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Viet Nam makes progress on EU trade deal following Ha Noi forum

Relations between Viet Nam and the European Union (EU) have gained more momentum with a significant increase in bilateral exchanges in recent months, said Jean-Jacques Bouflet, Trade Counsellor of the EU Delegation at a public dialogue forum held in Ha Noi yesterday.

The forum attracted representatives from ASEAN Member States, Vietnamese Government officials and stakeholder representatives from the private sector and social organisations. The meeting served as an oppoportunity for participants to share their concerns and aspirations about the deepening of their country’s engagement with the EU ahead of the first round of bilateral Free Trade Agreement negotiations between the two sides expected to take place next month.

Director General of Viet Nam’s Ministry of Trade and Industry’s Multilateral Trade Policy Luong Hoang Thai said that based on the current relationship between the EU and ASEAN member states, a regional FTA or bilateral FTAs with the EU reflect the desire of the parties to achieve the ultimate goal of economic integration for delivering practical benefits to the private sector and stakeholders.

In 2011, Viet Nam was the fifth largest trading partner with the EU amongst the ASEAN countries, with a total bilateral trade amounting to EUR18 billion (US$23.4 billion), consisting of exports from Viet Nam to the EU worth EUR12.8 billion ($16.6 billion) and Viet Nam’s import from the EU worth EUR5.2 billion ($6.76 billion).

In the first half of this year, the EU has become the second most important export market for Viet Nam, importing goods worth approximately EUR7.3 billion ($9.5 billion), accounting for 17.14 per cent of Viet Nam’s total export revenue.

The EU’s investment in Viet Nam totalled approximately US$1.76 billion last year, representing more than 12 per cent of Viet Nam’s total committed FDI in 2011.

Apart from communicating the desire of ASEAN and the EU to forge closer economic relations, including the conclusion of bilateral FTAs, the discussion also covered issues such as regulatory reforms. Regulatory reform is likely to form a key component in the structural economic reforms needed to support longer-term economic growth in both Viet Nam and ASEAN, as well as for Southeast Asia to reap the full economic benefits from enhanced trade and investment engagement with the EU.

Deputy Director General of Viet Nam Industry and Trade Information Center Le Quoc Phuong said aside from the improvement in the institutional and legal systems, the economic legal framework of the country has also changed dramatically. In the area of trade, for example, reforms have been carried out to ensure Viet Nam’s commitment in various international economic fora, including the gradual removal of tariff and non-tariff barriers.

Regulatory reforms should be the next step in the process of transformation from a centrally planned economic system to a more open and market-oriented approach that Viet Nam was currently pursuing, said Phuong.

Dao Ngoc Tien from the Foreign Trade University also agreed that the process of international economic integration has always encouraged Viet Nam to pursue regulatory reforms at domestic level. Whilst many of these internal reforms have been crucial in driving the process of economic development in the country, much is still needed to improve Viet Nam’s competitiveness in the international market. An FTA with the EU could consequently enhance the drive for further regulatory reforms in the country.

At the forum, participants also emphasised the importance of a ‘bottom-up’ approach to promote regulatory reform in Viet Nam. A representative from the Viet Nam Chambers of Commerce and Industry, Nguyen Thi Thu Trang, said the involvement of the private sector and the wider layers of society was imperative to ensure a relevant regulatory reform process in the country.

She also encouraged the Vietnamese private sector to provide constructive inputs in the forthcoming FTA negotiations that Viet Nam will pursue with the EU.

Rice prices rise, but only after farmers sell

Many farmers are ruing the fact that they have no more paddy to sell when prices have risen sharply in the Cuu Long (Mekong) Delta region.

On September 20, the low-quality IR 50404 paddy sold for VND5,200 to VND5,300 per kg after it was harvested from fields in the Cuu Long (Mekong) Delta provinces of An Giang and Dong Thap, an increase of VND500 to VND550 per kg compared with a month earlier.

Dried IR 50404 sold for VND5,700 to VND5,800 per kg, and dried high-quality long grain paddy for VND5,900 to VND6,100 per kg.

Rice to be processed for export was sold in Thot Not (Can Tho City), Sa Dec (Dong Thap Province) and Cai Be (Tien Giang Province) for VND7,700 to VND7,900 per kg.

Ngo Van Thom, who cultivated the IR 50404 variety on 2.6 ha in Can Tho’s Co Do District, said he had sold all of his paddy from the last summer-autumn after harvesting it early in August for just VND3,900 to VND4,000 per kg.

“I was not happy to hear that traders were purchasing paddy from the ongoing autumn-winter crop for VND5,100 to VND5,300 per kg,” said Thom.

“I hope that I can sell my autumn-winter paddy at higher prices when it is harvested in two to three weeks.”

Cuu Long (Mekong) Delta provinces have some 680,000ha under cultivation for this year’s autumn-winter rice crop, compared with over 1.6 million ha for the summer-autumn crop that ended a couple of weeks ago.

Dong Thap and An Giang have the largest areas under the autumn-winter rice crop, totalling 260,000 ha.Duong Nghia Quoc, director of the Dong Thap Department of Agriculture and Rural Development, said paddy prices have risen sharply these days, but most farmers in the southern province have no stock to sell.

He said Dong Thap has over 80,000ha under the autumn-winter rice crop, and some 10,000ha have been harvested in the past week with an average yield of 5.5 to 5.8 tonnes of paddy per hectare.

“At current [paddy] prices, farmers can get profits of VND15 to VND20 million, or 30 per cent of production costs, on each ha under the autumn-winter crop,” said Quoc.

In Tien Giang Province, with an average yield of 5.5 to 6 tonnes of paddy per ha, farmers can earn profits of VND17 to VND19 million per ha, double that of the last summer-autumn crop, local officials said.

The manager of a rice-exporting firm in An Giang Province, who declined to be named, said the current paddy/rice prices were favourable for farmers.

However, the total output of this autumn-winter crop, about three million tonnes of rice in the Cuu Long (Mekong) Delta, was not a great quantity for regional rice markets, he said.

Paddy/rice prices were on the rise because a number of rice exporters plan to increase their reserves, he added.

According to the Viet Nam Food Association, rice exports rose from 5.1 million tonnes in the first eight months of 2012 to 5.2 million tonnes on September 10, for an export turnover of US$2.3 billion.

In the first eight months, Vietnamese exporters had won contracts to export 6.8 million tonnes of rice in 2012, up 30 per cent over the same period last year.

Shrimp exports to total $2.5 billion

Shrimp exports are expected to reach the US$2.5 billion goal set for the year despite the ongoing challenges facing exporters, according to the Viet Nam Association of Seafood Exporters and Producers (VASEP).

Solid supplies and increased demand were putting the industry on track to meet its target, although shrimp export value would have to continue on a pace to total US$800 million in the last quarter of the year, VASEP said. In the third quarter, shrimp exports surged 19 per cent over the same period last year to $690 million, bringing total export value in the first nine months to $1.7 billion.

Obstacles to reaching the goal include a slowdown in demand on the European market and difficulty complying with strict food safety requirements being imposed by Japan. Japan is applying a maximum ethoxyquin residue limit of 0.01ppm for Vietnamese shrimp, a low rate for local shrimp breeders.

Ethoxyquin is a substance used in the preservation of fishmeal (a main ingredient in animal feed), and most of countries in the world apply a maximum residue limit of 77-150ppm.

To avoid damage to the export companies and protect the reputation of Vietnamese shrimp on the Japanese market, VASEP has proposed that the Ministry of Agriculture and Rural Development review of the use of ethoxyquin in aquaculture and enhance measures to strictly control its use.

Meanwhile, Vietnamese shrimp exporters also expect to face stiff competition in the final quarter of the year from rivals in Thailand, India, Indonesia and Ecuador, VASEP said. The UN Food and Agriculture Organisation (FAO) has predicted that output of white-leg shrimp from India this year would rise 33 per cent over last year to reach 100,000 tonnes.

Noting that only 35 per cent of shrimp processors and exporters had insufficient financial resources to remain in production through the end of the year, VASEP has also urged the authorities to adopt policies to reduce interest rates for exporters and to increase industry credit quotas.

Total export value of shrimp reached $2 billion for the first time in 2010 and rose by another 13.7 per cent in 2011 to reach $2.4 billion, VASEP said.

Enterprises need higher quality CEOs

Viet Nam needs a new generation of ambitious and inspiring chief executive officers (CEO’s) to kick-start the ailing economy, according to Gian Tu Trung, head of the PACE Business school.

Trung made the comments at a conference on Thursday titled ‘CEO 3.0: Go Through Challenges – Catch Opportunities’. He said, “new CEO’s must be good enough to be able to compete with the rest of the world.” He stressed that awareness and vision were the most important things for any business person but “Vietnamese CEO’s should share core values with each other and grow together.”

The first generation of CEO’s in Viet Nam is widely considered to have been from 1975 – 1986 when a spirit of renovation was widespread. This was followed from 1986 – 2008 by a generation of CEO’s pushing for international integration. Then the global crisis hit.

Speakers at the workshop lined up to make suggestions for CEO’s leading companies now.

“The new CEO generation must accept changes. They are not infallible, so they should find the right consultancy companies to help them in specific fields,” said Andy Ho, CEO of VinaCapital. He went on to note that the role of CEO was very important for investors, who need to see a person who can mobilise all a company’s resources and staff to work in one direction.

Tran Le Nguyen, deputy chairman of Kinh Do’s management board added to the calls for inspirational new leaders. “Being passionate and doing your very best for the job has been the requirement for every CEO in history, but it is especially necessary in these hard times.” He confirmed his opinion that the CEO 3.0 generation must be better in governance to add value to their companies.

Le Hong Minh, chairman and CEO of VinaGame, discussed the obstacles facing company leaders in the current economic climate. “Fierce competition and fast changing technology are creating the most challenges for a CEO at this time,” he said. His proposed solution is that local companies should set up a governance system that would help professional CEO’s work more efficiently. New CEO recruits could then be recruited from within this network.

Over 600 CEO’s from around the country gathered in HCM City to attend the forum. The event was organised by six organisations: Leading Businesses in Viet Nam club, HCM City Young Business People Group, Sai Gon Entrepreneur, 2030 Business people club, HCM City CEO club and Viet Nam’s Enterprise for High-quality products.

Exchanges close in frozen real estate market

Many real estate transaction floors in HCM City have downed shutters recently as the property market remains frozen, industry insiders say.

A report from the city’s Department of Construction says that as the end of last year, about 356 real estate trading floors had been established, accounting for 62 per cent of the nation-wide total.

While exact official figures are not available, it is estimated that around 100 exchanges have disappeared from the market.

Several years ago, when the real estate market was riding high, exchanges had mushroomed on Tran Nao Street in District 2. A large volume of the city’s real estate trading floors was established here and transactions abounded, making it a guild street for the property market.

Now, the street is very quiet. Fashion and construction material shops have replaced transaction floors.

The director of a real estate exchange told the Tin Tuc (News) newspaper that an exchange needed at 20 transactions per month to maintain it operations. At present however, having 5-10 transaction in one month “is a dream,” he said.

Some brokers admitted that they had were trying to push their business through phones and the Internet.

He knew that it would disturb customers, but it was the only way to maintain his job and earn money, said broker Nguyen Ngoc Toan.

Toan said it was very difficult now to find a customer. “There are months that I am only able to find one customer,” he said.

Other brokers noted that big trading floors were operating despite the paucity of transactions. They explained that such floors belonged to real estate companies still doing well, and being able to offer other services. They did not specify what the other services were.

Only “very strong” exchanges with “high prestige and good business” can exist right now, said the director of a trading floor in District 1, who did not want to be named.

Real estate exchanges were established in 2009 under Government regulations. However, they have not proved effective to date because they have developed in quantity, not quality.

Most investors had established exchanges just to sell their own projects, so they were unable meet high standards.

CT Group, Parkson VN ink retail space deal

Real estate developer C.T. Group yesterday signed an agreement with Parkson Viet Nam under which the former will make retail space available to the latter next March.

The space will cover 11,400sq.m spread over the first six floors of the Leman C.T Plaza Project on Nguyen Dinh Chieu Street in HCM City’s District 3.

The new Parkson Trading Centre, which is expected to open doors in June, 2013, will also include a food court.

Leman C.T Plaza is a 24-storeyed building with four parking basements that serves residents of 200 apartments.

Apartment builder secures cheap loans for buyers

Novaland group and Viet Nam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) have agreed on a deal under which the latter will lend at 8 per cent interest for the first year and 10 per cent for the next four years to buyers of Novaland’s apartments.

The loans are available for buying units in Sunrise City in District 7 and Tropic Garden in District 2 before December 31 this year.

Borrowers can get 70 per cent of an apartment’s value for a 15-year loan.

The deal is worth of VND5 trillion (US$250 million).

Authorities to probe apartment management

Authorities in Ha Noi set up a group to investigate management at apartment buildings in the capital from September 25 until October 10 following growing cases of conflict between apartment owners and management at high-rise buildings.

The delegation would investigate management at the buildings, including checks on service fees for residents and conflict between public ownership and private ownership at the buildings.

The group will draft proposals on better managing buildings in the city.

Investors in apartment buildings are also the managers and operators of buildings in the city, so the interests of residents at these buildings were not always adequately protected.

In an effort to solve the issue, some buildings in Ha Noi planned to establish a management board of representatives chosen by residents instead of management boards set up by investors.-

Ministry seeks to scrap group model

The Ministry of Construction has proposed scrapping the group model at the Viet Nam Industrial and Construction Group and the Viet Nam Housing and Urban Development Group after two years of inefficient operation under the pilot model.

Working in this model, the two groups experienced weaknesses in production, business and management of capital and workers.

When applying the model, the State expected the two groups to develop strong trade marks in the housing, infrastructure, construction and building materials sectors.

Viet Nam, Germany plan housing fund

Deputy minister of construction Nguyen Tran Nam signed a memorandum of understanding with a representative from German bank Schwabisch Hall (BSH) to develop a housing fund in Viet Nam.

Under the MoU, the two sides would establish a research team that includes experts from Viet Nam’s construction ministry and relevant ministries and sectors as well as from BSH to study development of the fund.

Viet Nam would create favourable conditions for BSH to carry out market research and work with commercial banks in Viet Nam to expand investment in the country.

Meanwhile, BSH would provide international experiences and co-operate on research work in the are.-

Suzuki opens new-standard showroom in HCM City

Suzuki World, the first showroom directly managed and operated by Suzuki Viet Nam, was opened in HCM City yesterday.

With 7 models of automobiles and 45 models of motorbikes, Suzuki plans to upgrade all their showrooms to a higher standard for better customer serving.-

Kohler relaunches showroom in Ha Noi

Kohler has collaborated with Rita Vo Company, an authorised Kohler distributor, to relaunch a showroom in Ha Noi today after six years of operation. Kohler products have been used in many high-end hotels and residential developments in the capital city.

Kohler is one of the oldest and largest companies involved in the manufacture of kitchen and bath products, engines, and power generation systems, and tile and home interiors.

Travel awards honour low-cost carrier VietJetAir

Viet Nam’s low-cost carrier VietJetAir was shortlisted in the TOP 5 Best New Route Launch category at the 2012 Budgie$&Travel Awards held recently in London.

The airline’s highly successful connection linking HCM City with Ha Noi was joined in the Top 5 by new routes from SpiceJet (India), EasyJet (England), Southwest (America) and AirAsia X (Malaysia). The Budgie$&Travel Awards celebrate the leadership, efforts, accomplishments and ingenuity of the low cost aviation industry and the Asian travel industry.-

Fair facilitates economic ties with Cambodia

A trade fair to boost ties between Viet Nam and Cambodia opened in Cambodia’s capital Phnom Penh yesterday.

Themed ‘Friendship, Cooperation and Development’, the 2012 Viet Nam-Cambodia International Trade Fair is co-organised by the Ministry of Defence and the Ministry of Industry and Trade. The six-day event features more than 160 businesses. On display at the 300 pavilions are processed foods, beverages, construction materials, interior decorations, leather products, school accessories, jewellery and electronic equipment.

Ha Noi greets 7.5 million visitors so far this year

The capital city has so far received 7.5 million tourists, an increase of 12 per cent over the same period last year.

The number of foreign tourists alone reached nearly 1.15 million – 28 per cent more than last year – and there were 6.35 million more domestic tourists, an increase of 9.8 per cent. According to statistics from the City Tourism Administration, most foreign visitors to the capital come from China.

Pests, diseases attack nation’s rice fields

Pests and diseases have attacked hundreds of thousands of ha of rice nationwide and farmers have been advised to strengthen their vigilance and take timely measures to control them.

In the Cuu Long (Mekong) Delta, the country’s rice granary, more than 3,590ha of rice have been attacked by brown plant hoppers with a density of 1,000-2,000 pests per square metre and more than 9,500ha of rice have been infected with the rice blast disease, according to reports from various provinces in the region.

Le Van Da, deputy head of the Kien Giang Province’s Plant Protection Sub-department, said 3,785ha of the province’s current 100,000ha of rice have been impacted by pests and diseases.

This area is infected with pests like brown plant hoppers and small leaf folder, and diseases like rice blast and grain discoloration, he said.

In Ca Mau Province, which neighbours Kien Giang, brown plant hoppers have caused the yield of infected paddy fields in several communes in Tran Van Thoi District fall by 30-50 per cent, said local farmers.

Many farmers have been forced to harvest their paddy early, before the crop has ripened properly, for fear of further losses.

Inclement weather is the major reason for the increased presence of brown plant hoppers this year, according to the Ca Mau Department of Agriculture and Rural Development.

Brown plant hoppers attacked mostly fragrant rice varieties like OM 4900 and OM 6162 as these have low resistance against the insect, with soft stems suitable for the pests’ growth, department officials said.

In the north, the small leaf folder has attacked 198,897ha of rice, according to the Plant Protection Department under the Ministry of Agriculture and Rural Development.

About 152,548ha of rice in the north have also been infected by the sheath blight disease.

Brown plant hoppers and white-back plant hoppers have infected more than 23,320ha of rice.

The Plant Protection Department has ordered local authorities to closely monitor the situation and instruct farmers on prevention and control measures.

It has also advised farmers to visit their paddy fields frequently to detect the appearance and density of brown plant hoppers.

Plan protection officials at grassroots levels must strengthen inspections of paddy fields in order to promtly discover problems and support farmers in resolving them, it said.

Delta suffers high post-harvest loss

Small-scale paddy fields, non-synchronous mechanisms, poor infrastructure, and a lack of drying and storing facilities are among the major reasons for the high post-rice harvest loss rate in the Cuu Long (Mekong) Delta, experts say.

The delta, the country’s rice granary, has posted a post-harvest loss rate of 13.7 per cent, according to the Southern Institute for Agriculture Engineering and Post Harvesting Technology (IAEPHT).

Of the loss, harvesting and husking account for 3 per cent, drying accounts for 4.2 per cent, and preservation accounts for 2.9 per cent. The average post-harvest loss rate in Southeast Asian countries is 10 per cent.

With the Delta’s current post-harvest rate, a farmer will lose about VND12 million (US$570) per ha annually when yielding three rice crops a year, while the entire delta region will lose about $650 million per year, according to the IAEPHT.

Speaking at a seminar in Tien Giang Province on Wednesday, organised by the ministries of Industry and Trade, Agriculture and Rural Development and Tien Giang People’s Committee, Pham Van Tan, deputy director of the IAEPHT, said though the rate of mechanism in rice cultivation had increased significantly in recent years the post-harvest loss rate had increased due to poor farmers not applying the mechanism synchronously.

Most harvesting is now done by combine machines, which are able to meet the harvesting demand during peak harvest season. However, the use of certain combine harvesting machines, such as the Japanese brand Kubota, have caused the number of paddy grains falling into fields to increase two times higher than that of a manual harvest, said seminar participants.

To reduce post-harvest losses, the engineering sector should undertake research into different types of imported harvesting machines suitable for small-scale fields in the south, the particpants added. If the reduction of post-harvest losses is done well, the Delta can increase it’s number of paddy grains by about 3 million tonnes per year. The delta, which possesses 2.1 million square metres of land devoted to rice cultivation, produced 23 million tonnes of paddy grains last year. And while the aim is to increase productivity and expand the area, it is very difficult to increase rice productivity by 3-5 per cent when there is such a large amount of waste.

Le Van Banh, head of the Mekong Delta Rice Research Institute, said the reduction of post-harvest losses can only be achieved through synchronously implemented mechanisms.

At the seminar, participants also discussed market development and trade promotion, researching and transferring production technologies, training human resources and developing infrastructure facilities for agricultural production.

Rice prices rise, but only after farmers sell

Many farmers are ruing the fact that they have no more paddy to sell when prices have risen sharply in the Cuu Long (Mekong) Delta region.

On September 20, the low-quality IR 50404 paddy sold for VND5,200 to VND5,300 per kg after it was harvested from fields in the Cuu Long (Mekong) Delta provinces of An Giang and Dong Thap, an increase of VND500 to VND550 per kg compared with a month earlier.

Dried IR 50404 sold for VND5,700 to VND5,800 per kg, and dried high-quality long grain paddy for VND5,900 to VND6,100 per kg.

Rice to be processed for export was sold in Thot Not (Can Tho City), Sa Dec (Dong Thap Province) and Cai Be (Tien Giang Province) for VND7,700 to VND7,900 per kg.

Ngo Van Thom, who cultivated the IR 50404 variety on 2.6 ha in Can Tho’s Co Do District, said he had sold all of his paddy from the last summer-autumn after harvesting it early in August for just VND3,900 to VND4,000 per kg.

“I was not happy to hear that traders were purchasing paddy from the ongoing autumn-winter crop for VND5,100 to VND5,300 per kg,” said Thom.

“I hope that I can sell my autumn-winter paddy at higher prices when it is harvested in two to three weeks.”

Cuu Long (Mekong) Delta provinces have some 680,000ha under cultivation for this year’s autumn-winter rice crop, compared with over 1.6 million ha for the summer-autumn crop that ended a couple of weeks ago.

Dong Thap and An Giang have the largest areas under the autumn-winter rice crop, totalling 260,000 ha.Duong Nghia Quoc, director of the Dong Thap Department of Agriculture and Rural Development, said paddy prices have risen sharply these days, but most farmers in the southern province have no stock to sell.

He said Dong Thap has over 80,000ha under the autumn-winter rice crop, and some 10,000ha have been harvested in the past week with an average yield of 5.5 to 5.8 tonnes of paddy per hectare.

“At current [paddy] prices, farmers can get profits of VND15 to VND20 million, or 30 per cent of production costs, on each ha under the autumn-winter crop,” said Quoc.

In Tien Giang Province, with an average yield of 5.5 to 6 tonnes of paddy per ha, farmers can earn profits of VND17 to VND19 million per ha, double that of the last summer-autumn crop, local officials said.

The manager of a rice-exporting firm in An Giang Province, who declined to be named, said the current paddy/rice prices were favourable for farmers.

However, the total output of this autumn-winter crop, about three million tonnes of rice in the Cuu Long (Mekong) Delta, was not a great quantity for regional rice markets, he said.

Paddy/rice prices were on the rise because a number of rice exporters plan to increase their reserves, he added.

According to the Viet Nam Food Association, rice exports rose from 5.1 million tonnes in the first eight months of 2012 to 5.2 million tonnes on September 10, for an export turnover of US$2.3 billion.

In the first eight months, Vietnamese exporters had won contracts to export 6.8 million tonnes of rice in 2012, up 30 per cent over the same period last year.

Vietnam casino bill: $4 billion required  

Investors should have at least $4 billion worth of capital and ten years of experience in tourism management to be allowed to open a casino in Vietnam, which is only open to foreigners, the Ministry of Finance suggested in its draft decree.

The decree on casino operating activities is now open for feedback from relevant ministries and agencies before being submitted to the government in the fourth quarter.

“The to-be-developed casino should be located in the areas zoned for gambling activities approved by the Prime Minister, and investors should prove they are financially capable of completing the project,” said one of the decree developers who preferred to be anonymous.

Investors will only receive the operation license when they have completed construction on the tourism, service, and entertaining complex where the casino is located. They are also requested to equip brand new machines, which should have adequate origins and technical certificates, at the venues.

The draft decree also states that only foreigners and overseas Vietnamese holding foreign passports are allowed to enter the casinos.

Players have the right to request anonymity in case they win prizes, and are also subject to financial penalties ranging from VND10 million to VND100 million ($500 – 5,000) if they breach casino regulations, cheating, or causing social disorders.

Regarding whether Vietnam should be more open to casinos, many experts show their supports, but warn administrative authorities to be cautious.

Economic expert Le Dang Doanh advised that Vietnam should ensure casino activities come under a close scrutiny from authorities.

“Casino is a complicated business, though it brings in whopping profits. Even a developed country like Singapore has failed to adequately prevent the negative side of gambling from affecting society,” said Doanh, who holds a PhD degree.

He reiterated the lesson learnt from the case of Do Son casino in the northern province of Hai Phong, where some local gamblers bribed to be able to play, and ended up losing all of their properties.

Similarly, despite supporting casino openings in Vietnam, Professor Nguyen Mai, former Deputy Minister of Planning and Investment, said the country should limit the number of casinos.

Dr. Doanh concurred, saying the casino should only be located in islands such as Phu Quoc or Van Don.

“It’s not an appropriate move to put the casino near the cultural and political centers, or areas with high population density,” he said.

Long-term deposit interest rate increases to 13%    

Other banks have followed suit after the Asia Commercial Joint Stock Bank (ACB) increased their saving rate to 13% per year on September 11 for 12 and 13 month terms.

This is the highest rate since the 14% rate Western Bank introduced in June.

The Vietnam Export Import Bank (Eximbank) and Saigon Thuong Tin Bank (Sacombank) quickly adjusted their ceiling rates to 12.8%-13% per annum. Bac A Bank, Dai A Bank, Viet Thuong Tin Bank (VietBank) also followed and adjusted their saving rates up to 12.9-13% per year.

The 13% rate will be applied to 12 and 13 month term deposits, which don’t have restricted interest rate caps. The longer term deposit still have 12% per year interest rate and 9% per year interest for shorter periods.

ACB Deputy Director Nguyen Thanh Toai denied rumours that the bank was suffering liquidity issues. Toai said this wasn’t an issue and that the banking sector had attracted larger deposits from customers.

He further said the bank wanted to encourage customers to invest money into making long-term deposit, since most of the bank’s loans were for long-term periods.

However, according to the State Bank of Vietnam, as of September 7, credit growth of the whole banking system only reached 1.82% while the savings rate is ten times higher. This means that the banks are still very cautious in giving out loans.

Economist Nguyen Dai Lai said the figures indicated that capital was still being used to repay loans and not for any useful purposes.

“The SBV should remove the cap on interest rates. Administrative tools should be applied to short-term lending rates.” he said. “The SBV could also limit interest rates. The lending rates can’t be 125-130% higher than the interest rate of the most recent government bonds for one, two and three year periods.”

He said through this, lending interest rates might not exceed the expected inflation rate and the interest rates for short-term deposits must lower than the long-term deposits.

Aviation firms fly to foreign funds

Some foreign aviation investors that have been circling Vietnam may soon be cleared for landing as discussions proceed on private-public partnership model in airport infrastructure development.

Deputy Minister of Transport Pham Quy Tieu discussed such PPP model in a meeting with US-Vietnam aviation cooperation working group last week.

“We will soon complete the legal framework, including investment incentives in upcoming time to attract private investment in this important industry,” said Tieu.

Meanwhile, Le Manh Hung, also Deputy Minister of Transport told VIR that Vietnam’s aviation infrastructure development projects faced difficulties in finding financing sources. If the PPP model were deployed soon, it would bring benefits for infrastructure development in Vietnam, he said.

Vietnam’s aviation industry has impressively grown at 15 per cent annually within the last five years. It is expected to continue such growth in the near term, underscoring the need for Vietnam to building an adequate and modern infrastructure network to accommodate such growth, Hung said.

“Vietnam is thirsty of finance to upgrade the existing airports and build up new airports,” he said.
According to Civil Aviation Administration of Vietnam, the country would need around $2.84 billion for airport development infrastructure to the year of 2015 and $2.73 billion of investment would be required for developing airports during 2016-2020.

“Finance will be drawn from the state budget, official development assistance (ODA) and foreign investment capital. But the majority will be from foreign investors and ODA because state budget is limited,” Hung said.

From now to 2020, Vietnam plans call for investments to upgrade Hanoi’s Noi Bai international airport, Ho Chi Minh City’s Tan Son Nhat and Danang international airport.

Noi Bai airport’s four-floor terminal T2 is expected to complete construction in 2014 with an increased capacity of 15 million of passengers annually. Notably, it will need a huge fund to continue expanding the capacity up to 50 million passengers by 2030.

Meanwhile, Tan Son Nhat airport is also looking for funding partners to expand it up to 25 million passengers from eight million passengers annually at present. Danang airport will be expanded to a capacity of 25 million passengers from current 6 passengers per year.

US’ airport developer ADC-HAS who desires to invest in developing Cam Ranh international airport in central Khanh Hoa province said PPP model in aviation sector was not new. This model has been applied in many countries for the last 25 years, however, it is speeded up in Southeast Asia and Vietnam.

The US firm recently sent its proposal to the Ministry of Planning and Investment to sign a memorandum of understanding on development of Cam Ranh international airport. This follows the firm spending more than one year studying the local aviation market’s potential.

ADC-HAS initially proposed to invest in Chu Lai, Long Thanh, Phu Bai, Danang, Tuy Hoa, Quy Nhon, Pleiku and Cam Ranh airports under the public-private partnership format.

Vietnam looks to stars

A milestone in Vietnam’s nascent space industry has been achieved as construction commenced last week on the country’s first-ever space centre at Hanoi’s Hoa Lac Hi- Tech Park, with financial support from Japan.

Expected to be finished in 2020, the 54.4 billion Japanese yen ($697.4 million) centre will be developed into Southeast Asia’s leading well-equipped space centre, according to the Vietnam Academy of Science and Technology’s Vietnam National Satellite Centre.

The project’s 46.5 billion yen ($596.1 million) is financed as Japan’s official development assistance- (ODA) based capital. The remaining capital, about $101 million, comes from the Vietnamese government.

Covering nine hectares of land, the centre will include a main building, a centre for assembling and testing small-sized satellites, a satellite signal receiving station, a satellite controlling centre, and a research centre.

Considered key to Vietnam’s strategy of studying and applying space technology, the centre will conduct important missions such as creating and owning technology, producing small satellites to be used in earth observation, building and resolving satellite’s database issues to serve for weather forecast and natural and environment disaster forecasts as well as many other missions such as exploration, radio- television broadcasting and rescue.

According to Japan’s Embassy to Vietnam, the project called for Japan to support Vietnam in developing and monitoring satellites, and human resources training. Vietnam’s satellite No1, to be wholly imported, will be launched in 2017, while the satellite No2, to be made by Vietnam, will be launched in 2020. Detailed design of the centre has been conducted since December 2011 and is expected to be completed in January 2013.

Deputy Minister of Science and Technology Nguyen Van Lang said Vietnam could develop a space industry that leads the Southeast Asian region. “This centre can help Vietnam save $1-1.5 billion from losses caused by natural calamities every year.”

The centre is also expected to contribute to a new phase of technology application to solve Vietnam’s daunting tasks in searching for feasible countermeasures for climate change.
Nagase Toshio, a senior representative from Japan International Cooperation Agency (JICA) in Vietnam, which is the implementing agency of Japan’s ODA projects, said the centre was part of a JICA project named “Disaster and climate change countermeasures using earth observation satellite in Vietnam”.

“Space technology application remains relatively new to Vietnam. However, I strongly believe that with strong commitment, great enthusiasm, high level of intelligence, Vietnamese experts would closely cooperate with Japanese partners to implement the project smoothly. This will help reach our final target, which is to efficiently apply space technology to cope with disaster and climate change,” Toshio said.

Hoa Lac Hi-Tech Park located in Hanoi’s Thach That district was founded in 1999, covering 1,600ha. The park targets to develop information technology, especially software development, bio-technology, mechanical-electronic engineering, micro-electronics, new materials and nano technology.

New rubber processing plant opens in Quang Nam

The Quang Nam Rubber one-member Company, Ltd. inaugurated the Hiep Duc Rubber Processing Plant on September 20 in Song Tra commune, Hiep Duc district, in the central coastal province of Quang Nam.

A line at the processing plant

The VND20 billion facility covers 8.7 hectares and has the capacity to process 1,000 tonnes of rubber annually during the first phase of its operation.

The company will invest nearly VND40 billion in the second phase of the project to raise the plant’s production capacity to 3,800 tonnes per year, including 3,000 tonnes of smoked sheet rubber and 800 tonnes of crepe rubber.

The plant’s wastewater treatment station, invested with a total of VND31 billion, is also being constructed with the support of the Vietnam Rubber Industry Group.

To date, the Quang Nam Rubber Company has invested in 4,500 hectares of rubber plantations in Hiep Duc, Nong Son, Nui Thanh, and Phuoc Son districts, 1,500 of which are now being exploited.

The company exploited 1,600 tonnes of rubber latex in 2011, generating a total revenue of VND120 billion. It expects its total rubber latex production will increase to 2,000 tonnes in 2012.

Gold sellers active on falling prices

While domestic gold prices tumbled after Saigon Jewelry Co. (SJC) started to process 13 tons of gold, the number of gold sellers surged sharply on Thursday.

SJC at 4:00 p.m. quoted the precious metal at VND46.59 million and VND46.94 million per tael for buying and selling respectively, down by VND380,000 against the previous day. A tael equals 1.2 troy ounces.

People flocked to sell gold at local jewelry shops in the morning. Nguyen Cong Tuong, deputy sales manager of SJC, said the enterprise bought over 4,400 taels on Thursday while the selling volume was modest.

As gold keepers were concerned that the global and local price gap would narrow down due to higher supply, they decided to offload it to avoid losses, Tuong explained.

Concerning SJC’s gold processing, Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said SJC started the job on Thursday with a small volume. This amount of gold includes non-SJC gold and deformed gold primarily from banks and gold trading companies in the country.

With this amount, banks will have enough gold to pay for depositors and enterprises will have more supply, helping ease gold demand on the market, Minh said.

However, there was still a wide gap between global and domestic gold prices, with local price around VND2.5 million higher for a tael. Last week, the difference soared up to VND3-3.1 million.

Closing the New York market on Wednesday, the precious metal was $1,769.5 an ounce, inching up $1 compared to the previous session. On the website www.kitco.com, gold price fell to $1,762.5 an ounce on Thursday, down $7.2 compared to the opening bell.

Experts mull ways to tackle bad debts

Bad debts are a real concern, according to financial and banking experts who attended a seminar held by the National Institute for Finance on Thursday to seek solutions for this problem.

“The Government should have a decree for tackling bad debts in the banking system,” said Truong Dinh Tuyen, former minister of trade.

Nguyen Thi Mui, director of Vietinbank’s human resource training and development school, said although there have been a number of figures concerning bad debts, this matter remains a mystery.

The central bank collected the reports of credit institutions in late May and revealed a bad debt ratio of 4.47%. However, central bank inspectors later said the figure was more like 8.6%.

The central bank’s governor went one further and estimated the bad debt ratio at 10%, while the National Financial Supervisory Commission calculated and announced a figure of 11.8%.

Such inconsistency is rooted in the different methods to classify debts, or maybe it is due to creditors turning debts into equity capital, said Mui. “Either way the bad debt ratio is on the rise,” she stated, adding that as long as the problem of bad debts was unresolved, banking sector restructuring would not reap success.

Vo Tri Thanh, vice president of the Central Institute for Economic Management, said dealing with bad debts is now more complicated than before, because the financial size of the economy has changed. Multiple State groups and corporations have run into losses and gone bust due to their inability to write off debts.

“In order to settle bad debts, there must be a financial institution powerful enough to assume the tough job,” said Thanh. He added this financial institution must have a legal foundation and a right to inspect and review all documents concerning asset disposal and transfer.

Moreover, for this institution to operate effectively in the debt trading market, whether the State is willing to delegate power and make a sacrifice or not must be clearly determined, Thanh stressed.

Duong Thanh Hien, deputy general director of Debt and Asset Trading Corporation (DATC), admitted though his firm is currently the most active debt trader, the operation mechanism is poor. “Financial regulations of DATC have been temporary for eight years now,” he said.

Poor mechanism reduces the efficiency of debt treatment. Therefore, Hien suggested there should be a more specific mechanism.

For example, Circular 79/2011 of the Ministry of Finance requests DATC to use at least 70% of the total investment capital to buy debts and assets from enterprises wholly owned by the State. However, the circular does not mention how to calculate the total investment fund.

DATC’s measures to tackle bad debts are also limited. As such, although DATC can handle bad debts of enterprises, the firm can hardly engage in the corporate restructuring process.

Truong Dinh Tuyen proposed the Government should have a decree for settling bad debts in the banking system and a mechanism for debt treatment organizations to operate so that they can deal with bad debts.

Cash flow choked off

Money supply as of end-June had picked up nearly 7% against late 2011, but a small fraction of it had flowed into the economy while the remainder had sat idle in the banking system.

Speaking at a forum “Connecting banks and businesses: Capital opportunities in late 2012” on Thursday, business executives said chances were slim for them to access bank loans from now to the year’s end.

Doan Trong Ly, chairman of Animal Production Processing and Import Export Joint Stock Company (Aprocimex), said banks had redundant capital but ironically businesses had found it hard to borrow to fund their production.

Cash remains stuck in the banking system, he told the forum organized by the Vietnam Chamber of Commerce and Industry (VCCI) and Dien Dan Doanh Nghiep newspaper.

Financial-banking expert Nguyen Dai Lai said deposits at banks had surged by 10.26% as of August 20 while outstanding loans had only inched up a mere 1.4% against late 2011.

Le Van Thanh, chairman and general director of Dong Luc Joint Stock Company, said many businesses were dying as a result of difficult access to funding.

Tran Thi Hong Hanh, chairwoman of the Vietnam Banks Association, said outstanding loans at the association’s member banks had dropped in the early months of the year.

Because of the low capital absorption of the economy, banks have had difficulty expanding their lending. Moreover, as businesses are struggling with slackening demand, banks have tightened lending requirements for fear of bad debt, Hanh explained.

Although the Credit Institution Law disallows banks to lend capital to their shareholders, it is not difficult to evade the law. Statistics show that some 40 State-owned and private enterprises are currently holding stakes of over 5% in commercial banks, meaning there are cross-ownerships between banks and businesses.

He said the economy was facing a capital redundancy in the banking system, a goods oversupply and a money shortfall among businesses. In such a context, it is a must to stimulate consumption, develop policies for management of capital markets, remove all administrative and monopolistic barriers, and adopt mechanisms for businesses and citizens to easily access credit capital, said Lai.

(VietnamNet)

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