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LogistBUSINESS IN BRIEF 24-12ics key to competitiveness

With its export-driven economy, Viet Nam should prioritise investment in trade logistics to improve competitiveness, economists have suggested.

Speaking at a consultative workshop on trade promotion, value creation and competitiveness on Wednesday, the World Bank economist Pham Minh Duc said it predicted the country’s export volume would triple by 2020.

However, poor commercial infrastructure and logistics services cost Viet Nam in terms of of time, money and reliability, making it less competitive than rival nations, he said.

Meanwhile, according to the World Bank’s latest report, solid infrastructure and logistics can help boost GDP by up to one per cent.

It also claims that every 10 per cent reduction in logistics costs can help save resources worth two per cent of GDP.

However, in Viet Nam, according to the General Statistics Office, transported goods volume increased over 12 per cent annually for the last 15 years and trade volume saw a yearly increase of 18 per cent but the proportion of investment for transport infrastructure has hardly risen.

Major shortcomings included high transport costs, poor access to ports, improper inland container deports and insufficient awareness about the importance of logistics, Minh said.

“The sector requires huge investment but Viet Nam is targeting cuts in public spending, so this poses huge challenges for mobilising capital,” he said, adding that a boost of public – private partnerships (PPP) in transport infrastructure development could be the solution.

However, he noted that the implementation of PPPs in Viet Nam is hampered by a bottleneck in legal framework and risk sharing mechanisms between public and private investors.

Former deputy minister of Industry and Trade Luong Minh Tu said inexperienced and financially-incompetent enterprises in the logistics sector hindered its development.

Moreover, poor connections between roads, railways, airports and waterways, as well as transport networks with industrial parks were also problems, Tu said.

The World Bank also recommended three key pillars to improve Viet Nam’s competitiveness including more logistics investment, administrative reform and a restructuring of the supply chain for exports.

According to the World Bank’s report in the 2012 Logistics Performance Index, Viet Nam ranks 53rd out of 155 surveyed nations.

Insurance is still a safe bet

The insurance industry is expected to maintain a growth rate of 10-12 per cent in 2013, according to the Ministry of Finance’s Insurance Supervisory Authority’s director Trinh Thanh Hoan.

Insurance products and services would be diversified next year to better meet the demands of a wide range of organisations and individuals, Hoan added when speaking to Dau Tu Chung Khoan (Securities Investment) newspaper.

Insurance premiums this year totaled VND40.858 trillion (US$1.946 billion), representing an increase of 11.7 per cent over 2011. Non-life insurance premiums accounted for about VND22.942 trillion ($1.093 billion), an increase of 11.5 per cent, while life insurance premiums totalled VND17.916 trillion ($853 million), a rise of 12 per cent over last year.

Although experts initially predicted the industry’s growth rate would reach 17 per cent, it failed to do so, in large part due to the impact of the global economic downturn.

However, Hoan said, the market remained stable and foreign investors saw rich potential in the Vietnamese insurance market.

Insurance enterprises accumulated VND90.591 trillion ($4.314 billion) to reinvest in the economy this year, 9 per cent more than in 2011. This sum came from a combination of Government and enterprise bonds, deposits, securities, real estate and contributions to enterprises’ capital.

Hoan estimated that next year’s investment would hit VND95 trillion ($4.524 billion), although difficulties would continue to besiege financial, banking and real estate sectors, making it difficult to expand the market.

Recently, the Ministry of Finance issued Decision 2330/QD-BTC, which aims to develop the insurance market by 2015 into a safe, sustainable and efficient market.

The six measures addressed in the decision include making enterprises more competitive and diversifying distribution channels.

AAA notches Diamond Prize for excellence

AAA Assurance Corporation has received the International Diamond Prize for Excellence in Quality award from the European Society for Quality Research.

The European society, an organisation dedicated to quality, recognition and research, presents the award to selected companies and organisations for their outstanding achievements in quality on an international scale.

The award is granted on the basis of criteria outlined in the society’s Quality Performance Model, including effectiveness in the use of available resources to enhance customer satisfaction, capabilities to evaluate risks, cut costs and achieve predictable results, and the creation of a healthy environment that motivates employees.

AAA is the only Vietnamese company among the awardees this year.

Car registration fees to fall to 10 per cent next year

The registration fee for cars will be cut to 10 per cent next year from the current level of 15 per cent, according to the Ministry of Finance.

Also, for secondhand cars, the registration fee will also decrease sharply to 2-5 per cent from the current 10-15 per cent.

Finance Minister Vuong Dinh Hue said high fees would increase tax evasion and lead to tax losses.-

DOC ponders ban on Vietnamese coat hangers

The US Department of Commerce (DOC) has preliminarily decided against steel garment hangers imported from Viet Nam, except goods from the company Haminco, according to the Competition Management Agency under the Ministry of Industry and Trade.

In July, both Haminco and Cao Quy, a rival company, were asked to disclose their monthly export figures.

However, only Haminco’s figure was verified as accurate, while Cao Quy failed to submit the data.

Can Tho export values fall 14 per cent in 2012

Can Tho Province’s exports hit US$1.3 billion this year, a decrease of 14.3 per cent compared to last year, reported the municipal authorities.

The Mekong Delta province’s main exports include seafood, rice, canned fruit and vegetables, clothes, traditional handicrafts and pharmaceutical products, said Chairman of the Provincial People’s Committee Nguyen Thanh Son.

The People’s Committee hopes for the value of exports next year to reach $1.5 billion, and the province’s GDP to spike to 12.5 per cent.

Semen Gresik acquires 70 per cent stake in Thang Long

Indonesian cement producer Semen Gresik has bought a 70 per cent stake in Thang Long Cement fromthe Ha Noi General Export-Import Joint Stock Company (Geleximco).

The deal will raise the charter capital of Thang Long Cement from VND1.570 trillion (US$74.7 million) to VND4.2 trillion ($200 million).

The cement producer, which has a total production capacity of 2.3 million tonnes per year, is based near the deep-sea port of Cai Lan in the northeastern province of Quang Ninh.

Firms resort to creative accounting

Prolonged economic hardship this year has enticed many listed companies to embellish their financial statements.

Together with numerous violations related to information disclosure, the latest discovery raises an alarm about the lack of transparency in the corporate sphere.

According to Ho Thi Ngoc Ha, deputy director of the Ministry of Finance’s Accounting and Auditing Department, the accounting standards are not simple to interpret, so errors are to some degree unavoidable. However, the quality of financial reports this year has declined substantially compared to previous years.

“Just glancing at those financial statements, we saw gaping errors,” Ha said. “Many used a reporting method that did not at all comply with accounting standards.”

She said the economic crisis had made companies’ inventories and bad debts soar, yet the financial statements of most listed companies this year have not made provisions for such inventories or bad debts.

“There are some companies hiring 2-3 auditing companies to audit their financial statements at the same time and choosing the better audit report to make public, Ha added.

Bui Hong Hai, deputy director of the State Securities Commission’s Issuance Management Department, said errors occurred across the balance sheet, from failing to make provisions for losses to accurately depicting business performance and cash flow.

Notes to the financial statements often failed to meet accounting standards, the director noted.

“This year, the State Securities Commission has asked 20 listed companies to explain and supplement the notes to their financial statements, which concern related parties, potential assets and outstanding liabilities,” Hai said.

Following the Law on Independent Audit, which takes effect this year, public companies including listed companies, securities companies, insurance companies and financial institutions must set up internal control and audit divisions in order to enhance the quality of companies’ performance.

Japanese insurance company receives Govt seal of approval

Deputy Prime Minister Vu Van Ninh said he was satisfied with the recent co-operation between Japan’s Sumimoto Life Insurance Company and the Bao Viet Insurance Group at a meeting yesterday with Sato Yoshio, the company’s chief executive officer.

The Sumimoto Life Insurance Group has bought stocks from the Bao Viet Insurance Group.

He said the co-operation between these large insurance companies would foster the development of both countries’ economies.

In response, Yoshio said Sumimoto had high expectations for the Vietnamese market as Viet Nam was developing quickly.

Petrol reforms fuel market diversity

Petrol monopolies topped the agenda in an online discussion between local policy makers and finance experts in Ha Noi yesterday afternoon.

The discussion also focused on ways to calculate petrol prices in a transparent manner in line with market mechanisms.

As Viet Nam’s shift from a centrally-planned economy to a market economy under State supervision was a lengthy process that was still far from complete, Decree 84/2009/ ND-CP on trading petrol and oil products would be followed by many more decisions aiming to bring the petrol business in line with the market economy, said Nguyen Cam Tu, Deputy Minister of Industry and Trade.

Decree 84 allows fuel trading firms to increase retail prices when input cost prices change.

Regarding the issue of monopoly, deputy minister Tu said that while Petrolimex had once been the country’s only fuel trading firm, there were now 13 major firms.

Still, Petrolimex currently holds up to 48 per cent of the domestic market share.

Since Decree 84 came into effect in October 2009, petrol prices were still mostly adjusted by the State.

Concerning information disclosure on petrol prices, the Finance Ministry always made official any information about price calculation and administration. The inspection results were also often made public.

Anyone who suspected that the petrol price was not determined in a transparent manner should check the information about the petrol price updated daily by the Ministry of Finance, Deputy Minister Tu said.

Nguyen Anh Tuan, deputy director of the Finance Ministry’s Price Management Agency, also reminded the press to pay attention before releasing information about retail petrol prices. He noted that the current basic price was now based on the price of finished products, not on the crude oil price.

Bui Ngoc Bao, chairman of the Viet Nam National Petroleum Corporation (Petrolimex), said the Finance Ministry always conducted a press meeting before every petrol price adjustment and released information about petrol price adjustments in a transparent manner.

Policy-makers have kept a close watch on the ministry’s tax management for a long time. In Viet Nam, when the global petrol price went up, the tax-levied petrol import was slashed so petrol could be sold domestically at a low price. Of course, local retail prices would not follow the global price trend, so the Government and the Ministry of Finance had to stabilise retail prices.

Import tariffs on petrol imports barely amounted to anything in the first six months of 2012 and the State had to use the Petroleum Price Stabilisation Fund to keep the retail price low. Vietnamese consumers are contributing VND300 per litre of petroleum products to the price stabilisation fund.

Investors urged to forge neighbourly links

Cambodia, Laos and Myanmar present many new business opportunities for Vietnamese investors, according to speakers at a business forum held in HCM City yesterday.

Julien Brun, general director of Cel Consulting for Supply Chains and Operations in Southeast Asia, said the three countries were very different and investors should examine their individual characteristics carefully.

Myanmar, with 75 million consumers, limited competition, and an area rich in natural resources, has the highest potential of the three at the moment, he noted.

In Laos, besides the forestry and agriculture sector, mining is also a promising industry.

More textile companies are moving from Viet Nam to Cambodia because of cheap labour costs, making it a platform for basic manufacturing, Brun said.

“Look at overall, construction materials would be important to these countries,” he said.

Because Viet Nam now has an oversupply of construction materials, he suggested that Vietnamese companies do business in the three countries in building housing, infrastructure and facilities.

Jean-Christophe Ngo, an infrastructure and value chains consultant, also urged Vietnamese companies to study the markets and act quickly to take advantage of trade and investment opportunities, especially in Myanmar.

In Myanmar, telephones, tables, furniture, pharmaceutical goods and consumer goods are all promising areas since most of those items are now imported from China.

However, China and Thailand have an advantage in this market because they share a border with Myanmar.

Despite many poten-tials, investors would face challenges when doing business in these countries, delegates agreed.

Brun said the top challenges in all three countries were a poor legal framework, corruption and underdeveloped transport infrastructure.

It would take from five to 10 years to improve, he added.

In Myanmar, the lack of trained human resources, various ethnicities, religions and low incomes also present challenges for investors, according to Ralf Matthaes, regional managing director of TNS.

“Despite obstacles, opportunities exist. Finding the right partners is key,” Brun said.

“A lot of investors are focusing on profits right now, but sometimes these investments have a bad impact on people and the environment,” he said. “Vietnamese companies should avoid these pitfalls and have a fair and transparent approach in these markets.”

According to the Foreign Investment Agency, Vietnamese companies had 222 projects with a total investment capital of US$3.79 billion in Laos and 124 projects worth $2.56 billion in Cambodia.

The forum was organ-ised by the Viet Nam Supply Chain.

Power for 19 remote communes on the way

Construction of a system to supply electricity to 19 communes in the northern mountainous province of Lai Chau began on Tuesday.

A total of 51 transformer stations with a total capacity of 2,900KVA and worth VND171 billion (US$8.1 million) are being built to supply Phong Tho and Muong Te districts.

The project, conducted by the Lai Chau Power Company, is expected to be completed next July.

Carrier plans new routes to Finland

Finland’s national carrier Finnair has announced plans to launch its Helsinki – Ha Noi service in July next year as part of efforts to develop connections between Europe and Asia.

The route will start with three weekly flights.

Finnair CEO Mika Vehvilainen was quoted by World Aviation news website CAPA as saying at the World Aviation Summit in Hong Kong on November 28 that he expected long-term successes from the route.

Travel firms complain about hikes in entry fees to cultural heritage sites

Many tour operators in the central region are complaining about the increase in admission fees to cultural heritage sites in Quang Nam and Thua Thien – Hue provinces.

They are afraid the new prices will discourage visitors and adversely affect their business.

Since November 1, the Hoi An Centre for Culture and Sports has increased entry fees to the old town from VND45,000 ($2.1) to 60.000 ($3/ticket/3 sites) for local tourists and from VND90,000 ($4.5) to 120,000 ($6/ticket/five sites) for foreigners.

In Hue, prices of admission tickets to relics in the city have been increased since April.

Tickets to the Royal Citadel and the tombs of Kings Tu Duc, Khai Dinh and Minh Mang now cost between VND55,000 and 80,000 for foreigners, and VND35,000 to 50,000 for Vietnamese visitors.

Sales of cheap air tickets soar

Many people are rushing to book cheap air tickets for their tours in 2013 as several carriers offer promotional fares.

Vietjet Air has launched its third sales campaign of the year with 10,000 cheap tickets for flights taking off in 2013.

Jetstar is preparing to launch a “one dong” promotional fare campaign. It had earlier offered one-way tickets for flights from HCM City to Singapore at just VND145,000.

Viet Nam Airlines has also launched a special programme offering preferential airfares for the passengers who book tickets early.

AirAsia’s promotion campaign has Ha Noi/HCM City – Kuala Lumpur flights for just US$40, and flights to Bangkok for US$50.

FabMax and M+W introduce chip plant

A consortium consisting of the Netherlands’ FabMax and Germany’s M+W Group introduced a chip plant worth US$150 million at a meeting with the HCMC government and Vietnamese partner Saigon Industry Corporation (CNS) on Tuesday.

According to Eduard Hoeberichts, founder of FabMax, his firm which specializes in development and commercialization services for semiconductors-based technologies and products will be in charge of the whole process of developing a semiconductor plant, including design, equipment procurement and construction.

Simon Burley, managing director of M+W Malaysia, said that the group has constructed over 200 semiconductor fabs worldwide and over ten photovoltaic fabs and nanotechnology research centers.

M+W has also developed many plants in Vietnam such as TH Milk Mega, Nestle coffee, First Solar and B/Braun, said Oliver Herzog, Business Development Manager of M+W Vietnam.

It will take around two years to finish the project, with the feasibility study worth US$175,000 taking 3-4 months, said Hoeberichts.

HCMC vice chairman Le Manh Ha expected the plant would soon come into operation. Ha also asked CNS to carefully study the scheme as previously there was a similar Chinese-invested project worth billions of U.S. dollars which fails to compete with Taiwanese products.

Tough times hit city firms in IZs

Many companies in industrial parks and exporting processing zones in HCMC are suffering badly due to the protracted financial difficulties, Nguyen Tan Dinh, deputy director of the HCMC export processing and industrial zones authority (Hepza), said.

Dinh was speaking at a press briefing on the labor situation and Tet bonus plans of enterprises at the industrial parks in HCMC.

The ongoing economic hardship with a sharp fall in export contracts have forced numerous enterprises to scale down, stop operations or dissolve, Dinh noted.

The city this year has seen up to 79 local and foreign entities operational in local industrial parks and exporting processing zones, including 26 foreign direct investment (FDI) enterprises, having no other choice but to narrow down production. Besides, up to 25 projects have stopped operations, 11 schemes have suspended operations and 22 others have disbanded prior to maturity.

However, Dinh noted, most of the struggling firms are small with an inconsiderable labor force, thus no labor disorder has been caused by the companies’ distress.

Like in previous years, businesses have to speed up production in the final months of the year or before the Tet holiday, meaning workers will work overtime, Dinh said. But there are not many firms with three working shifts a day, resulting in little change in the local labor force, he said.

Dinh noticed the number of FDI projects at the city’s industrial parks and export processing zones has been rising but the number of foreign expatriates has substantially shrunk there. There are only about 2,040 foreign employees working in the facilities, dipping 5% year-on-year.

Dinh ascribed the situation to companies who are mired in woes and are forced to cut down on foreign employees and experts who are given higher salaries than local peers. On the other hand, the fact shows that domestic workers have already mastered good technical skills to replace foreign labor, he said.

Regarding Tet bonus and other treatment for laborers during the holiday, Dinh reported 160 enterprises already submitted their Tet bonus plans, with the lowest level at VND2.14 million, a slight increase from last year. Among these firms, a local producer specializing in consumer goods gave a bonus worth up to VND400 million to a staff member while another industry insider, a FDI firm, reported a bonus of over VND217 million.

More than 800 companies in the city have yet to report Tet bonus plans but Dinh assured that labor unions at the entities will ensure a bonus amount worth at least one-month salary for each worker.

Seafood firms long for forex loan deadline extension

The Vietnam Association of Seafood Exporters and Producers (VASEP) has not received any response from the central bank to its proposal for an extension of the deadline for seafood exporters to borrow foreign currency loans.

On May 2, the central bank issued Decision 857/QD-NHNN extending the deadline for seafood firms to take out foreign currency loans to December 31 instead of May 2 as regulated by Circular 03/2012-TT-NHNN.

However, VASEP proposed the central bank further extend the deadline to the end of 2013, as local seafood exporters are facing many difficulties, said the association’s chairman Tran Thien Hai.

“Seafood exporters in Thailand or Indonesia can access foreign currency loans with very low interest rates (3-5% per year), while Vietnamese seafood exporters have to borrow loans in Vietnam dong with high interest rates of 11-13% a year, so they are suffering low competitiveness,” he said.

Truong Dinh Hoe, general secretary of VASEP, said the extended time was running out but the association had not received the central bank’s reply on another extension.

VASEP wants Circular 03 to be further extended so that local seafood enterprises can access cheap foreign currency loans and strengthen their competitiveness.

It is still unknown whether the central bank will give the nod to another extension or not, but production, processing and export of seafood, especially tra fish, remain troublesome.

As of mid-November, seafood exports had brought in US$5.3 billion, versus the revised forecast of US$6.18 billion for the whole year and the original forecast of US$6.5 billion. In particular, tra fish exports had reached US$1.5 billion, or US$300 million lower than the forecasts.

Hoe ascribed the difficulties in seafood export to the debt crisis in the euro zone and the ethoxyquin technical barrier in Japan.

As for tra fish farming, farmers continue to incur losses due to prices falling below production cost.

Specifically, tra fish material prices are now ranging from VND21,500 to VND23,000 per kilo, while production cost is VND24,000-24,500, or even VND25,000 a kilo, according to the An Giang Fisheries Association (AFA).

Thousands of social enterprises in need of legal recognition

The Central Institute for Economic Management (CIEM) is drafting the amended Enterprise Law to recognize the legal status of social enterprises to let them enjoy incentives like other local entities.

Nguyen Dinh Cung, deputy director of CIEM, told the Daily of the plan at a seminar on developing social enterprises on Monday in the northern province of Nam Dinh.

Recent statistics of the British Council show that there are currently 211 social enterprises in Vietnam. This figure is exclusive of some 165,000 other entities in the nation with certain operations characterized as social.

CIEM will integrate two important contents into the Enterprise Law that will be amended in the near future to enable social firms to get funding from related sides for development, according to Cung. At the same time, he said, the target firms will be recognized legally and will be subject to incentives of taxes and land among others accordingly.

The Government has entrusted CIEM to draft the amended Enterprise Law, Cung said, adding the law will be submitted to the National Assembly for approval by 2015.

“When contributing ideas to revise the Enterprise Law, we will provide definitions about social enterprises with specifications on their rights and duties,” Cung said.

He noted his institute will identify the legal role of social enterprises and create policies for the development of these companies like what had been done to private firms before.

Social companies are those established to address social issues via their products and services, he added.

Top businessmen exchange with 500 students

Over 500 students from universities in Danang City yesterday have an exchange with successful businessmen – Photo: Thanh Hai

PepsiCo Vietnam and Danang University on Tuesday held an exchange talk ‘Social responsibility of enterprises’ between successful businessmen from companies in HCMC and students in Danang.

The  guests include Pham Phu Ngoc Trai, chairman of Advisory Board-Corporate Affairs, PepsiCo Southeast Asia, Vu Kim Hanh, chairwoman of the Business Association of High Quality Vietnamese Goods, Nguyen Ngoc Hoa, board chairman of Saigon Co.op and Tran Hung Viet, general director of Saigontourist Holding Company. These enterprises had a talk with over 500 students of universities in Danang.

They said that society always pins high hopes on young people who have much potential to develop so they need to be responsible for themselves and society.

Enterprises have to offer opportunities for students to chase down their dreams and to care about their local community, and support scholarships for students and give them chances to exchange with successful businessmen.

PepsiCo Vietnam has co-organized the contest ‘Dynamic students – future businessmen’ for third and fourth year students at the National Economics University, Foreign Trade University in Hanoi and HCMC University of Economics and Foreign Trade University HCMC. The ten best students in the regional round will be given scholarships worth VND10 million each from PepsiCo.

Overlapping policies ‘stifle sustainability’

The rights to formulate and implement policy to promote sustainable production and consumption in Viet Nam have been granted to too many agencies, hindering efficiency.

This was among the main findings of a study carried out this year to examine the regulatory framework for encouraging sustainable production in a nation that has shown strong commitment for the ideal.

Presenting the study’s outcomes at a workshop in Ha Noi yesterday, Shantanu Roy, vice president of the Mumbai-based Environment Management Centre LLP, which commissioned the study, highlighted the need for collaborative approaches among ministries to streamline policies.

He recommended that a special task force be established to co-ordinate efforts.

“Clarification of responsibilities and transparency in transactions will ensure proper accountability,” the study noted.

Participants at the workshop agreed that there was a big gap between policies in place and real needs, citing the operations of SMEs as a case study.

Bach Tan Sinh from the National Institute of Science and Technology Policy and Strategy Studies said despite a myriad of policies, they had hardly any helpful impact on Small-and-Medium-Sized Enterprises (SME), which accounted for 90 per cent of the economy.

He said when it came to innovation, finance was the main challenge as the expense involved in switching from prototype testing to commercial usage could be many times higher than the research phase.

“It is simply impossible for SMEs to innovate towards more sustainable products without the support of external resources. But at present, such support is limited,” Sinh said.

Nguyen Hong Long from the Viet Nam Cleaner Production Centre said SMEs were held back not by their capacitybut by policies that did not fit reality.

He cited the case of tra fish processing enterprises that imported most raw materials from abroad to cut costs rather than invest in research to produce local materials.

“The policy to enhance our competitive edge by selling at as low a price as possible does not make sense because we are the dominant tra fish exporter in the world. We can still sell at higher prices and why don’t we do that so we can have extra funds for innovation?” he asked.

Nguyen Minh Duc from the Industrial Policy and Strategy Institute said the bottom line was whether the political will to implement such policies was strong enough, citing the case of his own institute where many policies, no matter how sound they appeared to be, still failed because lack of political will to adopt them.

Nguyen Bien Cuong from the Viet Nam Environment Administration agreed, saying that despite all the talk about sustainable development, it had not really sunk into the minds of decision-makers.

He said, for example, the new Ca Mau Gas-Power-Fertiliser Plant still produced a remarkable amount of carbon dioxide despite new technology.

The study was part of the European Union-funded SPIN project, with technical support from the United Nations Environment Programme and the Technical University of Deltf.

VNPost officially separates from VNPT

Viet Nam Post (VNPost) has now officially separated from the Viet Nam Post and Telecommunication (VNPT) company to be run by the Ministry of Information and Communication (MIC).

The changeover ceremony was held on Wednesday in Ha Noi.

VNPost will be operated according to Enterprise Law, along with other legal degrees regulated by the MIC.

An MIC representative said that the separation will help VNPT concentrate more on developing its telecommunication and technology arms.

The domestic postal service has great potential to develop, but solutions must be found to overcome the existing market difficulties in competition, experts said.

Credit growth to slow to 6%

The nation’s commercial banking system expects to see credit grow by 6 per cent this year, well below the Government target earlier in the year of 8-10 per cent, said a report in the publication Saigon Economic Times.

Credit growth in HCM City alone was expected to rise by only 5.4 per cent, well shy of the 7.7 per cent pace seen in 2011, according to the State Bank of Viet Nam branch in the city.

Despite the slow growth in lending, the credit structure of commercial banks has changed significantly since the beginning of the year. According to figures on the State Bank website, the rate of short-term capital used for long- and medium-term lending was 17.36 per cent as of October 31, a much higher figure than the 7.58 per cent logged in April.

Interest rates remain under control, with the interbank rate for loans in domestic currency down to 2.5 per cent as of December 16 from a high of up to 4.8 per cent earlier in the month.

The central bank has also increased foreign reserves and actively pumped cash into the banking system to sustain liquidity and stimulate economic growth.

Banks were also seeing success in attracting deposits, which had grown by nearly 16 per cent industry-wide through last month, according to State Bank statistics. Overall, the money supply in the commercial banking system as of November, including cash on hand, deposits at the central bank, and reserves, had risen 15.3 per cent since the beginning of the year.

More firms make use of internet

As many as 42 per cent of businesses have websites now compared to 30 per cent in 2011, according to a survey released by Viet Nam E-commerce Association (VECOM) late last week.

However, customer confidence and online purchases fell sharply, down 16 per cent from last year, due to online trade frauds.

The survey, a part of Viet Nam’s e-commerce index, involved 3,193 businesses, of which 89 per cent were small and medium sized.

The survey showed most businesses had computers and access to broadband internet and an average awareness of internet security.

Meanwhile, 41 per cent were considering investing in hardware and 26 per cent in software as a part of their plan to build e-commerce gateways.

In addition, 51 per cent had specialised personnel in charge of IT and e-commerce, of which the highest number were in the areas of entertainment, education and finance.

Up to 50 per cent of personnel working in small and medium sized firms used e-mail in their daily work, more than in large-scale firms.

HCM City tops the 2012 e-commerce index, followed by Ha Noi, Da Nang, Hai Phong and southern Dong Nai province.

A full 97.3 per cent of firms in HCM City have built their own websites, up 5.7 per cent from 2011, with most transactions and advertisements being made by email and websites.

Shrimp exports decline by 4.8%

Shrimp export value declined 4.8 per cent for the first 11 months of the year compared to the corresponding period last year, according to the Viet Nam Association of Seafood Exporters and Producers.

Of Viet Nam’s top 10 biggest shrimp export markets, exports to the US fell by 16.1 per cent; to the EU, by 25.2 per cent; and to Canada, by 13.8 per cent. Value also fell in Switzerland by 13.8 per cent and in the ASEAN market by 21.5 per cent.

Next year, the shrimp industry is expected to continue to face difficulties such as disease outbreaks, the shortage of quality shrimp fries and fewer bank loans for production.

The US imported only 381,425 tonnes of shrimp in the first nine months of the year, down 5.7 per cent against the same period last year, according to the US National Marine Fisheries Services.

In recent months, Japan has applied a limit on ethoxyquin residue of 0.01ppm on Vietnamese shrimp, resulting in a drop in exports.

Ethoxyquin is a substance used in the preservation of fish meat, and most countries applied a maximum residue limit of 77-150ppm.

Vietnamese shrimp exports to Japan in the first 11 months of the year increased by 6.3 per cent during the same period last year.

The growth rate fell significantly compared to a monthly growth rate of more than 20 per cent in the first few months of the year.

The Ministry of Agriculture and Rural Development is working with Japan to ask the latter to reconsider the maximum residue level of ethoxyquin.

Farmers may get interest-free loans

The Ministry of Agriculture and Rural Development has asked the Government to offer financial support to farmers who agree to stockpile rice.

With world rice prices expected to fall because of abundant supply, the ministry said it wanted to help farmers by preventing prices from falling in the domestic market.

The stockpile plan would begin on a trial basis in An Giang, Kien Giang, Dong Thap and Tra Vinh provinces.

Farmers, agricultural cooperatives and farm owners who agree to stockpile rice receive interest-free loans equivalent to the value of the stockpiled volume for a maximum of three months.

Businesses that take part directly in rice production or have contracts to purchase rice from farmers will also have interest-free loans.

In addition, food companies assigned to buy and stockpile rice by local authorities will receive interest-free loans as well.

Under the plan, the country is expected to stockpile a maximum of 2.5 million tonnes of rice from the winter-spring crop and the summer-autumn crop.

Last year, the Government provided interest-free loans to enable food companies to buy 1.5 million tonnes of rice for a temporary rice reserves.

Truong Thanh Phong, chairman of the Viet Nam Food Association, said rice exports in the first quarter of next year were expected to drop compared to earlier this year.

The Philippines and Indonesia, two important markets for Vietnamese rice in Asia, have already announced they would not need to import rice next year.

Several African countries have high inventories as well, so they are also unlikely to import rice during the first quarter of next year.

Because of higher purchase prices, Thailand has accumulated a large inventory, and if it decides to slash prices to clear its stock, rice prices are expected to fall further.

Phong said that the prices of Vietnamese rice were equivalent to the prices of rice from India and Pakistan.

At such prices, and with better logistics conditions, Viet Nam could compete with Pakistan and India in exporting rice to China and Africa when demand resumes.

The Food and Agriculture Organisation (FAO) has forecasted that global rice production would once again outpace consumption for the 2012-13 period, resulting in oversupply.

It is expected to reach 486 million tonnes, up about one per cent from the previous year.

The FAO also predicts that the international rice trade will have a record-high 37.5 million tonnes in 2013, up around two per cent against 2012.

Steelmaker Posco wins supply deal

Korean steelmaker Posco has won a US$400 million contract to supply raw materials for the Fomosa Ha Tinh steel mill, a joint venture of Ha Tinh Steel Corporation and Taiwan’s Formosa Group.

Ha Tinh Steel signed the agreement with Posco in Incheon, South Korea, on Monday, under which Posco will ship and provide iron ore for the new facility. Construction of the US$20 billlion plant, capable of processing up to 7 million tonnes of steel per year, will begin in February, 2013 on 3,300ha site encompassing five communes in Ky Anh District, including 2,025ha of land and about 1,290ha of water surface to accomodate the Son Duong Deepwater Port. The project is scheduled for completion in January 2015, when the provincial government expects it to create jobs for about 10,000 local workers in its first phase, with the figure to increase to 20,000 in the second phase.

The province, which approved the project in 2010, expects the project to help shift the provincial economic structure towards industry and promote the development of other industries not only in Ha Tinh but in the neighbouring provinces of Quang Binh and Nghe An.

Posco beat 10 other contractors from Taiwan, China and elsewhere to secure the deal, which it expected would open more doors for the company to bid for Fomosa Ha Tinh’s projects, including future steel plants and petrochemical facilities.

Brokerage resigns seat on exchange

Nam An Securities Co will resign its seat on the Ha Noi Stock Exchange in a move approved by the firm’s shareholders. The brokerage stopped opening new client accounts last Wednesday and will transfer all existing accounts to Dong A Bank Securities Co. Nam An reported a loss of VND71.8 billion (US$3.4 million) at the end of the third quarter, an amount equal to over 50 per cent of the company’s charter capital.

Company to delist shares, complete merger

Phuc Tien Trading and Manufacturing Co (PHT) is expected to convert its shares to shares of Tien Len Steel (TLH) at 1:1.25 ratio after delisting from the HCM City Stock Exchange, completing the merger between the two companies. Thirty-eight days after the delisting, the converted shares will be traded.

Financier reduces stake in power company

EVN Finance will sell nearly 22 million shares in Pha Lai Thermal Power Co (PPC), reducing its stake in the company from 11.7 per cent to 5 per cent, PPC announced. The transactions are expected to occur over a one-month period starting December 24. PPC has also recently made changes to its key management personnel. PPC shares closed yesterday at their ceiling price of VND11,900.

Plastic firm sells bonds to Japanese investor

Dong A Plastics Group (DAG) will sell VND40 billion (US$1.9 million) worth of convertible bonds to strategic partner Japan South East Asia Growth Fund LP, under an agreement signed on Tuesday. Dong A earlier announced plans to sell a total of VN?53.5 billion ($2.5 million) worth of bonds and is expected to sell the remaining VND13.5 billion ($642,800) to another investor. The bonds will have a three-year term and will pay a yield of 3 per cent.

PM calls for bigger push in social housing

Prime Minister Nguyen Tan Dung yesterday called on Ha Noi authorities to put stronger focus on developing social housing during a meeting to assess the frozen real-estate market.

The meeting followed a similar one with HCM City authorities on Tuesday. Both were in preparation for a Government plan to issue a resolution to help the struggling market.

According to reports from real estate companies and trading floors, Ha Noi currently has about 5,800 unsold apartments, equivalent to more than 566,000 square metres of housing space.

In addition, there are about 175,000sq.m in vacant rental offices, but only about 330 unsold apartments left for low-income earners.

Reports suggest that Ha Noi only holds 13 per cent of bank bad credit nationwide in real estate. In comparison, banks have loaned VND85 trillion (US$4 billion) to real estate projects in HCM City, including VND4 trillion ($192 million) chalked up as bad debt.

According to the chairman of the Ha Noi’s Peoples Committee, Nguyen The Thao, the frozen property market has resulted from “hot bubble” development and reduced purchasing power due to a weakening economy.

In addition, the market has been affected by speculators focusing only on the high-price segment of the housing market. Other problems relate to credit and financial policies and administrative procedures.

Construction Minister Trinh Dinh Dung noted that Ha Noi’s real-estate market was different than HCM City in the sense that it slowed down much later.

There were also a lower number of delayed projects and less outstanding loans as most funds were mobilised from buyers.

The PM said Ha Noi must re-assess planning work and focus on developing the housing market, especially for low-income earners, such as workers, students and office workers.

The PM asked the city to make administrative reforms and increase inspections to find if laws and regulations on land, investment, housing development and real-estate businesses are met.

And, he added, the capital city has to also make sure that information on property activities is kept transparent.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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