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Private equity investors downbeat about Vietnam’s outlook

Negative sentiment of private equity investors has run high towards the general outlook for Vietnam’s economy as indicated in the latest survey that the consulting services firm Grant Thornton Vietnam released on Tuesday.

The 8th bi-annual Private Equity report shows negative views of many decision makers in Vietnam or those having a significant focus on Vietnam for the next 12 months jumped to 51% compared to only 27% in the firm’s previous report.

“Compared with the results of our previous survey in Q2-2012, negative sentiment… was at the same level of that in the Q4-2011 survey which was the most pessimistic outlook in the last eight surveys,” the firm commented.

The positive view of the Vietnamese economy over the next 12 months, showed in the latest survey that Grant Thornton Vietnam conducted in October this year, decreased to 16% from 34% in the Q2-2012 survey and 17% in the Q4-2011 survey.

Ken Atkinson, managing partner of Grant Thornton Vietnam, said in the “Private Equity in Vietnam – Investment Sentiment and Outlook” report that investors were a lot more cautious than six months ago.

“This fall in confidence and attractiveness is consistent with current challenges in Vietnam’s economy relating to banking system issues, high level of non-performing loans, high lending interest rates, unstable inflation,” he noted.

The report of Grant Thornton Vietnam reflected how investors have reacted to Vietnam’s economic woes, as investment attractiveness halved from 56% in Q2-2012 to 27% in Q4-2012. The survey found 44% of investment fund respondents believed there would be ‘no change” in their portfolio in Vietnam in the next 12 months.

But not all is negative. According to the Grant Thornton survey, there was a small uplift in the expectation of increasing allocation of investments to Vietnam despite the negative outlook. The option of ‘decreasing’ accounts for 25% while ‘increasing’ accounts for 31% of responses from investment funds,” the firm said.

The firm pointed out healthcare and pharmaceuticals as the most attractive industry to invest in as up to 53% of respondents opted for this in the survey and this industry has been chosen as the most favored in Grant Thornton’s two surveys this year.

Retail surpassed education and agriculture to be the second most favored industry as selected by 42% of respondents. Of course, real estate is not the choice of investors given the current gloomy outlook of this sector.

“The real estate sector continues to be ranked the least attractive industry in consequence of the uptake in an over-supplied market and price reductions,” Atkinson said.

The Grant Thornton survey revealed a change to the expectation of investors over the planned length of their investment time in Vietnamese companies from one to three years to a longer period of more than five years.

The report contains concerns of private equity investors when investing in Vietnam, including investment allocation and obstacles, important drivers of value growth, level of hands-on involvement expectation, level of exit multiples and key factors to be considered.

Dong Nai sees rising foreign investment

More than US$800 million in foreign direct investment so far this year has been disbursed in the southern province of Dong Nai, the highest figure since 2008, said provincial Department of Planning and Investment director Bo Ngoc Thu.

The province attracted 42 new foreign- invested projects with a total investment of $622 million, an increase of 46 per cent over the same period last year. It also signed agreements for 50 projects, adding $456 million to total project investments.

Provincial industrial-zone management board deputy head Nguyen Phuong Lan said that foreign businesses had become more careful in their investment plans because of the economic turmoil.

Newly licensed projects in October alone were mostly focused on sectors like mechanics, electronics spare parts assembling and food processing.

Among the new projects, two were in high-tech. They were Belmont Manufacturing, specialising in health care equipment, and Maspro Viet Nam, producing satellite television receivers and transmitters and security equipment.

Foreign-invested projects accounted for 62 per cent of Dong Nai’s total industrial production and 95 per cent of its export turnover.

They also helped create more than 500,000 jobs.

Also this year, the People’s Committee of the southern province of Dong Nai had cancelled projects of nine foreign direct invested enterprises and revoked their investment licences.

The enterprises, mostly located in industrial parks with total investments of over $72 million, had intentionally delayed implementing projects. Some of them went bankrupt.

Thu said the province was upgrading its infrastructure and training skilled labourers to attract more investors.

Testing process overload hinders energy labeling

Quite a few household electrical appliances will not get energy labels before the year’s end as required as the testing process is now overloaded due to the lack of testing agencies.

Electrical equipment producers and importers said many refrigerators and air conditioners had yet to receive energy labels although it is regulated that household electrical products must carry this label from January 1, 2013.

Pham Thien Thi, marketing manager for cooling appliances at LG Electronics Vietnam Co. Ltd., said his firm started mandatory energy labeling two months ago. However, up to now, the product samples have not been tested to be labeled.

At present, it takes 3-5 days to test a refrigerator and 1-1.5 days for an air conditioner.

Energy labeling is progressing at a slow pace due to the lack of testing centers. For refrigerators and air conditioners, there is now only one agency in charge of checking energy efficiency, which is the Testing and Verification Center for Industry under the Vinacomin-Institute of Mining and Energy Mechanical Engineering in Hanoi.

“We want more testing centers in HCMC instead of only one in Hanoi, so that enterprises do not have to wait and management agencies are not overloaded,” said Thi of LG Vietnam.

Meanwhile, for electric fans, lighting devices and rice cookers, there are 2-3 testing agencies.

Recently, the Ministry of Industry and Trade has authorized a laboratory of Intertek in Thailand to test appliances imported from abroad before they are brought into Vietnam. It is expected that there will be another testing center in Thailand and one in South Korea hired to do the testing.

“However, this testing center has also faced overload as too many companies bring their goods there,” said a senior executive from the import-export department of an electrical product trading company.

Apart from the lack of testing agencies, the source said many businesses had not paid due care until the deadline was near to start energy labeling. The decision on mandatory energy labeling of household electrical products was announced a long time ago, but it was not until March and April that enterprises began labeling.

So far, only one company has finished energy labeling because it has just a few product lines.

Therefore, a source told the Daily that some businesses were intending to send a petition to relevant authorities asking for a six-month delay of energy labeling.

Energy labeling is carried out under Decision 51/QD-TTg of the Prime Minister and the Law on Energy Efficiency. Starting from January 1, 2013, household electrical appliances and industrial electrical appliances must have energy labels.

Ministry in talks for foreign loans

The Ministry of Finance is now in talks with foreign creditors over 22 credit agreements, and the amount having been tentatively approved in such loan agreements has reached some US$2.6 billion as of now, the ministry said.

In a press statement on Monday, the ministry said that the loans are to replenish capital sources used for growth and economic recovery.

Besides the agreements under negotiations, the ministry last month also clinched four other agreements to borrow money and receive assistance with a total value of US$253.4 million. The ministry in the January-October period signed 25 agreements with foreign partners worth US$2.37 billion in credits.

The ministry also provided updates of results from carrying out the State budget plan, with total revenue in the ten-month period accounting for an estimated 67% of the year’s target. Meanwhile, total State spending was put at nearly 79% of the year’s plan.

As of end-October, investment funding disbursed from the State budget was around 76% of the planned figure, while funding from Government bonds have reached some 75% of the target.

“Compared to the plan, State budget revenue is still mired in difficulties as the finance industry will have to collect 23.8% of the year’s plan or 11.9% of the plan each month while during the ten-month period, revenue averaged out at only 7.6% of the annual plan,” the ministry said.

The ministry also unveiled information on other activities.

For instance, the State Treasury in January-October mobilized nearly VND15 trillion from various channels excluding government bonds, which amounted to roughly VND115.88 trillion, realizing 96.56% of the annual plan.

The ministry in its statement also said inflation this year would be under control.

“The January-October consumer price index (CPI) jumped 6.02% against December last year. The 2012 CPI will be within the target of 8% assigned by the National Assembly if macroeconomics and price management policies are launched in a prudent and drastic way in the remaining two months of the year without any considerable and sudden changes,” the ministry said.

PetroVietnam seeks partners

PetroVietnam (PVN) is calling for European Union partners to support 40 of its projects in the areas of power production, finance and petroleum technical services.

The group’s general director, Do Van Hau, made the statement at a conference titled “Partnership with PetroVietnam – Exclusively for European Investors” held in Ha Noi yesterday.

Hau said PetroVietnam needs $40 billion by 2015 to implement several important investment projects, with the aim of further developing to meet its restructuring plans.

“This is the reason that we want to co-operate with EU partners to ensure we have capital for the projects,” he added.

PVN want to lure investors to some of their key projects, including power plants (coal-fired, thermal and hydropower), oil pipelines, a port in Phuoc An, a shipyard in Dung Quat, and financial and construction companies.

Answering questions from potential EU investors, PVN’s deputy general director Nguyen Tien Dung said that they would benefit from preferential policies for investing in the projects. He also called for EU partners to consider investing in offshore petroleum exploration work, which is an area that PVN has accelerated operations in.

Dung assured them that investments would be safe, as price calculation methods are in place to monitor risks in the foreign exchange rate (forex). However, he suggested that foreign investors still apply risk prevention measures and pay attention to the forex transfer.

He told the audience that investors will be able to work closely with PVN and the Government to ensure their benefits.

In addition, he said that a suitable rate would be applied on capital return for investors who made effective contribution to projects.

General director Hau outlined plans for a major project constructing an oil refinery plant in Nghi Son, in the north-central Thanh Hoa Province.

He said an Engineering, Procurement and Construction (EPC) agreement would be signed at the beginning of December promising a US$5 billion investment in the project (which is expected to cost $7 billion).

The project is a joint venture between PetroVietnam, Kuwait Petroleum International Ltd (KPI), and the Japanese firms Idemitsu Kosan Co (IKC) and Mitsui Chemicals Inc (MIC).

A feasibility study for the development has been completed and all relevant parties are promptly preparing for construction work to begin.

The selected contractors are the same who built the Dung Quat Oil Refinery Plant.

The new plant will initially have a capacity of 10 million tonnes per year – 1.5 times higher than the design capacity of the Dung Quat Oil Refinery. It will become the country’s biggest petrochemical complex.

The refinery will annually churn out 2.3 million tonnes of petrol and 3.7 million tonnes of diesel as well as liquefied gas (LPG) when it comes into operation by 2014.

Nghi Son and Dung Quat refineries together are expected to meet 50 per cent of the country’s petrol and oil demands.

Shares stall as trades remain sluggish

Shares managed to gain on the HCM City Stock Exchange yesterday but retreated in Ha Noi as trading volumes remained depressed.

In HCM City, the VN-Index closed up 0.65 per cent to 387.71 points on improved market sentiment, although nearly 40 per cent of codes saw losses.Morning gains were largely erased during afternoon trades.

The value of trades was virtually unchanged from Tuesday’s level at VND320.8 billion (US$15.2 million), while volume reached only 24 million shares.

Among the 30 leading shares tracked by the VN30-Index, advancers and decliners were split almost evenly, 12-11.

Vinamilk (VNM) soared to its ceiling price, helping lift the VN30 overall by 0.69 per cent to 458.21.

On the Ha Noi Stock Exchange, the HNX-Index fell to 52.30, 0.17 per cent below the prior day’s close. Market value fell by half to just VND118 billion ($5.6 million) on a volume of 18.9 million shares.

The HNX30, which tracks the northern bourse’s 30 leading shares by capitalisation and liquidity, shed 0.2 per cent to close at 95.68 points.

Gains failed to materialise for Sai Gon-Ha Noi Bank (SHB), real estate firm Sacomreal (SCR) and construction giant Vinaconex (VCG) – the most active stocks in Ha Noi during the previous session.

The market needed a boost in liquidity before it would recover, but this was not forthcoming in recent sessions, FPT Securities Co analysts wrote yesterday.

Foreign investors were net buyers in Ha Noi yesterday, picking up shares worth a net of VND4 billion ($190,400). However, they shifted to net sellers in HCM City by a margin of nearly VND11 billion ($523,800).

Stocks favoured by foreign buyers included PetroVietnam Gas (GAS), Kinh Do Confectionery (KDC), Vietcombank (VCB) and sugar producer Bourbon Tay Ninh. Meanwhile, foreign investors unloaded shares of Military Bank (MBB), real estate developer Hoang Anh Gia Lai (HAG), Sacombank (STB) and Vinh Son-Song Hinh Hydropower (VSH).

Bangladesh, another potential market for Vietnam

According to the Vietnam Chamber of Commerce and Industry, Bangladesh is currently one of the biggest markets in the South Asian Region and with a population of 161 million people is also a potential growth market for Vietnamese products because of its strong purchasing power.

Bangladesh is not a completely new market for Vietnam, but trade between the two countries is low-key as Vietnamese firms are still hesitant to tap this market. However, in the past few years, some Vietnamese companies have started to trade with Bangladeshi companies and with positive results.

Since 2003, footwear producer Biti’s has realized the potential of the Bangladeshi market, after already tapping into markets in Nepal, India, and Pakistan. In 2004, Biti’s chose five official distributors in Bangladesh and began to sell products there. Now, sales of the company are showing a steady growth.

In July this year, the Hoa Phat Group exported the first batch of 10,000 tons of blast-furnace slag to the Shun Shing Group. Up to now, Hoa Phat has exported three batches of blast-furnace slag to this market and will supply around 80-100 tons of slag annually, according to the agreement. In reality, Shun Shing Group imports upto 300,000-400,000 tons of blast-furnace slag every year for the cement industry in Bangladesh.

Bangladesh also considers its garment and textile industry as one of the main industries, same as Vietnam. Garment exports from Bangladesh have continuously increased, reaching nearly US$22.3 billion in 2011. However, Bangladesh depends on imported materials as much as domestic-made fabrics to meet 40 percent of demand of the garment industry. Moreover, Bangladeshi consumers prefer garments and textile products from Vietnam because of their reasonable price and high quality.

Thus in 2011, Bangladesh imported finished products and materials for their garment industry from Vietnam valued at about $7.5 billion.

In addition, Zafar Osman, director of a timber company in Bangladesh, said that companies in this industry are in dire need for a steady supply of round teak wood and teak planks on a monthly basis. Vietnam has an advantage in the wood industry so this is a good opportunity for firms to cooperate with each other.

After many years of experience in doing business with Bangladeshi companies, Nguyen Tien Dat, director of Vissai Import-Export Company, said that demand to import goods in this market is huge but Vietnamese firms have not developed all potential yet due to lack of information. Hence, authorities should help set up coordination between firms of the two countries.

Besides promoting exports, the Bangladeshi government is also encouraging foreign investors to invest their money in the country to increase goods supply as well as to develop technological standards for its domestic market.

According to Supradip Chakman, Bangladeshi Ambassador to Vietnam, his country has great demand for garments, footwear, wood-pulp, and chinaware as well as for mechanized agriculture. Currently, a few Vietnamese firms have helped the country to improve some sectors that had remained undeveloped.

Viettel bought stakes in Teletalk Bangladesh Ltd for $300 million in 2009. After entering this market, Viettel has set up 19,500 base station towers, provided services to 3.5 million clients, and installed 50,000 kilometers of fiber optic cables and introduced 3G technology.

Data given by the Statistics Office of Bangladesh showed that the gross domestic product grew 6.7 percent in 2011 and is expected to reach 7.2 percent this year. Export growth was 21.2 percent in the past three years and import growth was 22.2 percent.

Bangladesh has been opening trade with other countries to maintain its economic growth in the coming years. In order to achieve this, the government has built many policies to create a fair business environment for both local and foreign investors. Furthermore, at every meeting, Bangladeshi firms always try to persuade Vietnamese firms to invest directly instead of just exporting or importing on small contracts. Accordingly, the former will support the latter with legal procedures, advertising, and market information so that Vietnamese firms might meet Bangladeshi consumer needs.

Ministry defends VAT freeze

The Ministry of Finance has rejected calls by some National Assembly deputies to reduce value added tax (VAT), saying that such a measure would be unreasonable.

The issue was raised at the ongoing National Assembly meeting.

Some deputies said a cut to VAT from the current 10 per cent to 5 per cent would boost consumption and spark an economic revival.

The ministry replied that a reduction would not help enterprises cut costs, as VAT taxes consumers and not producers.

They added that the current 10 per cent rate was already low compared to other countries.

Statistics on VAT levels in 112 countries worldwide show that 88 impose a VAT of 12-25 per cent, while the remainder ask for 10 per cent.

The ministry also pointed out that no country had waived or reduced VAT as a response to the global economic crisis.

“Measures to reduce VAT for a set amount of time will not significantly support enterprises,” a ministry spokesman said.

“And State authorities cannot control the decline of product prices.”

Unemployment remains challenging problem

The economic downturn continued to have negative impacts in Viet Nam, with unemployment remaining high since the beginning of the year, experts have said.

Dr Nguyen Thi Lan Huong, head of the Institute of Labour Science and Social Affairs, told Tien Phong (Vanguard) newspaper that this year, cities had seen an upward trend in unemployment as a result of economic woes and public dependence on unemployment insurance.

The macroeconomics newsletter number seven released by the National Assembly’s Economics Committee in October revealed that during the first half of the year, the number of businesses which ceased operations reached over 26,300, an increase of 5.4 per cent against the same period last year.

Among which, the number of businesses which ended up closing completely increased by over 35 per cent.

According to the newsletter, a large number of businesses had to either reduce or delay production or even went bankrupt as they fell short of funding because of increasing inventories.

While the first six months saw an increase in the number of enterprises going out of business, the number of new businesses also decreased by 12.5 per cent against the same period last year.

The impact of the economic downturn in terms of unemployment was markedly seen in Ha Noi, which saw over 730 enterprises close and 1,900 others temporarily halt operations during the past 10 months, according to the Ha Noi People’s Committee.

As a result, about 41,000 people had lost their jobs so far this year.

The number of people registering for unemployment benefits in Ha Noi in the first 10 months had risen to 20,638 people, an increase of about 20 per cent against last year, said Nguyen Thi Kim Loan, head of the Unemployment Insurance Section under the Ha Noi Job Employment Centre.

Unemployment insurance has paid VND172 billion (US$13.4 million) for 16,901 cases in Ha Noi during that time, added Loan.

The majority of people to receive unemployment insurance benefits were aged from 25-40 years old. Unemployed college or university degree holders made up 35 per cent of total claims.

In the southern province of Dong Nai, the number of unemployment claims in the first ten months reached 41,000, an increase of 78 per cent against last year’s figure, according to Tran Thi Thuy Tram, head of the Employment Insurance Section of Dong Nai Job Promotion Centre.

Dong Nai Province spent over VND200 billion (nearly US$ 10million) on unemployment insurance by the end of October, a figure 2.4 times higher than the amount spent for the whole of last year, said Pham Minh Thanh, deputy director of Dong Nai Social Insurance Department.

Farmers worried about early blossoming of apricot flowers

Yellow apricot trees in many Mekong Delta localities blossomed early, three months before the Tet, worrying growers about sales for the holiday.

Truong Van Diep, from Tra Vinh Province’s Cau Ke District, said that more than ten apricot trees in his garden have been in blossom for more than a week. He shared that for people in the southwest, it would be lucky for the whole year if yellow apricot trees blossom on time for Tet.

He added that recent heavy rains might be the cause of early blossoming.

Nguyen Van Binh from Can Tho City’s Thot Not District complained that, “Last year, his apricot trees also blossomed early. This year I took care of my trees to avoid the same situation, but, more than 20 apricot trees have already blossomed.”

For many farmers this early blossoming could translate into huge losses.

Vietnam honours outstanding agricultural products and initiatives

Authors of 56 most outstanding among 300 nominated agricultural products and initiatives were honoured with the Vietnam Golden Rice Ear Award.

The award ceremony was held on November 14, at Hanoi Opera House with the participation of Deputy Prime Minister, Vu Van Ninh and Minister of Agriculture and Rural Development Cao Duc Phat.

This is the first event of its kind to be held in Vietnam in honour products and initiatives spanning seven agricultural categories including inventions, effective solutions, science research and technology development works, varieties of crop plants and domestic animals, agricultural technical materials, models for agriculture and rural development as well as prestigious agricultural trademarks.

Among the awarded, several are products and trademarks familiar to Vietnamese consumers, such as Moc Chau milk, Phu Quoc fish sauce, Dau Trau fertilizer, Lam Thao superphosphate, Ha Bac URE fertilizer, and Dien Bien fragrant rice.

Several individuals were also honoured for their outstanding initiatives including a cashew picking machine invented by Ngo Ngoc Quang from the southern province of Binh Phuoc, together with the conservation and development efforts of Vietnamese traditional agricultural villages by Dr. Ngo Kieu Oanh.

Speaking at the ceremony, Cao Duc Phat said this is the sole award given by the Ministry of Agriculture and Rural Development (MARD) to honour individuals and organisations for their outstanding and high-quality products.

Deputy Prime Minister Vu Van Ninh said, “I highly appreciate MARD for devising the idea of presenting these awards, which could encourage more innovation of such products in the future. This will help realise the Central Party Committee’s Resolution 26 on agriculture and rural development to ensure the country’s long-term food security.”

Ninh called on MARD to continue developing the these awards in the following years, along with studying and proposing solutions to support inventions and initiatives that could have real applications.

Tran Cong Chien, General Director of Moc Chau Milk Company, one of the awarded institutions, said that the award would encourage more people to take part in milk production in the time to come, improving the quality of production in Vietnam as well as boosting exports.

Dr. Ngo Kieu Oanh, awarded for a model of developing sustainable tourism and development of Vietnamese traditional agricultural villages, said traditional agriculture is of great importance to the development of agricultural and cultural development in Vietnamese rural areas. Agriculture-based tourism is an area expected to expand in coming years, hopefully, Oanh said, with a number of benefits.

Oanh is also among developers of a project to preserve the old Duong Lam Village in Hanoi’s Son Tay Town. She added that, in order to preserve traditional agricultural village, it would be necessary to help farmers earn a livable wage on their traditional agricultural economy, focusing on sustainable products.

PVN calls for EU investors into local projects

Vietnam Oil and Gas Group (PVN) has for the first time called for European investors to pour capital into 40 projects under its umbrella in the country, with an aim to approach advanced technologies for the local industry.

PVN and the European Chamber of Commerce (EuroCham) in Vietnam on Wednesday co-organized a seminar themed “Partnership with PetroVietnam – Exclusively for European Investors” to promote nearly 40 projects in the five core business areas in need of investment.

Attending the seminar was EuroCham president in Vietnam Preben Hjortlund along with the EU minister resident in Vietnam, ambassadors, commercial counselors and over 80 EU organizations and enterprises. The event saw the presence of PVN representatives comprising general director Do Van Hau, deputy general director Nguyen Tien Dung and many other senior executives.

General director Do Van Hau of PetroVietnam told the seminar that the cooperation with EU investors will help PVN acquire know-how of modern science-technology and management.

To accelerate growth in line with the restructuring project submitted to the Government for approval, PVN needs to expand cooperation to lure foreign investment, especially EU investors for a number of key schemes, Hau noted.

PVN is seeking foreign investors for the LNG Thi Vai warehouse, Nam Con Son 2 gas pipeline, Thai Binh 2 thermo power plant, Hua Na hydropower plant, Nhon Trach 1 hydropower plant, PetroVietnam-Vinatex Dinh Vu JSC (PVTex), Phuoc An port and Dung Quat ship building plant projects.

Besides, there are also many other opportunities for foreign investors to inject money into the group’s leading subsidiaries, Hau said.

Speaking at the seminar, EuroCham president said that this is a good chance for EU to understand more about investment conditions in the petroleum area in Vietnam.

The country has strong petroleum potential in Southeast Asia but it is still underdeveloped in terms of petroleum science technology and services, he said. Therefore, the collaboration with EU nations not only facilitates EU investors to sound out business opportunities in Vietnam but also allows the local petroleum industry to become more developed.

This is the first time that PVN has held a seminar to woo EU investors. It had earlier received positive signals when exploring investment demand in several targeted international markets and will speed up investment promotion in other markets in the coming time.

PVN in the restructuring scheme plans to focus on the five crucial areas including petroleum exploration, exploitation and oil refining, gas and electric industries and high-quality petroleum services.

Information expo promotes made-in-Viet Nam products

Forty leading Vietnamese information and communications technology companies are participating in the Viet Nam ICT (information, communications and technology) expo in HCM City yesterday.

“The expo aims to help local companies [with] brand establishment, advertisement, development, and protection,” Do Kim Lang, deputy head of the Industry and Trade Ministry’s Trade Promotion Department, said in his opening speech.

“This is also an opportunity for us to select the best Vietnamese ICT brands to support and develop them to represent Viet Nam.”

As of two years ago, 43 firms from all industries were chosen as national brands, and they have been able to take part in national programmes with official financial support, he said.

“Assistance to register international and national brand names is offered for them,” he added.

Last year Viet Nam spent VND 351 billion (US$17 million) on software, with 28 per cent being supplied by Vietnamese companies, and VND904 billion ($43 million) on hardware.

To Thi Thu Huong of the Information and Communication Ministry’s ICT Department said: “Vietnamese companies have not paid enough attention to research and development. They mostly assemble, offer limit-ed post-sales service, and their brands are not famous.”

She said they should increase research, improve product quality and post-sales service, and offer competitive prices.

Four conferences and workshops on ICT devel-opment will be held to promote made-in-Viet Nam products.

Consumer confidence falls to three-year low

Viet Nam’s consumer confidence index dipped 8 points to 87 in the third quarter of this year, marking the lowest confidence level since the first quarter of 2009, according to the latest findings from Nielsen, a global market research company.

According to the survey, conducted between August 10 and September 7, at least 73 per cent of Vietnamese said this was not a good time to make purchases.

Viet Nam, Hong Kong, Taiwan, South Korea and Japan were also the bottom-five countries and territories that were the least optimistic about local job prospects.

Ninety-one per cent of Vietnamese respondents reported change in their spending in order to save on household expenses. This rose from 86 per cent in the second quarter and 84 per cent in the first quarter.

As for the items that were cut back the most, 68 per cent of Vietnamese consumers pointed to gas and electricity, followed by new clothes (67 per cent), out-of-home entertainment (66 per cent) and telephone expenses (55 per cent).

With fuel prices rising five times within the third quarter; 24 per cent of Vietnamese respondents said utility bills (electricity, gas, heating) were their biggest concern. This was followed by the economy and job security at 20 per cent and 16 per cent, respectively.

Only 42 per cent of Vietnamese respondents believed their personal finances in the coming year would be good to excellent, down from 51 per cent in the second quarter.

Similarly, 40 per cent of Vietnamese online respondents believed their local job prospects would be good to excellent over the next 12 months, a drop of 6 percentage points from the second quarter and 18 percentage points since the beginning of the year.

“The subdued third quarter results reflected an overall trend that is neither positive nor negative as consumers are treading water very carefully,” said Dr. Venkatesh Bala, chief economist at The Cambridge Group, a part of Nielsen.

Meanwhile, according to the survey, global consumer confidence increased one index point to 92 in the third quarter of this year, up four index points from the same period the previous year.

Nielsen’s survey shows that North America and Europe reported the only quarterly consumer confidence increases, rising three index points to 91 and one point to 74, respectively.

The Asia-Pacific (100) and Middle East/Africa (98) regions remained flat in the third quarter, and Latin America fell two index points to 94.

Begun in 2005, The Nielsen Global Survey of Consumer Confidence and Spending Intentions, measures consumer confidence and major concerns and spending intentions of more than 29,000 consumers in 58 countries. The survey is conducted online.

Consumer confidence levels above and below a baseline of 100 indicate the degrees of optimism and pessimism.

SBS chartered capital cutback not approved

The scheme for restructuring of Sacombank Securities Company (SBS), including thickening shares at a rate of 3.8:1 in order to reduce its chartered capital was not approved by the company’s shareholders at a meeting in September, according to the Hochiminh Stock Exchange.

Of the total of 1.685 ballots having been issued, representing 126.6 million shares with voting rights, only 36.46% agreed with the restructuring scheme of SBS. As the approval rate was below 75%, the scheme was not passed.

Meanwhile, the preferred stock issuance program received the nod of only 37.16 million shares, 29.34%, and thus it was not passed either.

At present, SBS is negotiating with Sacombank, owner of an 11% stake in SBS, over conversion of the bonds held by the bank into equity capital at a rate of 1:100 (one bond into 100 shares). However, the bank has not given any specific opinion.

As of end-September, SBS had incurred an accumulated loss of over VND1.7 trillion. The company’s equity capital is currently minus VND240 billion.

SBS is now under special control. If the company failed to address its negative equity status in the next three months, it would be forced to suspend operations.

Traders’ outlook less positive

The bi-annual HSBC Trade Confidence Index released on Wednesday shows that confidence among Vietnamese traders fell slightly in the second half of the year, dropping from a score of 115 to 110.

Scores above 100 are considered positive and below 100 negative.

Seventy-three per cent of those surveyed said they expected to see trade volume grow or remain at current levels, compared to 80 per cent in the earlier survey.

Although neither importers nor exporters have expressed any increased concern over payment defaults or an inability to fulfil orders, Vietnamese sellers like others in the region are establishing more stringent payment terms (32 per cent).

In addition, traders have a less positive outlook about the global economy than they did six months ago, with only 34 per cent anticipating any type of growth, compared to 51 per cent in the year’s first half.

Like those in Indonesia, Vietnamese traders are moving away from relying on their banks for trade finance (32 per cent), with 37 per cent indicating they want to fund their own financial oblig-ations.

Foreign-exchange concerns appear to have abated somewhat, as 58 per cent of traders say they either anticipate exchange rates to work in their favour or do not expect them to hinder growth.

With Greater China, Southeast Asia and the rest of Asia as their top three trading partners, and each growing their share in Viet Nam, intra-regional trade continues to be the core of the country’s importers and exporters, according to the report.

The confidence index, covering around 6,400 enterprises in more than 20 markets, notes that in contrast to most of its neighbours in emerging Asia, Viet Nam maintained double-digit export growth in the first nine months of this year, weathering the global downturn extremely well.

Last year, the US was Viet Nam’s largest trading partner.

Viet Nam, which signed a bilateral trade agreement with the US in 2000 and joined the WTO in 2007, has become the second-largest supplier of clothing and footwear to the US behind China.

Within the last few years, mobilephones and related accessories have become the second-largest export (after garments) from Viet Nam, accounting for more than 10 per cent of exports.

The World Bank expects this category to overtake garments as Viet Nam’s largest source of export revenue by 2013. Demand for clothing and footwear is less sensitive to global-market turmoil than other goods.

These exports, combined with the rapid pace at which Viet Nam is building market share in telecoms, have helped protect it from the recent weakening in global demand.

Viet Nam’s exports are expected to grow at a pace in excess of 10 per cent to 2030, with exports to the rest of emerging Asia, the Middle East and Africa all growing by double digits.

By 2030, China will have overtaken the US as Viet Nam’s largest export partner, but the US, Japan and South Korea will remain key sources of demand for Viet Nam.

Plans to expand the ASEAN Free Trade Agree-ment to zero tariffs on all goods by 2015 will be an additional factor supporting Viet Nam’s trade with other economies in the region over the medium term, the report anticipates.

Export growth to Europe (excluding Russia) and to Australia, New Zealand and Oceania is expected to average around 9 per cent a year from 2020 to 2030.

Being able to attract and retain foreign firms in high-value manufacturing products such as electronics, computers and phones is an advantage for Viet Nam.

In June 2012, Standard and Poor’s upgraded Viet Nam’s outlook from negative to stable, acknowledging the authorities’ recent success in bringing inflation under control, reducing the fiscal deficit and improving the trade and current account balances.

The current account moved into surplus in 2011 from a deficit of 12 per cent of GDP in 2008. These reforms are expected to continue in coming years.

As well as enjoying strong export growth, Viet Nam will also be an increasingly large importer, both of capital goods to meet its large infrastructure needs and of consumer goods to meet the needs of its rapidly expanding consumer market.

India, China and Bangladesh will be its fastest-growing import partners from 2020 to 2030, the report notes.

Forty tonnes of fish die en-masse

About 40 tonnes of red tilapias worth over VND1 billion (US$47,700) have died en masse in Thanh Binh town and Tan Thanh commune in the southern province of Dong Thap over the last few days.

Local farmers said that harvesting was nearly finished when the fish died, leaving them at a huge loss as they had already taken deposits from traders.

The deaths were initially attributed to pollution from the river water, caused by pesticide residue from discharged field water. Samples of the water have been taken for testing.

VNM fuels up market recovery

The local market staged a mild recovery after just one losing session on Wednesday thanks in part to a limit-up gain on VNM, which helped push the VN-Index up 2.49 points, or 0.65%, from the day earlier to close at 387.71.

The market opened in the red and immediately broke into the black, running up three points to hit an intraday high of 389.4 points and subsequently trading in a narrow range until the end of the morning session. In the afternoon, trading saw a continuation of range bound trading before closing just over a point off the highs.

Liquidity on the Hochiminh Stock Exchange kept falling with only 23.9 million shares worth VND320.8 billion changing hands. The put-through market was quite inactive again with few transactions although there was a sizeable put-through deal in KDC.

There were 105 stocks up while 88 stocks declined, of which 30 stocks went up to the ceiling prices and 24 others plunged to the floor prices.

VNM was the most sought-after ticker and jumped 4.7% to VND132,000 per share on news that the State Securities Commission had received bonus share issuance documentation from the company. Accordingly, VNM will issue 278 million bonus shares to existing shareholders at the ratio of 2:1. Once the issuance is completed, the new chartered capital of VNM will rise to VND8.3 trillion.

Military Bank (MBB) became the most actively traded stock but it dipped 1.6% against the previous day to VND12,400 per share with nearly 2.5 million shares traded. Tan Tao Investment Industry Corporation (ITA) followed, moving sideways at VND4,000 on a volume of 900,000 shares.

Foreigners net sold VND11 billion on the southern bourse, of which divestment of MBB consisted of VND17 billion. The investors accounted for 12.8% and 16.2% of the market’s buying and selling value respectively.

The Hanoi market declined for the second straight session on Wednesday while turnover dropped sharply to VND118 billion. The HNX-Index lost a slight 0.09 point, 0.17%, from the session earlier and ended the day at 52.3.

Gainers till slightly outnumbered losers by 81 to 75, including 23 stocks hitting the ceiling prices and 24 others plunging to the floor prices. Foreign investors’ risk appetite continued to be strong as they injected VND4 billion on the northern bourse, raising the net buying value to VND40 billion since November 2.

Viet Capital Securities Company predicted that the correction may still occur on the HNX-Index but this correction may soon end when tickers go back to the supports of the correction zone. However, both indices are faced with closest resistances, 389 points for the VN-Index and 52.5 points for the HNX-Index.

(Vietnam Net)

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