New lending regulations worry small firms

New lending regulations worry small firms, Bank chairman admits violations, More than 590 firms receive Vietnamese High-Quality Goods awards, New innovative startup club in Quang Nam

Small-sized enterprises are concerned that they would have to borrow from credit institutions at higher rates when new lending regulations take effect next month.

Under a circular issued by the State Bank of Vietnam (SBV), which comes into effect on March 15, lending rates applied by credit institutions will be fully floated, except in five special fields: agriculture and rural development, high-tech industry, export, small- and medium-sized enterprises, and supporting industries.

The lending interest rates of bank loans will be based on agreements between the credit institutions and customers, the circular said, and the SBV will remove the available lending rate cap stipulated under the Civil Code of 2015, which set a maximum lending rate of 20 percent "unless otherwise specified by other relevant laws."

The new circular, which replaces a 2001 decision, is expected to develop the country’s lending activities in accordance with international practices, besides improving their transparency.

Experts have so far hailed the new regulation, saying that it will help the country’s lending meet the requirements of a market economy as the lending activities will mainly depend on market demand and supply, and the credit worthiness of customers.

However, some firms, especially small ones, are so far concerned that they will have to borrow bank loans at higher rates.

Though agreeing that the new regulation is in accordance with market mechanism, director of a logistic firm, who declined to be named, said that he was concerned about his firm’s loans next time, as it would be hard for his firm to be able to compete against large firms who have better credit worthiness.

Nguyen Bang Tam, chair of the enterprises group at HCM City’s Binh Thanh district, which is home to many SMEs, told Dien dan doanh nghiep (Enterprises Forum) newspaper that the removal of lending cap was in accordance with the market mechanism; however, it might cause unfair access to bank loans for small-sized firms, as they have to compete with large firms.  

However, Tam have also urged firms to take measures to build up their firms better to be able to get bank loans at the most reasonable rates.

Vice Chairman of the Vietnam Pepper Association Phan Minh Thong said that one of the solutions was to focus on building the financial reports of firms, which should be audited by prestigious organisations to be able to get bank loans at reasonable rates.

Credit institutions often give high grades and credit worthiness to firms with financial reports audited by prestigious organisations, Thong said, adding that the firms therefore would likely get their loans at good interest rates.

Representatives of the Small- and Medium-sized Enterprises Association said that with the regulation, firms can consider mobilising capital from securities market if the interest rate is too high.

Financial expert Nguyen Tri Hieu said that Vietnam needs to further develop the bond market to help firms mobilise medium- and long-term capital sources, instead of focusing only on bank loans.

Consumer trust crucial in e-commerce: online business forum

How to win consumers’ trust and develop business reputation is one of the major challenges to the development of online business, experts said at the Vietnam Online Business Forum – VOBF 2017 in Ho Chi Minh City on March 3.

According to Nguyen Huu Tuan from the Department of Electronic Commerce and Information and Communication Technology, Vietnam has put in place a legal framework to ensure a favourable environment for e-commerce.

However, customers are still concerned about risks when purchasing online, he said, adding that his department has made efforts to enhance its management capability and strengthened connection between firms and consumers to protect the legitimate rights of online shoppers as well as interests of enterprises.

Nguyen Thanh Hung, President of the Vietnam e-Commerce Association, highlighted the potential of Vietnam’s e-commerce market, which is forecasted to grow at between 25-30 percent a year. 

He stressed, however, that each firm needs to develop their own development strategy in order to reap success.

Hung noted that many firms have joined the online e-trade aiming for long-term goals, but they only focused on promotion, failing to pay due attention to connecting with customers, developing a supply chain, and investing in information and communication infrastructure.

Meanwhile, Director General of Nielsen Vietnam Nguyen Huong Quynh underlined the development trend of the online business on the basis of online connection, urbanisation, consumers, e-payment, and new business models.

Therefore, enterprises in e-commerce should pay attention to basic requirements of consumers, instead of merely offering promotion or discounts, she said.

Quynh also advised firms to develop their brand names to improve their competitiveness, while connecting with partners to support each other.

Workshop looks to promote clean production in rice value chain

Agriculture sector insiders put forth solutions to improve the entire rice value chain towards clean production, especially in the Mekong Delta, at a workshop in Ho Chi Minh City on March 3.

At the event, rice exporters said Vietnam is facing difficulties in rice export as the volume of shipments dropped from the record of over 8 million tonnes in 2012 to 6.6 million tonnes in 2015, and is still falling. Although the country ranks first in the rice export volume, it is facing challenges in quality and also climate change impacts, hence the need for solutions to reshuffle the entire rice production chain. 

Tran Van Nhan, Director of the Vietnam Cleaner Production Centre Co. Ltd, said a Swiss-funded project on minimising industrial waste towards low-carbon production has selected rice processing to apply clean production solutions since this link has major influence on the entire chain.

Accordingly, rice producers have been instructed in how to adopt energy efficiency solutions in rice hulling and grinding and to optimise rice husk. Husk can be used to make fuel (husk briquettes and husk fuel blocks) or silica can be extracted from rice husk ash to be used as an additive in producing construction materials, he noted.

The Vietnam Southern Food Corporation (Vinafood 2) has expanded the use of energy efficiency solutions in rice production at eight subsidiaries in the Mekong Delta. They have modified equipment to use rice husk, instead of oil or coal, as fuel. They have also modernised rice processing lines to raise productivity and reduce fuel consumption.

Pham Van To, deputy head of the technique and basic construction division at Vinafood 2, said since 2013, the Song Hau Food Company – an affiliate of the corporation – has effectively applied energy efficiency solutions, saving 980,000 kWh of electricity so far.

Those solutions have brought about economic benefits while helping to reduce greenhouse gas emissions, he added.

At the workshop, experts also suggested ways to improve other steps in the production chain relating to land preparation, rice seed and pesticide use, processing and sale, thereby raising Vietnamese rice’s competitiveness in the global market.

The Swiss-funded project on minimising industrial waste towards low-carbon production has been implemented in several countries with a view to gradually reducing industrial waste and by-products and promoting the use of waste as a source of fuel.

In Vietnam, the project is being carried out in rice and coffee processing. Since 2013, the project has helped 16 rice processing factories and 10 coffee processing companies adopt clean production practice, saving over 1 million kWh of electricity (equivalent to more than 80,000 USD) and reducing 621 tonnes of CO2 emission each year.

Bank chairman admits violations     

Former Ocean Bank chairman Ha Van Tham admitted his violations on Thursday, saying his actions were aimed at saving his job and preventing the bank from going bankrupt.

In one of the biggest economic crime cases in Viet Nam, Tham and 47 other former leaders and employees of the bank are being tried for charges including breaching loan regulations of credit institutions, abusing positions and power while on duty and intentionally acting against State laws on economic management, causing serious consequences.

The fourth day of the hearing at the Ha Noi People’s Court focused on questioning defendants to make clear their violations in illegally paying interest rates outside of deposit contracts to customers, causing losses of VND1.576 trillion (US$70 million) for the bank, affecting the central bank’s monetary market management policy and hindering the implementation of State’s monetary policy.   

Tham admitted his violations and said his actions were caused by a need to complete his quota and avoid being dismissed. He said the payment to “care for customers” was illegal, but the bank could have gone bankrupt if they had not done it.

He asked the court to reduce legal responsibilities of his accomplices, because they were also forced to do so to adapt to the difficult context at that time.

The trial, which opened on Monday, is expected to last 20 days.

According to the People’s Procuracy’s indictment, Ocean Bank committed extremely serious violations in lending, mobilising deposits, and paying customers higher interest rates than the ceiling regulated by the central bank, causing heavy losses for the bank and its shareholders and hindering the implementation of State monetary policy.   

The indictment also stated that while holding the highest position at Ocean Bank, Tham personally directed the Ocean Bank Board of Directors to approve a loan to Pham Cong Danh, former Managing Board Chairman of the Construction Bank.

The loan was approved without meeting loan conditions and without collateral assets, causing losses of nearly VND350 billion ($15.5 million).

Other defendants present at the hearing included former director general Nguyen Xuan Son and Nguyen Thi Minh Thu, former deputy director general Nguyen Van Hoan and Le Thi Thu Thuy, and former directors of Ocean Bank branches and transaction offices.  

Tham, 43, was arrested in October 2014.

Under Tham’s direction, Ocean Bank’s bad debts climbed to nearly VND15 trillion ($666 million), with pre-tax losses reaching more than VND10 trillion as of March 2014.

The Ocean Bank case is one of the six biggest economic crimes that the Central Anti-Corruption Steering Committee was asked to bring to trial by the first quarter of 2017.

The State Bank nationalised the Ocean Bank in May, 2016. 

Deputy PM meets with EuroCham delegation     

Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh on Friday praised the European Chamber of Commerce (EuroCham) for being a bridge between the Government and the European business community.

The delegation meeting with the Deputy PM was led by Eurocham Chairman Michael Bahren. Also at the meeting were the Ambassador, Head of Delegation of the European Union (EU) to Viet Nam and representatives of leading European enterprises doing business in Viet Nam.

Eurocham has also sucessfully acted as an advisory and supporting body for European enterprises in their development process in Viet Nam, Minh said.

He said EuroCham and the EU Delegation had also played a positive role in promoting economic ties between Viet Nam and European countries.

Minh appreciated EuroCham’s efforts in publishing its White Book on business and investment environment in Viet Nam.

He said the Vietnamese Government was determined to build a constructive Government to better serve the people and businesses, a Government of integrity, transparency and efficiency, one that says no to corruption, negativity and wastefulness.

Minh suggested that EuroCham and the EU Delegation in Viet Nam continues to stand beside the Vietnamese Government as it strives to become an attractive investment market.

Bahren affirmed EuroCham’s commitment to support and promote European businesses link with the Vietnamese economy.

He said publication of the White Book was an important activity of EuroCham in carrying out its commitment.

This is the 9th year that EuroCham is publishing the White Book which gathers evaluations, analysis and recommendations of the European business community about the investment and business climate in Viet Nam.

Bahren said a recent EuroCham survey of 950 members on the business environment in Vietnam found European investors optimistic about the Vietnamese market and wanting to continuously expand investment here.

One of the main factors for this optimism is that the Viet Nam-EU Free Trade Agreement would be signed and come into effect in 2018. He said EuroCham would actively support and accelerate the process of ratification of this agreement in the member states.

Bahren also thanked Vietnamese Government for maintaining dialogue with the foreign business community.

At the meeting, EuroCham outlined some orientations for activities in the coming period, including strengthening of links between Vietnamese localities and carrying out projects to promote European enterprises, including small- and medium-sized enterprises, to explore investment and business opportunities in Viet Nam.

More than 590 firms receive Vietnamese High-Quality Goods awards


This year’s Vietnamese High-Quality Goods Awards were granted to 592 local businesses at a ceremony held in HCM City on Thursday.

More than 40 of the firms have been recognised for 21 consecutive years.

Most of the winners are manufacturers of sauces, spices and confectionary; non-alcoholic beverages; cosmetics and chemical cosmetics; jewellery; electrical and household machines; and dried foodstuff and instant food.

Speaking at the awards ceremony, Nguyen Thanh Phong, chairman of the city People’s Committee, said the high-quality products programme had become the city’s key trade promotion programme, with the high-quality Vietnamese logo now recognised as a prestigious label.

City authorities said that more and more local businesses are being recognised for having high-quality products, which shows their continuing efforts to improve their competitiveness in the world market.

The awards are organised by the Business Association of High-Quality Vietnamese Products each year.

At the event, the association launched a new set of quality standards based on both local quality norms and the standards adopted in developed countries for high-quality Vietnamese goods.

Vu Kim Hanh, the association’s chairwoman, called on companies to adopt new standards to safeguard consumer interests and improve competitiveness.

The awards ceremony was attended by 1,000 delegates, including State officials, leaders of cities and provinces, representatives of international organisations, and businesses.

APEC aims at inclusive growth     

An agreement to enhance trade linkages and foster sustainable, inclusive and innovative growth marked a positive wrap-up to the first Senior Officials’ Meeting (SOM 1) and other related APEC meetings on Friday.

The results achieved at the meetings laid the ground for following SOMs and the year-end Summit, said SOM Chair and Deputy Foreign Minister of Viet Nam Bui Thanh Son.

He said SOM 1, featuring senior officials from the 21 APEC member economies, was significant for three reasons: it was taking place in the context of uncertainties and continued slow growth of the regional and international economy; the bloc faced the challenges of meeting Bogor Goals in three years; and the enterprise community as well as the public pinned high hopes on APEC contributing to an improved business environment and improving people’s quality of life.

“The meeting brought together APEC officials determined to enhance co-operation towards addressing issues and challenges facing the whole region,” the Deputy FM said.

On the 2020 deadline for free and open trade among the economies, called the Bogor Goals, APEC Secretariat’s Executive Director Alan Bollard said: “We have made huge progress on it, it’s fair to say but over the last couple of years, that progress is slowing down so we need to continue regulatory reforms.

“We know that it is a long game we are playing. So Viet Nam is contributing many initiatives this year. It will continue the work that was done by Peru last year, the Philippines the year before and Papua New Guinea next year.

“Viet Nam is already going to help some discussions on where APEC should go after 2020, should it be more of the same or should we take a different approach,” he said.

Under the theme of “Creating New Dynamism, Fostering a Shared Future,” APEC members have high expectations of a shared future, because that has always been the goal, nothing can change that, Bollard said.

Convening for the first time in 2017 in Nha Trang City with Viet Nam as the chair, senior officials are developing trade and economic policies that all corners of society can embrace and benefit from across APEC – whose member economies circle the Pacific Rim and account for three billion people, half of global trade and 60 per cent of world GDP.

The emphasis this year has been on providing new direction for regional economic integration and promoting sustainability in APEC; greater support for workers and small business participation in trade; and enhanced food security and agricultural sustainability in an era of climate change.

“The biggest achievement of SOM 1 was the high consensus on enhanced economic and trade co-operation and linkage, and sustainable, inclusive and innovative growth,” Son said.

All four orientations proposed by host Viet Nam received unanimous support and agreement.

First, co-operation orientations and concrete steps must be persisted with to reach the Bogor Goals on free trade and investment in 2020.

Second, a mechanism must be formed for discussions on post-2020 APEC visions.

“Viet Nam plans to hold multi-party dialogues on APEC towards 2020 with a post-2020 vision and all member economies agree that the mechanism will encompass not only Government officials, but other parties such as scholars, enterprises, and international and social organisations,” Son said.

Third, the members will re-orient APEC co-operation, focusing not just on free trade, but on ensuring inclusiveness of trade and growth.

Fourth, APEC should remain a leading co-operation mechanism to address practical demands of the people, that is the development of human resources in the digital age, cross-border e-commerce, supporting industry, and rural-urban development to reinforce food security and quality growth.

“APEC will continue its leading role in enhancing co-operation to support the multilateral trading system, gradually realise a free trade area in the region and connect micro, small and medium enterprises,” Son said.

During the 12 working days, all the four committees and 34 out of 53 working groups of APEC sat together for 60 meetings, workshops and dialogues and approved co-operation foci for each committee and group in 2017.

The other working groups will commence their meetings in the months to come. Numerous capacity building projects have also been put forward to support member economies take better advantage of trade, investment and business opportunities brought about by APEC co-operation.

SOM 1 delegates also approved the agenda for the APEC Year 2017, which includes three Senior Officials’ Meetings in Nha Trang, Ha Noi and HCM City, and Ministers’ and Ministerial Meetings and the Summit Week in Da Nang.

New innovative startup club in Quang Nam     

Quang Nam provincial People’s Committee held a ceremony to launch a new innovative startup club taken place in Hoi An City on Friday.

The project reflected the spirit of the Prime Minister’s official Decision No. 844/QD-TTg on May 18 last year, promulgating a scheme to support the national innovative startup ecosystem by the year 2025.

This club has appointed Phan Xuan Thanh, Director of EMIC Hospitality Company, as its chairman and targeted members of young entrepreneurs club, students, pupils, giving priority to outstanding people with startup enthusiasm and eagerness to contribute to the success of the province. The club will operate in accordance with the law and its own regulations.

The main responsibilities of innovative startup club are organising activities, supporting events or forums related to innovative startup themes, providing consultancy services and training. The club also seeks out and connects investment funds and investors, introduces and evaluates innovative startup projects, gathers people whose passion and capacity are suitable for sharing ideas, and serves as a format to exchange experiences and register for startups.

The club aims to promote and develop entrepreneurship ecosystem in Quang Nam, focusing on districts in the province’s northern area and Hoi An City. Besides, this is an opportunity to connect investment resources and accelerate startups process, Deputy Chairman of the committee Le Tri Thanh said in the ceremony.

The establishment of this club has played an important role in promoting local entrepreneurship startups; especially in terms of tourism, sciences and technology. In addition, it will have close co-operation with Da Nang business incubator to contact, access to international investment funds in order to introduce potential projects within the club. 

Enterprises urged to adapt to environment     

Enterprises must adopt new business models and create value beyond the expectations of customers to succeed in today’s competitive, fast-changing environment, delegates said at a forum held in HCM City on Thursday.

Tran Anh Tuan, CEO of Pathfinder, who specialises in market research, brand strategy and communication, said the IT boom had transformed many aspects of daily life, including the way consumers interact with businesses.

“The world changes every day, especially marketing tools. If we only use traditional marketing tools, it will be difficult for us to grow,” he said.

The marketing strategies recently focus on an “omni-channel” since customers interact with businesses via multiple channels, he said.

Previously, customers visited brick-and-mortar shops to buy products. Now, consumers can engage with a company in a physical store, on an online website or mobile app, or through social media.

“The problem is how to turn them into loyal customers,” he said.

The term “omni-channel strategy” refers to a significant shift in which marketers enhance the customer experience, regardless of channel or device.

Though many new Vietnamese businesses have been established, many of them face difficulties because their branding is weak.

They have not developed a long-term strategy and their business models have no competitive edge, Tuan said.

In addition, distribution systems are a crucial weakness of Vietnamese enterprises due to financial limitations

Businesses are losing customers because they have not caught up with new trends and have not applied modern management technologies, among other reasons, he added.

An Ha, CEO of AntBuddy, said that businesses have not employed effective measures to retain customers. The trend today in business is to reach customers at any time or any place.

Tuan pointed out that businesses were still only focusing on products and services and not their business model.

Since products and services can be similar among businesses, companies need to clearly differentiate their offerings to attract more customers.

“Traditional enterprises should look at their business models to improve their competitiveness,” he said.

Nguyen Phi Van, a global franchise expert, said businesses must strive to be different and not settle for the same experiences that competitors are offering.

Companies need to use digital technologies with their existing products and services to create value that extends beyond customer expectations, she said.

“Our internal capacity and management still lag behind foreign firms, but technologies can help us have greater advantages in the future,” she said.

Tuan said that while inexpensive digital tools have been created for small enterprises, the “most important thing is to make the right investment in technologies, process and people.”

Organised by the Business Association of High-Quality Vietnamese Products, the forum included a talk show on young businesspeople, digital technology used in business management, and a discussion on startups.

Topica founder institute marks five years with start-ups     

The Topica Founder Institute (TFI) held its fifth anniversary ceremony this week, reviewing its contributions to the start-up community over the past half-decade.

Since its first course’s graduation ceremony on April 2012, there have been 60 start-ups graduated in Ha Noi, HCM City and Bangkok.

TFI is a member of the Global Founder Institute Network, which has branches in 60 countries and headquarters in Silicon Valley. TFI is a start-up accelerator program owned by Topica Edtech Group, the leading e-learning group in Southeast Asia with more than 1,000 employees and 1,800 lecturers in Bangkok, Da Nang, HCM City, Ha Noi, Jakarta, Manila and Singapore.

It is the only accelerator in Viet Nam that had graduated start-ups that have garnered up to US$20 million investment.

New lending regulations worry small firms, Bank chairman admits violations, More than 590 firms receive Vietnamese High-Quality Goods awards, New innovative startup club in Quang Nam