ha in Phu Xuyen District is underway withh 60 ha being ready for use.

HANSSIP is designated for plants to produce auxilary products for the manufacturing engineering, garment and textile, footwear, electronics and informatics, auto production and assembly sectors.

Investors in the park will receive preferential treatment and wide-ranging support during their operation, including financial arrangement, labor recruitment, employee training, technology exchange, output linkage and orientation…

Once operational, HANSSIP will lure some 200 investors, creating around 30,000 jobs.

HCMC lacks capital for housing projects

Major social housing projects in Ho Chi Minh City are currently on hold due to serious shortage of capital investment, stated Nguyen Tan Ben, director of the City’s Department of Construction.  
Construction began on five dormitory projects two years ago, to accommodate 67,000 students, but now work is at a stand still.

The five dormitories were to be funded with VND3.8 trillion ($180 million) from government bonds. However, only VND1.2 trillion ($57 million) was disbursed, bringing the construction to a halt.

HCMC leaders have now decided to withdraw VND500 billion ($24 million) from the city budget, to enable the dormitories to be completed.

The present tightened monetary policies have also caused difficulties for investors in accessing loans to complete accommodation facilities for workers in the industrial and export processing zones.

Supporting Vietnamese goods in US market

A conference on ensuring the quality of export products to meet US consumer goods safety requirements was held in Ho Chi Minh City on August 11.

The event, co-organised by the US Consulate General in Vietnam, the US Consumer Product Safety Commission (CPSC) and the Ho Chi Minh City Investment and Trade Promotion Centre (ITPC), aim to keep Vietnamese businesses and exporters updated on the US safety criteria for imported consumer goods, especially those for U12 children.

According to the Consumer Product Safety Improvement Act of 2008, consumer goods imported to the US market must acquire a general certificate and another product safety certificate granted by an independent third party organisation or laboratory approved by the US government.

Richard O’Brien, US Office of International Programmes and Intergovernmental Affairs Director, said Vietnamese businesses need to enhance the manufacturing process and the quality of products to improve their competitiveness as well as constantly updating new CPSC requirements.

CPSC is ready to provide information on the US market, its legal documents and training courses to support Vietnamese businesses, he added.

The US is a large and potential market accounting for more than 20 per cent of the Vietnam’s total export revenue.

Urban expansion plans in Can Tho propel land prices

Land prices on the outskirts of Can Tho are soaring thanks to the city administration's urban expansion plans.

On July 21 the People's Committee approved detailed plans for developing urban areas along Vo Van Kiet Street which has been upgraded to link the city centre with the Can Tho International Airport.

The 692-ha area to be developed will include shopping malls and tourism and residential areas. Its future population is estimated at more than 69,000.

Earlier, the administration also approved a plan to upgrade Nguyen Van Cu Street linking Con Khuong Islet with the rural Phong Dien District, making it the longest and most beautiful road in the city.

Also under this plan, major urban developments will take place along the road.

Tran Thanh Man, Secretary of the City Party Committee, said these roads were the city's axes, not only enabling transport between inner areas and outskirts but also helping the city's push to the north and west.

The city's moves have sent the price of farmland skyrocketing, analysts said.

Le Ngoc Nuoi in Binh Thuy District's recently sold his land – situated close to National Highway 91 and 10 kilometres from the city centre – for VND1.2 million per square metre, double the official compensation rate fixed by authorities.

Also in Binh Thuy, Bui Phuoc Loc sold his 5,500sq.m farmland at the same price.

Land agents in this area said that agricultural land in Binh Thuy now costs VND1-3 million per square metre, or three or four times the prices obtaining before the city's expansion plans were announced.

Farmland along Nguyen Van Kiet Street is sold at VND2-4 million per square metre, they said.

Nguyen Quang Thong, deputy director of Hoan My Real Estate Company, said: "Since a bridge linking Con Khuong islet with the city centre was opened, land prices there have doubled to VND3-4 million.

"Though the real estate market around the country, even in Can Tho city, is very quiet because getting bank loans is very difficult, land prices in Con Khuong are constantly rising," he added.

PVN signs $95m loan agreement with Vung Ang

The Viet Nam Oil and Gas Group, PetroVietnam, has received a loan worth US$95 million to build Vung Ang Thermal Power Plant No 1 in central Ha Tinh Province under an export loan agreement signed with two Japan-based banks yesterday.

The lenders include the Japan Bank for International Cooperation (JBIC) and the Sumitomo Mitsui Banking Corporation (SMBC), which provided 60 per cent and 40 per cent of the loan, respectively.

The loan will finance the procurement of steam turbines and related equipment purchased from Toshiba Corporation and the Sojitz Corporation to construct the 1,200MW coal-fired power plant.

The Viet Nam Machinery Installation Group will be responsible for the project's EPC (Engineering-Procurement-Construction) contract worth $1.17 billion.

Nguyen Tien Dung, PetroVietnam's vice president, said that the loan amount, while not large, would play an important role in contributing capital to the project while providing an opportunity for future co-operation between PetroVietnam and Japanese banks.

"While this is the first loan between the JBIC and PVN, the contract is expected to create more co-operation opportunities for both parties based on oil, gas and infrastructure projects," said Hideo Naito, the JBIC's director of Power and Water Finance.

The $1.6 billion project, undertaken by PVN, is expected to start generating power by July 2012. When fully operational, the plant will contribute 6.64 billion KWh per year to the national grid, helping decrease national power shortages.

In April this year, a consortium of five foreign banks, including HSBC, the China Development Bank, the Bank of Tokyo-Mitsubishi UFJ, Credit Suisse and Italy's Intesa San Paolo, agreed to arrange a $904 million loan for the project.

In Viet Nam, demand for electricity has been increasing sharply against the backdrop of robust economic growth. However, the construction of power plants has lagged behind increasing demand. The $1.6 billion plant is part of the Government's national power development plan, approved by the Prime Minister in 2007.

Is monetary policy hurting stocks?
Newly-named State Bank of Viet Nam Governor Nguyen Van Binh denies the suggestion by many investors and securities analysts that the nation's tight monetary policies have led to the prolonged downturn of the nation's stock market.

"The currency market is a short-term capital market, while the stock market is a medium- and long-term channel for raising capital," Binh said. "The currency market is not functioned as the main source to feed the securities market, it is only true in a short time with a rational level," he added.

The basic goal of the short-term market is capital preservation rather than currency speculation, he said. The great demand for capital, meanwhile, has caused banks to hike deposit interest rates, turning the banking system into a venue for financial speculation.

"Banks have absorbed all the idle capital in the economy, leaving little for the stock market," he said. "That is why, when the central bank eases monetary policies, the stock market recovers, and vice versa."

Binh said the State Bank's new target to reduce lending interest rates to 17-19 per cent would be achieved as financial institutions had preserved good capital flows and the interbank rate had held stable at 12-15 per cent for the past two months.

Trades on the nation's two stock exchanges opened yesterday with positive signals overnight from the US stock market and a revival of shares on Asian stock markets.

But sluggish volumes remained the rule.

On the HCM City Stock Exchange, the VN-Index closed down by 0.14 per cent yesteday to 383.92 points, after mixed trading. The value of trades dropped 9.5 per cent from the previous day's level to VND360.1 billion (US$17.5 million), while volume remained unchanged at around 20 million shares.

"This proves that investors still have doubts about the risks of investing in securities," VNDirect Securities Co analysts wrote in their report.

Of the 10 leading shares by capitalisation, only Vietinbank (CTG), Phu My Fertilisers (DPM), Eximbank (EIB) and PetroVietnam Finance (PVF) posted gains.

Hotel developer Thuan Thao (GTT) saw heavy activity, with around 70,000 shares changing hands, following its annoucement yesterday of a major shake-up in management. It closed yesterday unchanged at VND6,000.

On the Ha Noi Stock Exchange, the HNX-Index edged up by 0.3 per cent to end the session at 66.02 points. Value slid by 11.6 per cent, however, to a very low VND179.5 billion ($8.7 million) on a volume of only 19.1 million shares.

Sai Gon-Ha Noi Bank (SHB) surprised the market by claiming the position as most-active share nationwide with nearly 2.8 million shares traded.