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World Bank backs loans to improve energy

The Word Bank signed an agreement with Electricity of Viet Nam to provide credit of US$449 million to the Electricity Distribution Efficiency Project in the country on Thursday.

The project, which aims to improve electricity distribution networks across Viet Nam in an environmentally-friendly way, will upgrade infrastructure and install new transmission lines.

Under the project, smart grid technologies will be introduced to the Electricity Regulatory Authority of Viet Nam and five electricity corporations in the northern, central and southern regions, including in Ha Noi and HCM City.

The Vietnamese groups will be supported with capacity building to calculate reasonable power prices and design management programmes for effective electricity transmission.

Total project value amounts to $800 million, with $449 million coming from the World Bank, $30 million from the US’s Climate Investment Fund, $8 million from the Australian Development Aid Agency and the rest from the State budget.

The 25-year credit loan from the World Bank will be provided through the International Development Association (IDA) with an interest rate of 1.25 per cent, service charge of 0.75 per cent and grace period of five years.

The project will partly contribute to meet targets of the national power development strategy by ensuring power security and minimising the impact of climate change.

The World Bank country director Victoria Kwakwa said the successful implementation of the project would help improve Viet Nam’s economic competitiveness.

The World Bank on Thursday approved a credit of US$70 million for the second Viet Nam Climate Change Development Policy Operation, part of a series of three operations to support Viet Nam’s institutional development.

The credit also provides parallel financing under a multi-donor budget-support programme for the Vietnamese government’s Support Programme to Respond to Climate Change.

The Japanese International Co-operation Agency and L’Agence Francaise de Developpement will provide US$145 million; AusAID, an initial AU$8 million; and Korea Eximbank, US$30 million, bringing total support to about US$253 million.

“This operation includes five policy actions under the thematic pillars of climate-change adaptation, mitigation and cross-cutting issues.

They focus on the water and energy sectors and climate-change integration into development planning, as well as a more conducive environment for climate-change financing,” a World Bank press release said.

The Policy Operation supports the development of a new Law on Water Resources and the adoption of regulations establishing the qualification and certification requirements for energy auditors and managers.

The operation also helps with the establishment of a National Climate Change Strategy, readiness for a national coordination platform for disaster-risk reduction and climate-change adaptation, and an institutional mechanism to promote climate-response financing sources.

The credit comes from the International Development Association, the World Bank’s concessional lending resource for low-income countries.

These series of operations contribute to assisting Viet Nam with sustainable development, a key element in the World Bank’s new Country Partnership Strategy with Viet Nam for the 2012-16 period.

Rice farmers are short of storage

A majority of Vietnamese farmers, especially those in the Mekong Delta, have chosen to sell their paddy at the rice fields after harvest, which has reduced their profits.

At the conference held on Monday in Can Tho City organised by the Ministry of Agriculture and Rural Development, the results of a survey on household rice-storage facilities were discussed with provincial authorities and farmers from the Delta.

To help farmers earn a 30 per cent profit from their rice cultivation and to ensure national food security, the Government appointed the Ministry of Agriculture and Rural Development to develop a warehouse system in the Mekong Delta that could stock 4 million tonnes of paddy and rice by 2013.

The warehouses include storage facilities at farmers’ houses. To prepare for the plan, MARD asked the Mekong Rice Research Institute to conduct a survey on household-storage facilities in the Mekong Delta.

The survey was conducted at 1,600 farmer households in the Mekong provinces of An Giang, Dong Thap, Kien Giang and Tra Vinh.

Dr Doan Manh Tuong, deputy head of the agricultural-research transfer centre under the Mekong Rice Research Institute, said: “Selling undried paddy at the fields right after harvest is one of the major problems in the Government’s rice-reserve scheme for storing rice at farmers households.”

Tuong said farmers preferred selling undried paddy because many did not have storage facilities. Many incur high storage costs, while others need money to pay for past investments.

In the past few years, farmers could not earn a 30 per cent profit from rice cultivation as paddy prices fell and few of them had no access to Government support.

According to the survey results, 84 per cent of farmer households in the region do not have their own paddy storage facilities.

At least 37 per cent of the rest invest their own money, 46 per cent use money from bank loans, and 18 per cent use other loans from sources outside the banking system to build storage facilities, according to Pham Van Du, deputy head of MARD’s Department of Plant Cultivation.

Ho Quang Cua, deputy director of the Soc Trang Department of Agriculture and Development, said the State agencies should be responsible for paddy and rice storage because farmers could not afford the high investments.

Pham Nhat Ai, director of the Vinh Long Department of Agriculture and Rural Development, said farmers should store their paddy and rice in their own facilities.

Government agencies should advise them on how long they should stock their paddy and rice while they await higher prices.

Duong Nghia Quoc, director of the Dong Thap Department of Agiculture and Rural Development, said the Government should help farmers who produce 15 to 20 tonnes of rice per crop to build their own storage facilities.

Pham Van Bay, deputy chairman of the Viet Nam Food Association, said farmers should be supported to build their stocking facilities.”However, it’s not easy for traders to force paddyrice prices down at harvest,” he said.

The chair of the conference, the deputy minister of Agriculture and Rural Development, Bui Ba Bong, said: “Both farmers and businesses are encouraged to build paddy and rice-stock facilities. The Government will have policies to help them get bank loans to build warehouses to store their rice”.

Seedless limes bring high profits

The use of Good Agricultural Practices (GAP) standards in the cultivation of seedless limes in the Cuu Long (Mekong) Delta province of Hau Giang has led to a higher volume of exports and better prices.

More than 100ha of Bears limes are being grown by the Thanh Phuoc Co-operative under the Global and Vietnamese Good Agriculture Practices (GlobalGAP and VietGAP) standards.

The 80-member co-operative in Chau Thanh District’s Dong Thanh Commune is growing Bears limes on 100ha.

The limes, which were originally imported from California, are sold to the Co.op Mart supermarket chain in Can Tho and HCM City and to other local companies.

They are also exported to the Middle East and Europe, with selling prices of VND10,000-30,000 a kilo.

Nguyen Van Chien, the co-operative’s chairman, said consumers preferred Bearss lime because they were large and juicy and have beautiful, smooth skins.

The co-operative harvests about 45 tonnes of seedless limes a month.

In 2010, the province’s Department of Agriculture and Rural Development helped the co-operative grow limes under VietGap standards.

This year, the co-operative began planting the lime under GlobalGAP standards on an area of 13ha to meet export requirements of several countries.

Besides planting the fruit, the co-operative’s members also produce 100,000 seedlings a year.

Members of the cooperative each earn a monthly income of VND3-5million (US$140-240), and many have escaped poverty, according to the co-operative.

The co-operative said it was planning to expand its cultivation area and invite more farmers to join.

Ngo Minh Long, deputy head of the Chau Thanh District’s Agriculture and Rural Development Bureau, said the use of international standards had increased yield and created a more stable supply.

The bureau plans to continue to support farming techniques and the use of organic fertiliser and plant-protection chemicals to meet market demand and raise income for members.

Last month, the bureau provided a total of 7,500 Bearss lime seedlings worth VND13,000 each to farmers in Dong Phuoc A, Dong Thanh and Phu An communes.

A Bearss lime plant bears fruit all year-round, yielding an average of 100 kilogrammes of limes per year.

The food industry uses the fruit for juice and food flavourings.

‘Future city’ to be built in Quang Ninh

The Tuan Chau Group and Thailand’s Amata Group have signed a cooperation agreement to build a “ Future City” in the north-eastern province of Quang Ninh.

Covering a minimum area of 5,000 hectares, the city will include a research institute, a system of international schools from pre-school to university level, a sport and entertainment centre, workshops and conference centres, and a high technology zone with a green industrial park.

The project, scheduled for completion in 2015, is expected to be a model city not only for Vietnam but the world, said a representative from the Tuan Chau Group said.

Amata Group boasts modern marine environmental treatment technologies, including a process to turn waste into fuel, and sewage into water used at golf courses.

At present the group is operating two industrial zones in Thailand ’s Chonburi and Rayong provinces and a third in Bien Hoa city, Dong Nai province, Vietnam .

During its 15-year operation, the Bien Hoa-based Amata Industrial Zone has attracted more than 110 investors from 19 countries and territories, with a total investment capital of 1.5 billion USD.-

Banking system health declining

The State Bank of Vietnam (SBV) has unveiled a number of basic indicators of the banking sector, which show the health of the banking system had weakened by end-September, reflecting the decline of the economy.

As of September 30, the total assets of the system had fallen by 1.89% compared to end-2011. In particular, the total assets of joint stock commercial banks; joint venture and foreign banks; and financial and finance leasing companies had dropped 7%, 4.56% and 6% respectively.

The deterioration in the banking system is reflected in several indicators.

First, the capital adequacy ratio (CAR) stood at 14.11% at the end of September, versus 14.55% on April 30, when SBV published data on the banking system for the first time. CAR is a gauge of a bank’s capital safety, which must be kept at 8% as regulated in Vietnam.

Second, the ratio of short-term capital used as long-term loans had risen to 16.81%, while it was only 7.58% on April 30.

Third, the credit-to-deposit ratio had reached 90.9%, down slightly from 94.7% in late April.

Some positive changes can be seen, however, such as equity capital of the system having amounted to VND413.4 trillion, up 5.76% against end-2011.

Return on equity (ROE) had improved a lot compared to the preceding month, standing at 4.14%. However, ROE of financial and finance leasing companies had declined 1.21% against the end of 2011.

Besides, chartered capital of State-run banks had picked up 27.8% over end-2011, while joint stock banks had recorded an increase of 5.24%.

An expert said the data revealed by SBV pointed to insignificant improvements in the banking system over the past four months.

Meanwhile, another statement from the central bank shows that as of July 30, 2012, money supply, including valuable papers issued to other credit institutions in the country, had increased 6.81% against last year’s end.

A rise in money supply proves that liquidity is plentiful, putting pressure on inflation.

Outstanding balance, including outstanding loans, investment in corporate bonds and off-balance sheet trust loans stood at VND2,880 trillion at the end of July, an increase of 1.24% against late 2011.

Recently, SBV announced that as of October 19, the credit growth of the banking system had reached 2.77%, much lower than expected, although some large banks had achieved high growth rates by the end of the third quarter, like Vietcombank with a rate of 8.6%, Military Bank 10%, Ban Viet 20%, PGBank 7.9% and Sacombank 8.3%.

NA wants gold market stability

Shortcomings in management and stabilization of the gold market should be remedied next year so that local and global gold prices can match and legitimate interests of citizens can be protected, says a resolution passed by the National Assembly (NA).

The NA on Thursday gave the nod to the resolution on a socio-economic development plan for 2013, calling for greater efforts to stabilize the macro-economy and to achieve lower inflation and higher growth than 2012.

The resolution underscores the need to continue to solve difficulties for enterprises and create conditions for them to access bank loans by lowering lending rates.

Banks are encouraged to give out low-interest loans to businesses active in agriculture, export and supporting industries, small and medium-sized enterprises, labor-intensive firms and developers of low-cost houses.

The resolution names eight major objectives and solutions for next year, says Vietnamnet.

Regarding economic development, the fiscal and monetary policies should be in harmony. Export must be further promoted, while import of luxury items, and obsolete machines and technologies should be restricted.

The NA demanded strict supervision on compliance to the State regulations, including regulations on interest rate cuts and access to credit.

Tackling bad debts remain a must. Loans for production and business purposes can be restructured.

In addition, the NA urged policies to prop up the real estate market next year.

As for social development, the resolution presses for further reforms of education, wages and administrative procedures.

Healthcare should receive proper investment. The coverage of social security policy should be extended, focusing on the poor and the priority entities.

The resolution stresses the need to fight corruption and wastefulness. Celebrations, conventions and state-financed business trips should be reduced.

Complaints and denunciations over land issues, especially the complicated and prolonged ones, need to be settled in 2013 and reported to the sixth meeting of the NA.

According to the Government’s report on the 2012 socio-economic situation released earlier, five targets for this year had yet to be achieved, including gross domestic product (GDP) growth, the ratio of capital for social development to GDP, job creation, poverty reduction and forest development.

Southern provinces important to trade with Cambodia

More than 50 businesses from Vietnamese and Cambodian districts met in the Mekong Delta province of An Giang to discuss how to improve investment cooperation, expand the market and increase exports into Cambodia .

According to Deputy Director of the Dong Nai provincial Department of Industry and Trade, Chau Minh Nguyet, An Giang has been selected as a venue for promoting trade relations with Cambodia as it shares nearly 100 km of border with the country and serves as a goods trading hub in the Mekong Delta region.

Representatives of An Giang and Dong Nai provinces presented their socio-economic situation and economic potential to Cambodian partners as they see vast opportunities to export their products to the Cambodian market.

Chau Van Chi, President of the Association of Cambodians of Vietnamese Origin, expressed the wish to seek agricultural partners, and called for investment in animal farming, rubber plantations and construction machinery in Cambodia .

He said he will provide information on Cambodia’s potential and demands, helping strengthen links between the two countries’ businesses.

During the exchange, five contracts were signed between An Giang and Dong Nai companies and their Cambodian partners.-VNA

Vietinbank, Vietcombank lift sagging market

Stocks gained value last week on both of the nation’s stock exchanges, boosted by a modest recovery in bank shares. However, the volume of trades decreased markedly as fears about the long-term health of the banking industry spooked investors away from the stock market.

Information released by the State Bank of Viet Nam, including data on the performance and bad debt ratios of commercial banks during the first nine months of the year, has revealed a growing malignancy inside the nation’s banking system, cautioned PetroVietnam Securities Co analyst Dao Hong Duong.

The average bad debt ratio at the end of August reached 8.6 per cent, Duong said, while the resignation of Sacombank chairman Dang Van Thanh has clearly affected the stock market over a number of sessions.

The central bank also announced last week that it had conducted a comprehensive audit of 32 credit institutions, most of which reported reduced earnings in the wake of the audits as they were asked to make stronger risk provision. Among commercial banks that had previously reported profits but which flipped to losses were Navi Bank (NVB), Tien Phong Bank, TrustBank and Western Bank.

The boost for last week’s modest rally among banking shares came predominantly from foreign investor interest in Vietinbank (CTG) and Vietcombank (VCB) – two leading banks that continue to be majority-owned by the State.

On the HCM City Stock Exchange, the VN-Index added 3 per cent in value over the course of last week, reaching 386.71 points. The average daily value of trades dropped by around 30 per cent from the previous week to VND2 trillion ($95.2 million).

On the Ha Noi Stock Exchange last week, the HNX-Index edged up 1 per cent over the previous Friday’s close to 51.58 points. The average value of trades fell, however, to just VND149.5 billion ($7.1 million) per session, a decline of 25.5 per cent, while the daily volume of trades averaged only 25 million shares.

Sai Gon-Ha Noi Bank (SHB), Navibank (NVB) and property developer Sacomreal (SCR) saw surging trading volumes and together accounted for 44.25 per cent of order matching volume last week on the Ha Noi bourse. Excluding these transactions, the average daily volume in Ha Noi fell to just 13.5 million shares.

The lack of supporting information has made investors more cautious and halted cash flows, Duong said.

“The impetus for another increase is relatively weak, so the risk of short-term share price declines will rise as stock indices approach strong resistance levels,” he said.

Petrolimex salaries soar even as losses mount

Salaries remained high for employees of State-owned petrol distributor Petrolimex even as the company posted a loss last year of VND2.3 trillion (US$110 million), according to a 2011 audit report just now made public by the State Audit of Viet Nam.

The report showed that Petrolimex paid each of its workers last year an average monthly wage of nearly VND21 million ($1,000) per month, compared to an average of VND6.6 million ($315) in the rest of the industry.

The Petrolimex audit report was released in response to requests from National Assembly members seeing to review the business operations of fuel distributors, according to Thoi Bao Kinh Te Sai Gon (Sai Gon Economic Times).

The audit report blamed Petrolimex losses in part on the declining value of the domestic currency last year against the US dollar, as well as on Government price controls on fuel. The market share of Petrolimex, the auditors also found, has been falling, dropping from 50 per cent in 2009 to 48 per cent in 2011.

The State Audit noted a number of shortcomings in the financial management of the company, with losses reaching an average of VND189 per litre of petrol sold.

Economist Ngo Tri Long told the newspaper Tuoi Tre (Youth) that the losses were huge and included losses from investments in securities estimated at VND949 billion ($45.2 million). Investments in non-core lines of business, including real estate, insurance, and banking, totalled VND1.5 trillion ($71.5 million), an amount equal to 15.6 per cent of the company’s entire equity.

The State Audit said that thorough analysis was needed to restructure the company’s operation with a focus on the fuel business. Auditors also proposed Petrolimex enhance its financial management and accounting systems and review processes from bidding to transportation.Petrolimex assets were worth a total of VND57.7 trillion ($2.75 billion) at the end of 2011, but its accounts payable were a lofty VND44 trillion ($2.1 billion).

Gold processors seek to export surplus

Gold-production enterprises have asked the central bank to allow them to export non-SJC gold and import solid gold to manufacture SJC gold to ensure an immediate supply for the market.

If this was done, it would contribute to reducing the price differential between domestic and global markets, thus limiting losses for people and credit institutions, while not affecting the country’s foreign currency resources, according to the enterprises.

Earlier, the HCM City People’s Committee made a similar proposal to the central bank’s consideration.

Currently, there is a wide gap between domestic and global gold prices, created after the central bank decided to be the only producer of gold bullion, choosing SJC as the national brand.

The decision has caused a scarcity of SJC-gold bullion on the market, making prices rise sharply.

Since then, the central bank has several times allowed bent and buckled SJC gold bars and non-SJC gold bars that still meet other standards of quality and weight to be exchanged for SJC bars for a nominal fee of VND50,000.

But several problems have arisen from this conversion process, which has become slow. People continue to suffer losses from high gold prices.

One of the problems is the quality of non-SJC gold bullion.

The Sai Gon Jewelery Company (SJC), which was allowed by the central bank to convert gold bars of other brands into SJC bullion, found that many non-SJC gold bars did not meet standards of quality and weight for converting SJC-gold. So, they then were given back to the owners.

SJC general director Do Cong Chinh said the percentage of non-SJC gold of lower quality accounted for around 10 per cent.

However, some non-SJC gold lots that contain low-quality bars make up between 55 and 57 per cent, Chinh told Nguoi Lao Dong (The Labourer) newspaper.

Owners of some non-SJC gold brands disagreed with this assessment, saying that the SJC’s gold testing machines were too old.

The director of a non-SJC gold brand, who declined to be named, said that since SJC was holding the largest share of the market, gold bars with other brands must be produced with the best standards in order to compete with the SJC gold.

He said they had no reason to produce poor-quality gold bullion.

He also said the gold was high quality because his company’s machines used to make gold bars had been imported and use new technology.

According to Tran Thu Anh, deputy director of SJC’s Tan Thuan Jewellery Plant, SJC’s gold testing machines are highly precise and made by the Da Lat Nuclear Research Institute.

SJC director Chinh also said that the testing of gold quality was supervised by the central bank around the clock.

In the face of such a controversy, an official of the central bank said that the request from companies to allow enterprises to temporarily export gold bars and import solid gold for producing SJC-gold bars would likely be approved.

Myanmar market captures investors’ attention

Many Vietnam-based companies are eyeing Myanmar as a new investment destination after the Myanmar Government approved a new foreign investment law offering strong incentives for international investors.

At a seminar on investment into Myanmar held in HCMC on Thursday, Edwin Vanderbruggen of VDB Loi Law Co. said despite the imperfect new law, Myanmar now is changing at a rapid rate.

He compared the case of Myanmar to that of Vietnam, saying the country has still attracted large numbers of foreign investors in spite of its incomplete legal corridor and yet-to-be-favorable business environment.

At the moment, Myanmar is considered the last attractive destination in Southeast Asia to foreign enterprises, he told the seminar held by the Malaysian Enterprises Department in Vietnam.

Vanderbruggen has already provided consulting services to petroleum companies, distributors and assets and private funds investing in Myanmar.

Foreign investors have considered sky-high tax levels in Myanmar the biggest barrier discouraging them from participating in the market, he pointed out. But the newly-issued law allows new investors to be subject to tax exemption for up to five years compared to only three years as specified in the 1988 law and this is really worth consideration, he said.

The new law is also loosened compared to the old regulations issued in 1988 regarding investment. Foreign entities are currently allowed to pour capital into mining, industrial and manufacturing sectors, construction, transport and repairing services, road transport or hotels.

However, a number of business activities with foreign investment will be banned or restricted in certain areas or business spheres.

Vanderburggen predicted there would be a lot of changes in the coming time which are expected to pave the way for Myanmar to join the ASEAN + China free trade zone in 2015.

A slew of enterprises have shown keen interest in the market, including foreign-invested companies operational in Vietnam.

Bill Watson, general director of Coats Phong Phu Co. in Vietnam, said he is considering a convenient point of time to make investment into Myanmar.

Several other big companies at the seminar said they had plans to open their representative offices in Myanmar soon. Therefore, there might be a tough race among foreign firms in Vietnam as well as Vietnamese companies and investors from other regional nations to invest into Myanmar in the near future.

Vietnamese firms like CT Group and Huu Lien A Chau along with many firms under the Association of High-Quality Vietnamese Goods Producers over the past time have sought ways to approach the Myanmar market to sound out investment and trade opportunities.

Credit growth on the right track

Total lending for non-production sectors decreased by 1.1% as of August 31 while credit for production industry increased considerably during this period.

The figures revealed that lending was concentrated in prioritised industries, which is in accordance with the Government’s policy to encourage credit for production industries.

The State Bank of Vietnam (SBV) has announced statistics on credit growth and lending for production and non-production sectors.

As of September 25, credit growth in the banking system reached 2.56% compared to December 31, 2011. Credit in VND was up 4.49% and down by 5.2% in USD.

As of August 31, lending for exports increased by 10.76% compared to end 2011, lending for agriculture and rural development increased by 3.82%, and for supporting industry by 7.15%.

Meanwhile, lending for non-production sectors including household consumption, securities and real estate were down 1.1% during the period and accounted for 14.21% of the total outstanding loans, equivalent to VND400 trillion (USD19.17 million).

Lending for household consumption as of August 31 decreased by 3.43% compared to end 2011. Lending for real estate increased slightly, by 0.44% and securities rose by 2.22% during the period.

Previously, the SBV estimated the country’s credit growth at from 6%-8% for this year.

EU continues to offer Vietnam import tariff incentives 

The European Union (EU) has announced a new Generalized System of Preferences (GSP) for developing nations, including Vietnam, which will come into force on January 1, 2014.

The European Parliament and the European Council have passed the revised GSP with import tariff incentives, reduced or zero tax rates, and import criteria that are favorable to developing countries.

The new GSP narrows down the range of beneficiaries in order to provide developing nations with higher effectiveness. In addition, the countries that are properly and efficiently implementing the international treaties on human rights, labor, environment and State management will receive many supports, said a source from the Europe Market Department under the Ministry of Industry and Trade.

The current GSP is still valid until January 1, 2014. During this time, policymakers need to adjust the economic policies to adapt to the new mechanism that will take effect after then.

Taking into account the proposal of the European Commission, the European Parliament and the European Council have created incentives for a wider range of products, although the number of incentives is still limited.

The time for applying the new GSP is longer and self-protection measures for plain fabrics and ethanol are enhanced.

Vietnamese goods exported to the EU will gain more advantages as many rivals will be removed from the list of beneficiaries

However, to fully benefit from the tariff incentives offered by the new GSP, Vietnamese exporters must comply with the international treaties on labor and environment.

In the first ten months of 2012, the country’s export turnover reached $93.45 billion, up 18.4% year-on-year. Exports to the U.S. grew by 17%, accounting for 17.4% of the total export turnover, while exports to the EU picked up 20.1%, making up 18.2%.

Banks lure longer-term gold deposits

Local banks are taking advantage of the central bank’s loosening move rescheduling the ban of gold mobilization until June 30 to attract longer-term gold deposits by raising gold interest rates.

Asia Commercial Bank (ACB) lowered gold deposit rates to 0.5% annually a few days ago but the bank suddenly pulled up the rates to above 1% per annum on Thursday. At the same time, ACB also encourages deposit terms from four to six months instead of just one month as before.

ACB gold depositors of one-month term will be subject to many more incentives if they change the term into four to six months.

For instance, four-month tenor interest rate stays at 1.2% a year and deposit rate of five-month tenor and six-month tenor is put at 1.5% and 1.8% respectively. The lowest gold deposit at ACB is fixed at one tael which equals 1.2 troy ounces.

Similarly, the highest rate of gold certificates at Vietnam Export Import Commercial Bank (Eximbank) set for six months is 1% yearly, with shorter terms having interest rates fluctuating between 0.5% and 0.9% annually. However, the lender does not allow gold depositors to withdraw gold prior to maturity.

At Saigon Commercial Bank (SCB), customers are offered an annual gold deposit rate of some 1% but certain customers still enjoy a higher rate, at 2%, for depositing 15 taels or more.

According to Nguyen Thanh Toai, deputy general director of ACB, the fact local lenders raised gold deposit rates are in line with the market’s changes. At the moment, banks will utilize the remaining time of the extended gold mobilization ban to improve their gold liquidity, instead of purchasing large volumes from the market to avoid chasing up gold prices.

A senior executive of a big joint stock bank said his lender mobilizes gold to deal with liquidity shortage. He affirmed that gold mobilization does not bring about profits as the credit institution is unable to lend out gold or convert gold into Vietnam dong.

Despite higher gold deposit rates, it is difficult for banks to mobilize gold as local depositors are reluctant to shift gold from one bank to another.

Local demand for gold among lenders wanting to make up for liquidity shortages has considerably tumbled. Nguyen Cong Tuong, deputy sales manager of Saigon Jewelry Holding Co. (SJC) noticed gold demand of banks has weakened since early this month. In previous times, gold volumes sold to lenders were higher than the volumes consumed by residents, he said.

Groups continue seeking Gov’t support amid limited budget   

State-owned economic groups have continued asking the government for financial support, putting more pressure on the state budget.

In a document recently sent to Finance Minister Vuong Dinh Hue, PetroVietnam said that it offered special terms and conditions for staff that had been sent abroad to work. These staff received financial assistance for accommodation, excess baggage and study fees for their children.

State-owned economic groups have continued asking the government for financial support, putting more pressure on the state budget.

PetroVietnam has proposed that the Ministry of Finance exempt personal income tax for these staff. If the recommendation was turned down, PetroVietnam would pay the taxes for the staff and the group would add the tax payment to its costs.

PetroVietnam said that by June 30 this year it had advanced VND2.9 trillion (USD138.1 million) for localities and agencies to implement their joint projects, with the group urging the Ministry of Finance to allocate capital so that the Ministry of Transport and localities could refund the outlay.

A recent statistics report showed that the monthly average salary of PetroVietnam employees topped VND17 million (USD809.5), the highest rate among state-owned economic groups in Vietnam.

By the end of October this year, the Vietnam Energy Association submitted to the Prime Minister a range of difficulties facing Vinacomin, EVN and PetroVietnam.

The association said coal export taxes which had been reduced to 10% were currently still too high compared to regional countries and continued posing difficulties for the coal sector. Therefore, it recommended the government to timely slash some taxes to help the sector.

It also noted that the coal sector would need at tens of billions of VND to build 28 coal mines and restore and expand 61 existing pits from now to 2015.

In 2007, EVN asked the Ministry of Finance’s approval for VND1 trillion (USD47.6 million) for it to offer its staff bonuses while it complained about a shortage of billions of VND for its power projects.  The proposal was refused.

Economist Pham Chi Lan said, “All of these moves show that groups still want to maintain the state subsidy mechanism,” adding that they do not share the government’s concern to ease difficulties for small and medium-sized enterprises which are on the verge of bankruptcy.

Currently, the state budget is very modest. The Ministry of Finance has even halted salary rises for state employees, meanwhile many groups offering high salaries have continued asking for financial support.

“The reason for this is prolonged monopoly. State-owned enterprises lack experience in facing competitive pressures, therefore, whenever they encounter difficulties, they seek the government’s support. If they faced real competition, they would not behave this way,” Lan commented.

Deputy Finance Minister Do Hoang Anh Tuan, said inequality exists among state-owned and private firms. When using the state budget, state-owned enterprises did not face capital cost pressures and received interest-free financial assistance every year.

Vietnam, Laos, Cambodia seek investments for Mekong sub region

Delegates attending a forum on investment and cooperation for the Mekong sub region, held in the central highland province of Dak Lak on November 9, all agreed that Vietnam, Laos and Cambodia need to work on common preferential policies to attract lucrative investments for the Development Triangle Area.

The Cambodia-Lao-Vietnam Development Triangle Area comprises of 13 provinces, covering a total natural land area of 144,000sq.km and a population of approximately seven million people.

Opening the forum, Dao Quang Thu, deputy minister of Planning and Investment, said Vietnam has now 112 investment projects in Cambodia with a total investment of US$ 2.36 billion.

In Laos, Vietnam currently has 50 investment projects in the development triangle area between three countries, with a total investment of $1.65 billion, accounting for 22.9 percent of the total number of projects and 47.5 percent of the total capital from Vietnam.

To date, five Vietnamese provinces in the area have attracted 75 projects from Cambodia and Laos with a total registered capital of $95.5 million.

Meanwhile, Vietnamese businesses have invested $3.09 billion in 75 projects in Lao and Cambodia, within the area.

However, the results have yet to match development potential as well as the strategic relationship between the three countries, he stressed.

Dang Xuan Quang, deputy director of the Foreign Investment Department of the Ministry of Planning and Investment proposed that   the countries in the region need incentives to invest in less developed and disadvantaged provinces in the triangle area.

The three countries should coordinate closely in attracting foreign direct investment (FDI) and official development assistance (ODA) from other regions for major transport projects to connect 13 provinces in the Development Triangle Area with seaports in South Vietnam, he said.

These countries should work together in the development of mechanisms and policies to prioritize investment in this area, he added.

Thong Sisuvong, a high official from Laos said that Cambodia, Laos, Vietnam need to promote foreign investment into the region to create a driving force for regional development. The three countries should create favorable conditions and policies to encourage enterprises in other countries of Asia such as Korea, India, Japan, etc. to invest in the triangle.

He said these policies aim to take advantage of the strength and resources of each country, serving as the key to removing existing obstacles to invest in the region.

The delegates suggested building large-scale commercial material supply areas to encourage and lure investments in production and for export product processing plants along arteries linking Vietnamese seaports to major world markets.

They also proposed that the governments of the three countries speed up investment licensing, especially for big projects on hydro-power, mining, cash crop planting, and infrastructure construction.

Seafood exports unable to meet annual target

The Vietnam Association of Seafood Exporters and Producers (VASEP) estimates that with the current difficulties in the seafood export industry, such as material and capital shortage, their earlier target of US$6.5 billion annual turnover will not be met but will touch only $6.1 billion this year.

According to VASEP, the nation’s seafood export revenue hit $5 billion in the first ten months of the year, a 1.7 percent year-on-year increase.

Although the seafood exports have increased, the industry turnover just fetched $6.2 billion, while the goal was set for $6.5 billion, due to obstacles currently troubling the sector.

Shrimp export turnover was about $2.2 billion, a year-on-year decrease of 8.3 percent while pangasius fish fetched $1.8 billion, the same as last year. Other seafood reached $2.2 billion, an increase by 19 percent compared to last year.

However, the Ministry of Industry and Trade is concerned that the two main exports of shrimp and pangasius are in a slump in the third quarter of 2012.

In the third quarter of this year, shrimp exports fetched $610 million, a decrease of 15 percent compared to that in 2011 and pangasius exports fetched $438 million, a 10 percent year-on-year decrease.

Due to difficulties such as material and capital shortage, more investment and slow consumption in markets, exporters cannot yield the expected turnover. Vietnam’s unstable traditional markets such as the EU countries, Japan and the US are facing an economic downturn. Besides, food safety barriers are often difficult to overcome.

The ministry said that competition in seafood exports across the globe is becoming fierce and Thailand and Indonesia are offering a lower price for shrimps, creating pressure on Vietnamese seafood exporters. For pangasius, Thailand and other countries are pouring more money to compete with Vietnam’s fish export.

Nguyen Van Dao, general manager of Go Dang Exports, is concerned as this time in previous years importers placed many orders for Noel and New Year Holiday season. However, this year very few orders were placed and at lower price.  Currently pangasius fillet in the EU country market fetches $2.6 per kilogram with which enterprises and fish farmers do not make any profits.

In the Mekong Delta province of Ca Mau, which has the most farm land for shrimps and exports the most in the country, there should be more orders for year end to reach the set goal of $1 billion in 2012. Seafood exports is one of the province’s chief economic sectors, said the People’s Committee.

Duong Tien Dung, deputy chairman of People’s Committee, said the local government has supported enterprises by seeking markets, giving loans at preferential interest rates and facilitating all paperwork to increase turnover for seafood exports for year end.

Ho Viet Hiep, deputy chairman of People’s Committee says that in the Mekong Delta province of An Giang, seafood export is also one of the province’s most important key economies. This year fish breeders and enterprises are all facing difficulties and hence the local government is trying its best to help raise exports in the last two months of the year as a decrease in seafood exports will lead to a decrease in the province’s economy.

The ministry said that to achieve the target of $7.5 billion in turnover in 2015 and $10 billion in 2020 to help farmers in rural areas increase their income, the sector needs to invest more and re-arrange its structure.

The sector should build its own brand name in the world markets and keep its important markets like the US, the EU and Japan as well as enhance exports into potential markets like China, Korea, the Middle East, Eastern Europe, Africa and South America.

Poultry imports must be strictly controlled

The illegal importation of poultry has posed a great threat to people’s health and caused a negative impact on the country’ husbandry sector, said Deputy Prime Minister Nguyen Thien Nhan.

Nhan, who is also head of the Central Committee for Food Hygiene and Safety, made the statement on November 9 while working with Hanoi municipal authorities on measures to fight against bird flu and human influenza.

He asked the Ministry of Industry and Trade (MoIT) to draw up a national plan on preventing the transport and importation of poultry of unknown origin.

He stressed the need to raise public awareness of the bird flu epidemic and set up checkpoints to immediately detect the illegal transport of sick poultry. Violations must be strictly punished and all sick fowl must be culled, he added.

The Deputy PM urged the Ministry of Health (MoH) and the Ministry of Agriculture and Rural Development (MARD) to provide updated information on the bad effects of eating sick poultry.

He also called for relevant ministries and agencies to complete their plans on controlling the transport, trading and slaughtering of poultry, especially in border areas and wholesale markets.

Earlier on November 6, Nhan and MARD Minister Cao Duc Phat inspected poultry trading at some big wholesale markets, including Ha Vi in Hanoi’s outlying district of Thuong Tin and Tu Dan in Khoai Chau district of neighbouring Hung Yen province.

These two markets are the major chicken suppliers to Hanoi, meeting up to 80 percent of the capital city’s demand, equivalent to 60-80 tonnes daily.

MoH Deputy Minister Nguyen Thanh Long warned against eating unhealthy food made from poor quality chickens, saying this could increase the risk of being infected with diseases. Moreover, he said, the residue of anti-biotics in sick poultry is often quite high, which can result in high cholesterol levels among consumers.

Source: VNN/VNA/VNS/VOV/VIR/SGT/SGGP/Dtinews/VGP

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