Home » Business » BUSINESS IN BRIEF 20/11

VN seeks to widen SNG co-operation

Viet Nam hopes to expand economic co-operation with the Customs Union of Russia, Kazakhstan and Belarus, which is known as the SNG group.

Director of the Europe Market Department under the Ministry of Industry and Trade Dang Hoang Hai said the expected signing of free trade agreement (FTA) with the Customs Union would play an important role in accelerating economic relations and offer new business opportunities to Vietnamese enterprises.

Two-way trade with Russia, Belarus and Kazakhstan during the past three years saw an average annual rise of 6.6 per cent, 36.8 per cent and 19.7 per cent, respectively.

“However, these figures are still below the potential,” said Hai.

The two sides agreed to start FTA negotiation early next year and aimed to have a deal worked out in two years with a goal of US$5 billion in bilateral trade with Russia alone by 2015.

The FTA could increase imports to Viet Nam from Russia, Belarus and Kazakhstan by 75 per cent, 83 per cent and 83 per cent, and expand exports to the three countries by 63 per cent, 41 per cent and 8 per cent, respectively, said Hai.

Viet Nam could achieve high export growth for rice, food, garment and textile, leather and wood product exports while importing more fruit, oil and gas, meat, milk, automobiles and coal.

Viet Nam would also have more opportunities to benefit from the Custom Union’s advanced technologies in the fields of energy, gas and oil and machinery.

However, the ability of Viet Nam to meet the import demands of the Customs Union remained low, said Hai, adding that one of the difficulties was competition from enterprises from more developed countries.

Vietnamese firms needed to adjust their production to meet demands on technical standards and hygiene and safety, he said.

To support enterprises, the Viet Nam-Russia Bank was established in 2006 by the Bank for Investment and Development of Viet Nam and Bank for Foreign Trade of Russia.

The departments’ deputy director Duong Hoang Minh said co-operation between Viet Nam and SNG countries aimed to create an advantageous business environment with preferential tax policies.

The SNG market covers a total area of more than 22 million square kilometres with a population of 279 million.

Joint purchasing raises concerns

After buying vouchers for discounted goods from nhommua.com, one of the top joint purchasing websites in Viet Nam, many customers found themselves unable to use them when the company closed temporarily and its CEO was dismissed.

Joint purchasing, where many people purchase the same product in order to get a discount, has become the latest online shopping trend in Viet Nam.

Those interested in a particular product “buy” it with their credit cards, although the sale does not take place until a certain number of people have expressed interest in the item.

Hong Minh, a customer in Ha Noi, said two restaurants denied vouchers she bought from the website, even though the deadline had not yet passed.

“I often buy goods and services on joint purchasing websites, so I was confused,” she said.

Nguyen Lan Phuong, a restaurant owner in Ha Noi, said the business had been forced to deny Nhommua’s vouchers since it was uncertain whether the website would be able to honour them.

Phuong said the company typically reimbursed the restaurant for part of the vouchers after 15-20 days, while the remainder was not paid until later.

Kely Pham, the company’s new CEO, admitted at a press conference on Thursday that several partners had denied Nhommua’s vouchers after the company abruptly stopped operations at all its offices in Ha Noi, HCM City, Hai Phong and Can Tho.

Suppliers were not able to contact the company while the website was down, he said, making them wonder whether their vouchers would be reimbursed.

He added that the company has contacted its partners to confirm that all transactions would be honoured. Customers could contact the company to get their money back if they were still concerned or if suppliers refused to honour the vouchers.

The CEO also said the company would be back in business on Tuesday.

In response to questions about the dismissal of CEO Tom Tran, he said economic police have been investigating Tran at the request of a shareholder group that believed his management style was not transparent enough, resulting in losses for shareholders.

The management board appointed Kely Pham the new CEO last Tuesday. But due to negative reactions from shareholders, he did not take the seal of HCM City’s branch from the ex-CEO.

Founded by Tran in 2010, the company now has 900 employees working in Ha Noi, HCM City, Hai Phong and Can Tho. The website gets around 4 million page views each month.

Drilling begins on tunnel project

Work started yesterday on a tunnel route under the Ca Pass that will link the two central provinces of Phu Yen and Khanh Hoa as well as reduce traffic accidents along National Highway 1A.

The tunnel road, from Phu Yen Province’s Hao Son Commune to Khanh Hoa Province’s Co Ma Commune, will be 13.4km long. The maximum speed for vehicles travelling along the route will be 80kph.

The project has total investment capital of VND15.6 trillion (US$748 million).

At the ceremony to mark the start of construction work, National Assembly Vice Chairman Huynh Ngoc Son said that the Deo Ca Investment Joint Stock Company, as the project’s investor, was required to complete the tunnel by 2016.

On completion, the tunnel route is expected to reduce traffic accidents on National Highway 1A and contribute to the development of large economic centres, industrial zones and tourism sites in the central region.

The work will also contribute to socio-economic development and better ensure security in the central and Central Highlands region.

Stocks stall but analysts expect traction

Stocks mostly tread water over the course of last week, but some analysts were predicting a weak rally in the coming week. Among reports issued by analysts from 10 securities companies, four said the market could rebound, while others expected it to continue to flatline.

Last week’s reduction in petrol prices seemed to have had little impact on the market. The nation’s overall inflation for the year was expected to reach about 8 per cent, and the modest changes in fuel costs were not expected to significantly shift that result. Retail petrol prices have been raised or lowered six times so far this year, cut by a combined VND3,700 per litre but raised by a combined VND6,050. In short, the net impact of all the adjustments has been nil.

On the HCM City Stock Exchange last week, trades also ground to an inconclusive end by Friday afternoon. The VN-Index ended the session on Friday at 385.71 points, a loss of 0.26 per cent from the previous week’s close, while in Ha Noi, the HNX-Index rose by 0.45 per cent to end the week at 51.81 points.

The volume of trades was up 4.1 per cent on the southern bourse and rose by 14.8 per cent in Ha Noi, mostly on the strength of strong transactions in shares of Sai Gon-Ha Noi Bank (SHB), NaviBank (NVB) and real estate developer Sacomreal (SCR).

Banking stocks overall offered support for the market, with shares of Vietcombank (VCB) and Vietinbank (CTG) performing strongly and a few commercial banks releasing solid earnings data for the first nine months of the year. Vietinbank saw an impressive 70-per-cent growth in profits, while profits of Military Bank (MBB) rose by 26 per cent. Many commercial banks have suffered terrible losses, however, and the average profit in the sector was off by 40 per cent from the same period last year.

Foreign investors were net buyers on both stock exchanges last week, although by low volumes. Net buys in HCM City reached VND85.8 billion (US$4.085 million) and VND3.8 billion ($180,960 ) in Ha Noi.

After a long period of declines, sell pressures had eased, said VietCapital Securities Co director Robert Zielinski, adding his voice to the predictions that the market would further rebound this week.

But he nevertheless cautioned that sell pressures would remain at resistance levels of 390 points for the VN-Index and 52.50 points for the HNX-Index. Investors with cash on hand could increase their buys if both indices broke these resistance marks.

“The sharp decline in liquidity is also an indicator that the tumble is about to end,” Zielinski wrote in a report released on Friday. “With the slight recovery next week, there are opportunities in penny stocks.”

In the coming week, investors were likely to be influenced by growing rumours regarding the establishment of a State asset management company, with details about the establishment expected next month or earlier next year.

Japanese firms seek opportunities in southern province

A delegation of 20 leading firms from Japan’s Hyogo prefecture led by Governor Ido Toshizo, visited southern Ba Ria-Vung Tau province to seek investment cooperation opportunities.

During a working session with the Japanese delegation last Friday, provincial leaders briefed the visitors on the province’s potential and investment policy.

They asked the Japanese to help their province develop and manage seaport system.

Ido Toshizo affirmed that Hyogo is very interested in the Vietnamese market, especially the key southern economic region, including Ba Ria-Vung Tau.

He said that after the visit, his prefecture will draw up specific cooperation plans with Ba Ria-Vung Tau.-

Doosan ships industrial boilers to Indian thermal energy plant

Doosan Heavy Industries Viet Nam shipped boilers to the 1,370 MW Raipur Thermal Power Plant, India, the company told Viet Nam News yesterday.

Two 685 MW boiler units manufactured in Viet Nam were set to be installed in the thermal plant 1,176 km southeast of New Delhi.

Vinacomin, HDBank ink landmark co-operation agreement

The Viet Nam National Coal and Mineral Industries Group (Vinacomin) and HCM City Housing Development Bank (HDBank) last week signed a comprehensive co-operation agreement in Ha Noi.

Under the agreement, HDBank will provide Vinacomin and its affiliates with loans and other products and services to boost production, do business as well as make large-scale investments in the industry.

Vinacomin meanwhile, will give priority to HDBank’s participation in process of preparing, consulting, sponsoring and co-sponsoring projects invested in by the group.

The two sides also plan to jointly develop capital-related products like improving cash flow management between parent and subsidiary companies.

Remittances to top $10 billion this year

Foreign remittances to Viet Nam this year are likely to be US$10-11 billion, economists forecast.

According to the State Committee for Overseas Vietnamese, the money remitted by overseas Vietnamese and guest workers in the first half of the year amounted to $6.3 billion, or 70 per cent of the total amount last year.

Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam’s HCM City Branch, said a large proportion of the remittances in recent years had come in the fourth quarter.

Thus, this year’s figure is likely to increase by 20 to 25 per cent from last year’s $9 billion.

Phan Huy Khang, general director of the Sai Gon Commercial Bank (Sacombank) said so far this year nearly $1.3 billion had been remitted through SBR, a Sacombank subsidiary.

DongABank’s remittance company reported an inflow of $1 billion, with over 60 per cent coming from Vietnamese living in the US, Canada, and Australia.

Vietnamese guest workers in Japan, South Korea, and Taiwan have also sent significant amounts through DongABank.

Around 4.5 million Vietnamese, including 500,000 guest workers, live in more than 100 countries and territories.

In 2010, with remittances of $8.26 billion, Viet Nam ranked ninth in terms of remittances.

Besides remittances, Vietnamese living abroad have also invested nearly $6 billion in the country, mostly in agriculture, healthcare, manufacturing, property, and tourism, according to the Overseas Vietnamese Committee.

Policy helps keep domestic shippers afloat

In June, the Ministry of Transport issued Document 5063/BGTVT-VT to temporarily halt foreign ships’ operations in the container transport market.

Under this decision, beginning on January 1, the granting of licences for three or six months will be suspended for ships under foreign flags that transport containers on local routes.

About 20 foreign ships with a total carrying capacity of 500,000 dead weight tonnage (DWT) will be affected by this new policy.

Owners of these foreign ships will have to obey the regulation since local ships have priority over foreign ships when operating in the domestic market.

This decision is in line with the national Maritime Law and trade commitments on transport rights that Viet Nam has made as a member of the World Trade Organisation.

The transport ministry’s decision is expected to create opportunities for the local ship fleet to regain market share in the local container-transport segment, which generates about VND1 trillion (US$47.6 million) for foreign ships.

Thus, the biggest beneficiaries from the decision are the Viet Nam Ship Owners Association and domestic shipping firms seeking opportunities to regain market share.

In the past, Vietnamese ships neglected the domestic market and actively participated in the flourishing international transport market.

To make up for what was lacking in the domestic market, the transport ministry had to allow ships carrying foreign flags to penetrate the domestic maritime transport market.

However, the international transport market has fallen into a recession, resulting from the prolonged global economic crisis, and now Vietnamese ships have to return to the home market.

According to the Viet Nam Maritime Administration, the country’s container shipping fleet has 24 vessels, some of which are capable of carrying 13,000 (DWT). But only 50 per cent of their carrying capacity is being used.

The domestic ships are capable of replacing the foreign ships operating on domestic routes, including at important ports such as Hai Phong, Cai Lan, Sai Gon Port and Cai Mep-Thi Vai.

However, replacing the foreign ships with local ones is not that easy.

Foreign ships are operating effectively in the local market and have advantages that local ships do not possess.

For instance, foreign ships will dock at small ports to receive a few containers even though this can lead to financial losses. Owners of Vietnamese ships will not commit to taking containers at such small ports.

Additionally, the prices charged by foreign ships for shipping containers are more attractive than those from domestic ships, while the service quality of the domestic shipping fleets is worse than foreign-flagged ships.

Because of these limitations, many cargo owners have doubts about the Transport Ministry’s policy to temporarily halt foreign ships’ operations in the domestic market.

Many of them are concerned about the capacity of Vietnamese ships to ensure delivery of cargo on schedule. Others believe that Vietnamese ship owners might eventually have a market monopoly, which could lead to an uncompetitive situation and an erosion of quality of services.

Specialty retail flourishes

Despite a tough economy, the specialty retail trade is prospering. General department stores in which many kinds of goods are sold remain popular, but in recent years more specialty stores have opened.

At these stores, customers can choose from different brands of one kind of product, and producers can more easily set up a distribution chain of supermarkets and trade centres.

Retailers also have a better opportunity to design long-term strategies to build trade names and improve service quality.

Ten companies in Viet Nam are listed among the top 500 most successful retailers in the Asia-Pacific region, a list compiled by the Euromonitor International Ltd. market research group and the Journal of Asian Retail.

Most of them are involved in the specialty retail trade. They include Sai Gon Gemstone and Jewellery Company (SJC), Phu Nhuan Jewelry Company (PNJ), Nguyen Kim electronics company, Mobile World, Telecommunications A (Vien Thong A) supermarkets, Fahasa Publishing Corporation and the TCT Group.

This is the fourth consecutive year that Sai Gon Gemstone and Jewellery Company was listed in the top 500 retailers in the Asia-Pacific region.

By late 2011, the company had 186 shops with combined turnover of VND20.579 trillion, accounting for 18.5 per cent of the company’s total turnover.

Participating in the domestic retail market in 1990, Nguyen Kim has six centres that specialise in selling electronic goods. The store generated about VND7 trillion in turnover (US$350 million) in 2011, up 35 per cent compared with the 2011 figure.

Vien Thong A (VTA) has also recorded regular growth in turnover, with 10 per cent in 2010, 20 per cent in 2012 and 30 per cent expected in 2013.

Despite such growth, domestic specialty retailers still do not have a good understanding of consumers, and their categories of goods and related products on sale do not match customers’demand.

In addition, they have not built up their trade names through their own products and they do not offer replacements or spare parts.

Many of their staff are not qualified. This is a serious problem since many customers go to specialty stores to receive good service and professional advice from sellers.

And, many of these stores do not pay sufficient attention to post-sale services. Such services help to ensure customer satisfaction and retention.

Gold draws higher interest

Interest rates on gold deposits have again risen recently because of banks’ attempts to mobilise more gold to balance their gold accounts before June 13, 2013, when they will no longer be allowed to do so.

The deadline, which was extended after many complaints, is related to the State Bank of Viet Nam’s Document 7019/NHNN-QLNH.

Under the document, credit institutions can continue to issue short-term gold-denominated certificates until November 24.

The maturity of short-term gold-denominated certificates cannot be beyond June 30,2013, and the new certificates should not be repaid before the due date.

On November 5, the Asia Commercial Joint Stock Bank (ACB) announced that, as part of its gold-mobilisation restructuring, it would eliminate certificates of gold deposits and only retained its option-enclosed gold deposit certificates.

The bank changed the deposit term structure and reduced the gold interest rate to only 0.5 per cent per year for terms of one, two and three months for both SJC and ACB gold products.

However, two days later, the bank suddenly resumed issuing certificates of gold deposits at increased interest rates.

The bank issued gold certificates for terms of four, five and six months at higher interest rates of 0.8-1.8 per cent per year.

However, the ACB’s gold mobilisation programme lasted for only one week.

The Viet Nam Commercial Joint Stock Bank (VietABank) is also continuing to issue certificates of gold deposits with one, two, three and six month terms at interest rates between 1 per cent and 1.9 per cent per year. They will issue the CDs until November 24.

The 1.9 per cent interest rate is considered to be the highest level for gold deposits at this time.

The Export and Import Commercial Joint Stock Bank (Eximbank) has also raised its interest rate on gold deposits from 0.2 per cent and 0.5 per cent to 1 per cent per year, and terms from two weeks to three to six months.

Other commercial banks are also offering gold deposit interest rates at high levels, between 0.5 and 1 per cent per year.

The banks’ mobilisation of gold deposits at this time is not aimed to increase profits but to improve their gold liquidity.

According to the central bank, about five or six credit institutions still do not have enough gold to terminate their gold lending and deposit contracts.

The banks’gold mobilisation this time would not affect the domestic gold market because the banking sector has bought about 60 tonnes of gold for their payment activities.

Promotions of electronics

Electronic product retailers in HCM City are launching various promotions to attract buyers during the year-end shopping season.

Given the current economic difficulties, retailers are focusing on inexpensive basic products for household use rather than luxury goods, as they have done previously.

With attractive promotions and strong discounts, retailers like Thien Hoa, Nguyen Kim and Gia Thanh, hope that consumers will open their wallets during the biggest holiday of the year.

The prolonged economic recession has made slowed down sales significantly this year, and the downward trend is forecast to continue during the Lunar New Year holidays next year.

According to a survey conducted by GFK Viet Nam, local demand for electronic and technology goods has been falling since the beginning of this year.

Electronic and IT product sales in the first eight months totalled US$2.5 billion, compared to US$2.7 billion in the same period last year.

The sale volume of electronic and IT goods fell 7.1 per cent year-on-year, and the number of buyers for electronic goods also declined from 20.9 per cent to 18.7 per cent.

In particular, the total revenue of the electronics industry plunged 13 per cent. Sales of telecommunications items, such as mobile phones, also declined 4.5 per cent in revenue and 5.3 per cent in volume.

Experts predict that falling demand could continue until the end of 2013.

Nation, EU wrap up latest talks on timber trade

Viet Nam and the European Union (EU) concluded the third round of talks on an agreement on timber exports in Brussels last Friday.

The Vietnamese delegation was led by Vo Dai Hai, Deputy Head of the Forestry Department of the Ministry of Agriculture and Rural Development, while the EU delegation was headed by Hugo Maria Schally, Head of International Agreements and Trade at the European Commission’s Directorate General for the Environment.

The two sides discussed issues related to the definition of which trees can be licensed to be legally logged and exported, the development of the Timber Legality Assurance System (TLAS) and a list of timber products.

Viet Nam is preparing a TLAS comprising of wood products for both domestic and export markets.

The two sides agreed on an updated roadmap for technical meetings and the fourth round of negotiations scheduled for next April.

Both sides expressed their hope to conclude the round of talks in September 2013.

According to EU regulations, the agreement on forestry law enforcement, governance and trade with Viet Nam, which will take effect on March 3, 2013, will establish a licensing scheme to ensure only licensed timber is exported to the EU.

The EU has signed these types of regulations with several countries, including Ghana, Cameroon and Indonesia. It is holding negotiations with others, including Viet Nam.

Banks face stricter risk fund rules

Banks can pay dividends or increase employee salaries only when they have made risk provisioning as stipulated by the central bank.

This is one of the main provisions of Directive No.06/CT-NHNN issued on November 9 by the State Bank of Viet Nam (SBV) to aid implementation of the monetary and banking policies until the beginning of next year.

It requires joint stock commercial banks to report on their 2012 dividend and profit distribution plans at least 15 working days in advance to the SBV.

Banks are also required to take all measures to ensure safe banking operations and proactively deal with non-performing loans.

Thus, they have to strictly comply with the SBV’s monetary, credit, and banking, prudential-ratio, and loan-classification norms; make adequate risk provisioning in accordance with the law; improve the quality and efficiency of the control system and internal audit; and enhance supervision to preclude violations.

They must actively implement measures to limit bad debts and resolve NPLs by risk provisioning and debt sale.

They are warned not to abuse debt-restructuring rules and other measures to conceal bad debts or falsify credit quality.

With regard to interest rates, the SBV wants the banks to strictly comply with its regulations; offer credit at reasonable interest rates based on deposit interest rates and risk level; and minimise expenditure on overheads, marketing, and others to reduce lending rates.

The directive stresses that lenders should not collect any other charges on loans except prescribed fees.

The banks have to regularly monitor implementation of the central bank’s rules on deposit and loan interest rates so that they can detect violations in time and take mitigative measures.

Those found violating interest-rate regulations will be penalised in accordance with the law.

The directive calls on banks to strictly comply with regulations on exchange rates and foreign-exchange management and gold deposits and loans.

The directive is expected to help the Government continue its policies to combat inflation, stabilise the economy, and sustain economic growth at a reasonable level to foster economic restructuring and social welfare

Viettel steals march on rival VNPT

Viettel Corporation may exceed the combined earnings this year of rival VNPT Group, operator of two major mobile service providers, Vinaphone and MobiFone.

Viettel deputy director Le Dang Dung told the website VnEconomy that Viettel has projected earnings this year totalling VND140 trillion (US$6.7 billion) and expected to post a profit of VND22-23 trillion (over $1 billion). It currently enjoys average daily revenue of nearly VND400 billion (US$19 million).

In 2010, VNPT Group earned over VND100 trillion ($4.8 billion), about VND10 trillion ($480 million) higher than Viettel’s earnings for the year. Last year , VNPT’s earning were VND120.8 trillion ($5.6 billion), but Viettel followed closely on its heels, with revenues of VND117 trillion ($5.5 billion). With the narrowing gap between two telecom giants, industry insiders were expecting Viettel to soon outrun VNPT.

Viettel expected both its turnover and profits to both grow 20-25 per cent this year, said Dung, noting that the military-owned company had also expanded overseas, successfully developing telecom services in Laos, Cambodia, Haiti, Mozambique and Peru.

 Retailers urged to stock up for Tet

Relevant authorities and businesses should ensure adequate supply of goods and price stability during Tet (lunar new year) early next year, the Government website has quoted Deputy Prime Minister Hoang Trung Hai as saying.

Speaking at a meeting with ministries, business executives, and local authorities last Friday, he told them that though things might not be as “tense” as in the last few years, they should not be complacent and step up measures to prevent demand – supply imbalance and speculation.

With many pork and poultry producers shutting down due to high production costs, the Government was helping them with credit, he said.

Due to low demand some producers were wary of increasing output for Tet in early February, so authorities should have proper plans to ensure adequate supply during the festival, he said.

Only 42 out of 63 provinces and cities have so far made plans to stockpile essential goods for Viet Nam’s most important festival, the meeting heard.

Hai called on ministries and local authorities to prevent the production and distribution of fake products and smuggling, and throw the book at speculators.

Improving publicity about all these issues was vital in preventing the spread of rumours that often cause market instability, he said.

The meeting was held to review the market situation and prices in the first 10 months of the year, discuss likely price movements before and during Tet, and discuss ways to regulate the market and ensure adequate supply during the rest of this year.

Ministries and other agencies have forecast that due to the continuing economic difficulties demand during Tet is unlikely to be as high as normal.

HCM City meanwhile reports that for more than 10 years since implementation, price-stabilisation programmes in HCM City have clearly shown their effectiveness, helping to control price speculation as well as counterfeit and poor-quality products.

The programme also ensured stable prices, particularly before and after the Tet (Lunar New Year) holiday, Ma Van Hue, a senior official of the HCM City’s Institute for Development Studies, said.

He pointed out that HCM City’s Consumer Price Index (CPI) had consistently been lower than the national CPI for several years.

In 2010, the city’s CPI rose 9.58 per cent year-on-year compared to the national index of 11.75 per cent. Last year, it rose 15.86 per cent year-on-year while the national CPI rose 18.58 per cent.

In the first 10 months of this year, the city’s CPI rose only 3.8 per cent while the entire country went up by 6.02 per cent.

The price-stabilisation programme has also been intrumental in helping the city and neighbouring provinces develop the programme to encourage Vietnamese use locally produced goods, according to Hue.

He said that it had helped domestic businessmen broaden the scope of their investments.

Pham Thi Huan, director of Ba Huan Company Ltd, said the city programme had improved connections between consumers and producers.

After it began, both producers and farmers were able to earn profits during the Tet holiday. Prior to the programme, only producers were recording profits as they increased prices.

Consumers as well benefited as prices of goods covered by the programme remained more stable.

To improve the programme even more, the city is planning to strengthen co-operation with neighbouring provinces so that it can have a steady source of raw materials for companies.

Van Duc Muoi, general director of Vissan Company, said it was important to have a stable supply of raw materials.

Each day, HCM City needs about 10,000 pigs and 600 cows and buffaloes, but demand is greater than supply. Thus, the city needs to co-operate with other provinces, according to Muoi.

Le Ngoc Dao, deputy director of the city’s Industry and Trade Department, said city authorities would soon begin working with provinces in the Cuu Long (Mekong) Delta so that it could have a stable supply of rice and foodstuff.

The city already signed contracts with Lam Dong Province to supply vegetables at lower prices, she added.

Dao said the city was also planning to ask provinces to identify their strengths so the city could buy goods from the appropriate sources.

When it was launched, the price-stabilisation programme had only two company members and total capital of VND45 billion.

The city is currently planning to organise four different price-stabilisation programmes with 48 participating companies.

There will be more kinds of goods, and the volume of goods are expected to increase by 20-50 per cent year-on-year.

The city’s contributing capital in the form of no-interest loans to participating companies will be more than VND262 billion, excluding capital from the companies.

Group suggests solutions to market problems

Viet Nam’s securities market is facing problems of falling investor confidence, low liquidity, poor quality offerings and limitations on foreign investment, says Dragon Capital CEO Dominic Scriven, who also heads the Market Capital Working Group.

At a meeting of the working group earlier this week, held to prepare for next month’s annual Viet Nam Business Forum, the group made recommendations to the State Securities Commission and the Ministry of Finance to help boost the nation’s capital markets.

Unstable economic conditions have adversely affected the financial markets since 2010, with only a brief recovery in the market in the first half of this year, Scriven told the meeting. New concerns about the health of the banking system, however, have pulled the rug out from other the market again.

Trading values on the market, averaging US$20-30 million per session in recent months, have been too low to attract investor interest, and foreign ownership limits in many of the best companies have already been reached, precluding much new investment.

“As a result, the stock market is no longer able to properly perform its function as a channel to attract long-term capital,” Scriven said.

The working group urged a hike in the percentage of foreign ownership in companies and also pointed out shortcomings in administrative procedures related to issuing trading codes to foreign investors. An open market should not restrict foreign ownership, they said, urging the authorities to create a type of shares without voting rights for foreign investors that would allow them to enjoy investment benefits (e.g., dividends, rights to buy additional shares) but not enable them to interfere in company management.

The group also called for a widening of the trading bands applicable to shares, the limit on gains or losses imposed on shares within a single trading day.

They said the current bands limited natural movement of share prices, negatively affecting share liquidity, and that wider bands and shortened transaction settlement periods would improve market liquidity.

The group also suggested that short selling be made legal, accompanied by strengthened regulatory oversight of the activity to ensure transparency and fairness to all market participants.

Nguyen Son, head of the commission’s market development department, said that stock markets were declining globally, not only in Viet Nam, and authorities needed to monitor leveraged products carefully. Several major stock markets around the world have imposed strict regulations on short selling, and the European Commission has banned it altogether, Son told the newspaper Dau tu Chung khoan (Securities Investment).

“In this context, short-selling is a double-edged sword and must be considered very carefully before implementation,” he said.

Bad debt fixes start to show progress say fiscal experts

The nation’s attempts to solve bad debt may have improved slightly, said Vo Tri Thanh, deputy director of the Central Institute for Economic Management at a banking conference on Tuesday.

Thanh affirmed that dealing with bad debt was vital to clearing congested credit flow, but he said it wasn’t necessary to clear all bad debt.

While total bad debt stands at around US$12 billion, he said solving 70 per cent of the amount, or about $8 billion, would possibly be enough to facilitate economic development.

State Bank of Viet Nam Governor Nguyen Van Binh said at a Q&A session early this week that financial institutions had increased their risk management assistance fund value to VND75 trillion ($3.7 billion), and he would instruct them to add even more when needed.

The $3.7 billion provisional amount would enable financial institutions to deal with a significant portion of bad debt themselves, Thanh said, and the Government would only need to deal with the remaining $4 billion.

Thanh reaffirmed that the country wouldn’t need to borrow money from the International Monetary Fund for this process, but noted that it would be very important that the Government assure transparency in dealing with areas with the most bad debt, including State-owned enterprises and real estate firms.

He predicted that a series of programmes would be defined between now and the end of the year while banking authorities were continuing to take prompt actions. “In the next few months, the State Bank will continue to step in for banks that can’t deal with their own problems themselves.”

“If everything goes smoothly, the programmes will start in the next quarter,” he added.

Binh said that some progress had been made so far, with about VND252 trillion ($12 billion) worth of debt having been reallocated out of VND2,700 trillion ($128 billion) of the total outstanding.

Japan urged to assist agricultural sector

Viet Nam wants Japan to increase its investment and co-operation to help industrialise and modernise Viet Nam’s agriculture sector.

The Southeast Asian country also needed more technical assistance and technological support from Japan, especially in the area of aquaculture, said Deputy Minister of Agriculture and Rural Development Vu Van Tam.

The deputy minister made the comments to Japanese Senior Vice Minister of Agriculture, Forestry and Fisheries, Takahiro Sasaki during Tam’s visit to Japan from November 12-17.

The Vietnamese officials asked the Japanese side to consider raising the acceptable level of Ethoxyquin content, an antioxidant, found in Vietnamese shrimp exported to Japan.

The Japan Food Safety Committee began proceedings to consider the request on November 6.

The Vietnamese delegation also held working sessions with the Japan External Trade Organisation (JETRO), Japan International Co-operation Agency (JICA) and Japan Fisheries Association, where it introduced Viet Nam’s fisheries strategy and called for Japanese investment in the sector.

Da Nang casts wide net for fishing success

Deep-sea fisherman Le Men has launched his own 100-tonne mother ship equipped with the latest technology to look after 10 or more fishing boats on prolonged fishing trips.

Men, 51, invested VND3.5 billion (US$168,000) to build the biggest vessel in the coastal central region after Da Nang decided to develop a high-capacity fleet.

The Da Nang-based fisherman said his vessel was able to stay at sea longer, saving large amounts of money.

“My venture enables each fishing boat to save at least VND80 million ($3,800) monthly as I can supply oil, ice, water and food to the other boats at sea,” he said.

He said fishing boats have had to waste many days going to and from port to unload fish and to stock up with food and fill up with fuel.

Deputy head of the Central Committee of Communications and Education, Truong Minh Tuan, said a meeting had been held to honour individuals and businesses in coastal cities and provinces involved in the development of the sea and islands.

“They have achieved good results in production, creating jobs for thousands of labourers and helped protect the country’s sea and islands,” Tuan said.

He urged business people and fishing associations to foster deep-sea fishing and develop fleets of fishing vessels as well as building shipyards and ports.

Director of Nha Trang Seafood export company, Huynh Long Quan, said it had earned $68 million from exports last year, created jobs for 870 people who each took home an average monthly income of VND3.6 million ($170).

However, he said many seafood processing companies needed further support from the State to overcome the economic downturn.

He said the development and expansion of seafood processing firms and fishing businesses would help protect the country’s sea and islands.

Quan said larger fleets of fishing boats would be able to provide boundary protection for Viet Nam’s sea territories and establish exclusive economic zones.

Viet Nam has joined the top 20 fishing countries in recent years. It is also the sixth largest exporter of seafood.

Sugar refineries in despair as prices fall

The price of sugar in the Mekong Delta provinces has dropped drastically to touch VND14,600 per kilogram, causing many sugar refineries to suffer losses although confectioneries have begun producing sweetmeats for the coming Tet Lunar New Year holidays.

According to Vietnam Sugar Association, the price of refined sugar was VND18,500-19,000 per kilo during the same period last year and there was a shortage of sugar, however, this year sugar prices have continually fallen.

Inventory in Phung Hiep and Vi Thanh Sugar Refineries in Hau Giang Province alone adds up to 20,000 tons currently. Other sugar refineries are also holding onto a large amount of sugar in their warehouses.

One of the reasons that sent sugar refineries into such despair was because of illicit sugar flooding local markets from Thailand at a very low price, with domestic prices unable to compete.

Mekong Delta offers unique tourism opportunities

In context of the current economic woes in the world, the tourism sector is still striving to attract more people to visit the Mekong Delta area in Vietnam, which is offering unique, stress free and exotic tours.

Cambodia, Laos, Myanmar and Vietnam, the four countries strategically located in the lower Mekong sub-region, will jointly work towards boosting tourism potential in this area, as discussed in a recent meeting themed ‘Four Countries-One Destination’.

Discussions were held in the meeting on how to attract more investments for tourism projects in the Mekong Delta sub region, Vietnam’s rice basket, and a current target for tourism promotion by Vietnam, Laos, Cambodia and Myanmar.

The Ministry of Culture, Sports and Tourism has approved a plan to develop tourism as a key economic sector in the Mekong Delta. The plan, which extends till 2020, will aid the country’s economic transformation and help reduce hunger and poverty, according to the ministry.

Thanks to its cultural diversity and the range of tourism it offers, such as eco, community-based, sea and islands, and diverse culture, the Mekong Delta attracts millions of visitors each year.

According to the Mekong Delta Tourism Association, around 12.8 million holidaymakers have visited the region since the beginning of the year, a year-on-year increase of 6 percent and a turnover of more than VND2.6 trillion ($125 million), an increase of 25 percent compared to last year.

In provinces like An Giang, in October alone, the province has welcomed around 28,000 tourists, an increase of 2.6 percent compared to September. Among them were around 2,300 international travelers, an increase of 6.7 percent compared to September. October turnover alone was VND17 billion ($815,662), an increase of 3.9 percent compared to last month.

There was a hike in holidaymakers from North Vietnam to the Mekong Delta and Cambodia, said Nguyen Dai Ho, director of the Phuong Nam Travel Company in Kien Giang. Accordingly, the company in coordination with the Hon Gai Tourism Company launched a new route Hanoi-Ho Chi Minh-Tay Ninh-Ha Tien-Phu Quoc-Hanoi.

Kim Trang from the Hanoi Tourism Company shared that every month her company organizes a tour for six groups of 30 tourists who want to go to the Mekong delta city of Can Tho to listen to amateur music on a boat along the river, visit orchards in the Mekong delta province of Tien Giang, and the Mac Cuu mausoleum in the town of Ha Tien, in the Mekong Delta province of Kien Giang.

Tommy, a representative of Fantasy Tour Company, said Vietnam has the magnificent Mekong River which foreigners love as it flows through six countries. His customers are interested in culture of the region, the natives and the natural beauty, rather than luxury hotels and sea bathing.

Foreign tourists have a good eye for the Mekong River and 40 percent of tourists here are Japanese, said Nguyen Duc Tho, a tourist guide of HCMC-based Le Phong Travel Company.
‘Work as a Farmer’ day tour in the Mekong Delta has attracted many young tourists (Photo: SGGP)

Recently, Dien Quan Media Company led a world famous Chinese American chef Martin Yan for a sightseeing tour of the Mekong Delta for a 26 episode show titled ‘Martin-Taste of Vietnam’ to promote Vietnamese cuisine across the globe. The organizers are aiming to broadcast the show on several US channels in addition to domestic TV networks.

Le Van Hien, chairman of Cuu Long Tourism Company, said the Mekong Delta Tourism Association and local tourism associations should train more tourist guides, waiters, and restore traditional festivals of ethnic minority groups like Khmer, Chinese, and Cham.

More important was how to link the uniqueness of each province and build an alluring image of the whole region and offering specific tourism packages .

There is also need to attract more investments and improve the basic infrastructure and accommodation since the region has the lowest rates of five-star hotels and resorts in Vietnam, said Hai Dang, Director of Vietravel Tourism Company.

(Vietnam Net)

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