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BUSINESS IN BRIEF 5/6
VAFI calls
for tax on trading of gold bars
The Viet Nam
Association of Financial Investors has called for a 10 per cent value added
tax on gold bullion trading to prevent the ‘goldisation' of the economy,
which refers to people's propensity to use gold instead of money.
In a report in the
Viet Nam Financial Times on Monday the VAFI said the recent gold bullion
auctions by the central bank were only a temporary solution to ensure supply
for credit institutions and reduce the gap between global and domestic gold
prices, and did not help fight "goldisation."
Most of the
measures used by the State Bank of
They did not help
check the "goldisation" but instead caused gold worth $22 billion
to be kept idly by individuals and affected policies related to interest
rates and foreign exchange, it charged.
No country in the
world waived tax on gold trading, it pointed out.
The association
also suggested that the central bank should gradually lower interest rates on
foreign currency deposits to zero per cent and on foreign currency loans to 3
per cent.
This would enable
the dong to appreciate, causing interest rates on both loans and deposits in
dong to further drop.
The plunging
interest rates would help the securities and property markets recover and
enable businesses to get access to cheap funds and expand, it said.
Excess
cement prompts production check
The Ministry of
Construction has recommended the Government cancel many pending cement
production projects and delay a number of others in order to align more
closely with market demand.
In a report on the
cement industry sent to Deputy Prime Minister Hoang Trung Hai this week, the
ministry suggested the removal of nine planned cement plants, with an
expected total output capacity of 4.15 million tones, from the nation's
Cement Industry Development Plan during 2011-20, which was approved by the
Prime Minister a few years ago.
They also suggested
that the construction of another seven cement production projects, which
would produce a total of 9.73 million tones annually, be delayed until 2016.
The nation's
development plan for the industry was designed to accommodate yearly growth
of 10-15 per cent, matching the rising rate of the industry in the period
2006-10.
However, according
to the ministry, the output suggested in the long-term plan will far exceed
domestic demand in the next two years, which has fallen due to the country's
economic difficulties.
Demand fell by 15
million tonnes in the last two years from the output stated in the plan, but
despite this new cement production plants have continued to be developed,
causing an excess which will reach 25 million tonnes by 2015. The redundant
figure would rise to 40 million tonnes by 2020 when the sector is producing
129.5 million tonnes.
Chairman of the
Viet Nam Construction Materials Association Tran Van Huynh said last year was
stormy for cement businesses and the situation does not look to improve. He
warned that if no drastic changes are made, more Vietnamese cement companies
will face the prospect of bankruptcy.
The association's
statistics showed that last year alone, coal and power prices surged 10 and
20 per cent respectively and prices of some other input materials also
increased by more than 7 per cent. Compounding things further is the falling
demand for cement, causing many plants to post losses and consider closing
their doors, he said.
Survey
condemns quality of companies' financial reports
The evaluation of
the quality of the financial statements of companies depends heavily on
auditing firms but auditors are not responsible for fraud of companies and
they have little ability to prevent swindling.
According to Bui Van
Mai, vice chairman of the Viet Nam Association of Certified Public
Accountants (VACPA), auditors can help companies find out data errors and
shortcomings during the process of making reports, as well as consult and
help companies improve their management systems.
"However if
they wish to swindle, auditors are not responsible for detecting and making
conclusions on such fraud," Mai was quoted as saying on the Thoi bao
Ngan hang (Banking Times) newspaper.
According to market
insiders, the responsibility is in the hands of the company's board of
directors and its internal control department.
However, the role
of board members in Vietnamese companies is more for execution rather than
strategic management and supervision. Meanwhile, the roles of internal control
departments are weak.
The Corporate
Governance Scorecard 2012 of the State Securities Commission showed a
disappointing result in which overall points of all surveyed businesses were
below 60 per cent while the average score was 42.5 per cent, lower than the
two previous surveys which scored 43.9 per cent and 44.7 per cent,
respectively.
The annual survey
rated quality of corporate governance of 100 listed companies on both
Following the 2012
survey, economic woes pushed many domestic companies into financial
difficulty and many attempted to conceal their weak business results.
The report
concluded that the information in the reports was incomplete and much more
formal.
Experts say the
most important thing is that shareholders should be aware of and utilise
their authority in supervising operation of their businesses.
They should be
strict in the matters of appointment of independent auditors, ask for
information from board members as well as information in the financial
statements. They are also encouraged to participate in shareholder meetings.
In addition, Le Thi
Thao, from the Law Faculty of University of Hue, suggested to empower
independent directors to increase their control over the performance of
boards of directors as well as increasing the responsibility and power of the
internal control department to support their supervisory role.
In an attempt to
help listed companies improve their corporate governance, the Ha Noi Stock
Exchange recently announced a plan to organise fact-finding tours for its
listed companies to the Thai Stock Exchange to learn about the Thai system of
managing information of listed companies as well as how the system can help
strengthen the company corporate governance.
Earlier this year,
a similar tour was organised by the HCM City Stock Exchange to
VN Airlines
announces new
Vietnam Airlines
will launch a direct air route between central
Chief
Representative of the carrier's South Korean branch Cao Anh Son announced the
plan in
Using Airbus A321,
the carrier will provide two-way direct flights on the route on Mondays,
Thursdays and Saturdays.
Last year, Vietnam
Airlines' South Korean branch catered for 640,000 passengers travelling
between the two countries, accounting for 20 per cent of the carrier's
international passengers and up 6 per cent from 2011.-
Firms need
to prove themselves
Enterprises who
wanted to access bank loans needed to actively demonstrate their operating
capacity, efficiency of their business plans and their ability to pay loans.
The advice came
from the Viet Nam Chamber of Commerce and Industry general secretary Pham Thi
Thu Hang.
The lending
interest rates were recently slashed to between 8-12 per cent – the level of
the 2005-06 period. That meant interest rates were no longer hindering firm's
access to bank loans, head of the State Bank of
Each enterprise
should restructure its business in an attempt to better convince banks about
the feasibility of its projects as well as to prove its cash flows, she said.
Both enterprises
and banks had encountered business difficulties, said VPBank general director
Nguyen Duc Vinh.
"We are
willing to lend to the firms but with certain conditions," he said.
Banks would take
into account the firm's operating capacity, mortgage assets and specific
plans for loan disbursement.
He emphasised the
importance of more effective assistance from the State and sectors in order
to bring banks and enterprises closer.
SME
development fund
A fund for small
and medium-sized enterprise (SME) development will be set up with a total
charter capital of VND2 trillion (US$95 million).
The move aims to
enhance the competitiveness of these enterprises and to create more jobs.
Functioning as a
State financial organisation under the management of the Ministry of Planning
and Investment, the non-profit fund is responsible for managing and using
financial resources to support SME development.
To get the
financial assistance, SMEs must meet a number of conditions, including having
feasible production or business plans in line with the fund's list of
priority areas.
The maximum loan
for each project will not exceed VND30 billion ($1.4 million) and must be
repaid within seven years. The establishment of the fund is part of a bigger
programme on SME development in the 2011-15 period.
Bank gets
go-ahead to raise charter
The Joint Stock
Commercial Bank for Investment and Development of Viet Nam (BIDV) has got
approval to raise its charter capital in the first phase of 2013 from
VND23.012 trillion (US$1.1 billion) to VND28.112 trillion ($1.34 billion).
The Ha Noi-based
bank shall increase its charter capital through paying share dividends and
issuing new shares to existing shareholders.
The charter capital
increase will be implemented in accordance with a plan approved by its annual
general meeting on April 26, 2013, and with a resolution of the board of
directors dated May 27 this year.
The approval will
be valid within 12 months. In case BIDV does not raise its charter capital
within the terms of the decision, and its shareholders approve a change in
the plan to hike charter capital, the approval will expire.-
IFC
supports efforts to make construction more energy-efficient
International
Finance Corporation (IFC), a member of World Bank Group, will provide support
to the Ministry of Construction to enhance energy efficiency in construction.
IFC will help the
ministry create instructions and training courses for energy efficiency in
construction and set up a strategy for the development of green construction
in
The programme, to
be implemented over five years, aims to reduce energy consumption by 15 per cent
for newly constructed buildings, helping Viet Nam cut greenhouse gas
emissions by 8-10 per cent in the 2011-20 period.
Tech firm
opens two offices in VN
Agilent
Technologies yesterday announced the opening of two new offices in Ha Noi and
"As one of the
fastest developing infrastructure and business regions in the world,
In Ha Noi,
Agilent's Advantage Services facility, a repair and calibration centre for
electronic testing instruments, will serve customers spanning industries such
as government, defence, education and manufacturing.
In
Southern
Companies which
were to stop projects are fruit juice producer Gia Nguyen, mechanics
manufacturer Vastalux-Alpha, fruit processor Van Dat, and trade and tourism
service dealer Hoang Ngoc.
Their projects had
a total registered capital of US$26.6 million and were expected to cover a
total area of over 74,000sq.m.
The
Conquas is a
standardised system developed by the
According to Hoa
Binh Corporation - the first contractor to be granted a Conquas Certificate
in
Hoa Binh is the
main contractor of the
Five FDI
projects under construction in southern province
Among 11 registered
property projects licensed for foreign direct investment in the southern
The five projects
are worth US$828 million, said the province's Department of Planning and
Investment.
Investors in
another four projects with a total investment capital of $1.56 billion have
cleared construction sites. The two projects not yet begun are the workers'
living area of Formosa Company and dormitory of Hyosung Vina.
The department said
the two investors and owners of the would-be construction sites have not
compromised on compensation payments.
The province's
statistics show office vacancies stand at 14,000sq m while there are 1,100
flats remaining for sale.
Work starts
on first five-star hotel in northern tourist town
Viet Nam Investment
Construction and Trading Joint Stock Corporation (Constrexim) on Thursday
began construction of its five-star Indochina International Hotel in the
tourism town of Sa Pa, northern Lao Cai province.
This is the first
five-star hotel in
Once completed, the
hotel will cater for both domestic and foreign visitors with 156 rooms, plus
meeting facilities and swimming pools.
Industrial
harmony promoted
The Government
needed to be more actively involved in both policy making and law enforcement
to help promote harmonious industrial relations, labour experts have pointed
out.
While acknowledging
that a number of new provisions specified by the new Labour Code and Trade
Union Law indicated the increased roles of upper-level trade unions and local
labour organisations in promoting better industrial relations, experts
complained that the provisions were lacking in specification, orientation and
practicality.
"When we look
at the Labour Code, it is difficult to find specifications on the
Government's role in solving industrial disputes," said Yoon Youngmo,
chief technical advisor on industrial relations for the International Labour
Organisation in
Vi Thi Hong Minh,
head of the Employers' Society's Office under the Viet Nam Chamber of
Commerce and Industry pointed out that the Labour Code had provisions about
harmonious industrial relations but offered no specific definition as to what
a harmonious industrial relation should be.
There is also a
provision about the roles of trade unions, employers' associations and
Government labour agencies regarding inspecting the implementation of the
labour laws, but there are no specifications as to how it should be done.
Minh added that the
new Trade Union Law came into effect over five months ago but specific
guidance on violations of the law had not been issued.
Youngmo pointed out
that the real role of the Government in promoting industrial relations was
also absent.
"The
Government only acts when strikes have already occurred, they don't keep
track of the real problem."
They should have
been proactive rather than reactive, Youngmo said.
He added that
Government mediators had not been fulfilling their roles because trade unions
and employers could not access support from them.
Mai Duc Chinh, vice
chairman of the
He said there were
only over 400 labour inspectors throughout the whole country and more than
400,000 enterprises.
Nguyen Thi Dan,
head of the Wage and Salary Division under
"Given that
the Labour Code is not specific, labour management agencies must have highly
experienced staff with a good knowledge of enterprises' circumstances and
practical experience of promoting industrial relations."
Dan pointed out
that these limitations would inhibit the implementation of the Labour Code.
She added that frequent
rotation of staff was also a challenge.
Despite the
difficulties, Youngmo said that it was possible for the Government to get
more actively involved in reducing disputes and preventing strikes.
He said most
strikes occurred in a select number of companies, sometimes even repeatedly,
so they were predictable.
Government
mediators could make plans to deal with disputes in strike hot spots, and try
to discover the root of the problem, he added.
According to the
In 2010, there were
over 400 cases, and in 2011 it peaked at nearly 1,000. Last year saw 550
strikes and during the first quarter of this year, 140 cases have been
reported.
$4m project
to develop industrial relations
A US$4 million
project to develop industrial relations in
The four-year
project is titled "Support to development in industrial relations, wage
fixing, and labour law implementation institutions and capacity in
It will be
implemented by the International Labour Organisation (ILO) and the Ministry
of Labour, Invalids and Social Affairs (MoLISA), among other relevant
agencies.
The non-refundable
official development assistance aims to promote effective enforcement of the new
labour code, raise the influence of employers' and workers' organisations,
promote collective bargaining and social dialogue, and develop the minimum
wage law and a good wage fixing mechanism.
The new code is
also expected to improve the mediation role of the Government to effectively
deal with labour disputes and prevent wild-cat strikes.
VMS, IBM
ink pact on cloud computing for mobile services
The Viet Nam Mobile
Telecom Service Company (VMS) - owner of MobiFone - has become the first
telecom service provider in the country to offer mobile solutions based on
IBM's cloud computing capabilities.
The solutions will
be offered under a strategic co-operation pact they have signed, the two
companies said in
Lack of
protection over dodgy dealings raises red flag
The recent dispute
between investors and a securities firm relating to abuses with investors'
money is again raising concerns about the lack of protection.
Two investors who
deposited about VND900 billion (US$43 million) at Dai Viet Securities Co's Ha
Noi branch recently accused the company of using the money without their
consent. They claim the money was secretly transferred to the account of the
branch's director, Dang Kim Thoa, without their request.
Lawyer for Dai Viet
Securities Nguyen Thanh Cong told ttvn.vn that Thoa and his colleagues
seriously violated company rules.
"(However) the
company did not illegally appropriate customers' money and we will pay the
money back," Cong said.
The State Securities
Commission will send an inspection team to check trading at the company's Ha
Noi branch.
After the incident,
many investors expressed concern about the possibility of their money being
used by securities companies without their knowledge. According to lawyer Le
Duc Thang, head of Le & Dong law office, transferring investors' money
without their request violates Ministry of Finance regulations.
Phung Thi Thanh Ha,
head of MB Securities Co's risk-management department, said in many cases,
leaders of securities companies did not know about the violations until
clients complained.
According to market
insiders, the misuse of investor funds can be avoided if every money transfer
is controlled and compared with the clients' request, data and signature.
They said that this
should be done daily or at least monthly, but for many reasons, the
regulation seems to be ignored at many securities firms.
VN firm
launches community development investment
Hoang Anh Gia Lai
Group last Friday kicked off its US$10 million investment programme of
community development in a bid to improve life for people in
In the first stages
of the programme, the group provided free healthcare services to roughly 1,500
local people in the province's Sre Aung Chhrong Commune; also offering gifts
of rice, salt and sugar to 400 poor local households.
Under the
programme, which will last until 2016, the group will also build up community
cultural houses, schools, medical stations and roads in the province, besides
giving sponsorship to local students to study teaching and healthcare in
Tiger Air
unveils promotion to mark anniversary
Singapore-based
Tiger Airways and the Singapore Tourism Board are offering huge discounts on
Viet Nam-Singapore tickets to mark the eighth anniversary of the low cost
carrier's operation on the route.
A one-way ticket to
Organic
rice farmers go against the grain
Yesterday's nice
weather proved ideal for rice farmers in Chuong My District's Dong Phu
Commune as they set to work harvesting their crops, and it wasn't just the
sunshine that had them smiling.
Last year, these
farmers made a commitment to completely avoiding the use of pesticides,
herbicides and chemical fertiliser on their crops, and they are finally
reaping the rewards.
This is the second
season that they have foregone the use of chemicals after receiving the
training of experts from the
"My rice is
growing well," said Bui Thi Khuynh, 53. "We only used organic
fertiliser for the crop and it is making a big difference."
Last year, the
commune's chemical-free crop was about 140 kilo for every 360 sq.m area. This
year it looks as if that amount will rise to 170 kilos.
In fact, the
productivity is mostly the same as in fields that are using pesticides and
herbicides, and in some cases it is even higher.
However, this
chemical-free method of farming is more labour intensive, as farmers need to
weed at least three times during a crop season, whereas farmers who choose to
apply herbicide only need to do this once. During harvest, Khuynh has to hire
two or three other farmers to help, to whom she pays about VND200,000 (US$9 )
each per day.
"The most
important thing is that our product is safe," she said. "I do the
farming for my family's consumption first and then I sell the rest. It is
quite popular because it is better for your health and tastier than rice that
has been sprayed with pesticides."
It is also
potentially more lucrative. Last year, Khuynh's rice was sold at VND25,000
per kilo, nearly double the price of normal rice.
Another local
farmer, 67-year-old Nguyen Thi Ton, said that for the last few years local
farmers have minimised the use of agro-chemicals as they had become more
aware of the harm that they can cause to human health.
"If we overuse
chemicals for crops, it will have a damaging long-term effect. We and our
children eat the rice, but the problems might not become obvious for another
20 or 30 years. By then, the damage is done. We are willing to grow safer
rice for ourselves, the next generation and consumers," she said.
Khuynh and Ton are
from two of the 15 households in the commune that joined a project called
‘Improving Production and Marketing Capacity Improvement for Sustainable
Agriculture, Farmers Empowerment, Rice Improvement and a Cleaner Environment'
(PAMCI-SAFE RICE).
Vice chairman of
Dong Phu Commune People's Committee Nguyen Van Bai said that farmers who had
participated were happy to provide safe products for themselves and their
consumers, who welcomed having more choice.
If they could find
a stable market, they could expand the model and develop an agricultural
brand for local safe rice, Bai said.
Dr. Kako Inoue from
the Agro-Environmental Laboratory at the
The subsequent
PAMCI-SAFE RICE project encouraged farmers to produce rice without any
agro-chemicals and to adopt the SRI (System of Rice Intensification) method
to prevent pest damage and to achieve higher yields.
"Importantly,
the project encourages farmers to eat their products themselves. We are not
emphasising the economic value of safe crops. This is because we want farmers
to continue their sustainable agricultural production for their own health.
After that is established, they can share the remaining rice with society and
make money for their efforts," Inoue said.
The project, funded
by Japanese International Co-operation Agency, kicked off last May in the
communes of Dong Phu, Dai Nghia and Dai Hung in the district, and will end in
2015.
The SRI is a
technique to produce rice with less input (in the form of seeds, water and
agro-chemicals). Seedlings are planted one by one, leaving more space than
usual and intermittent irrigation is applied with less fertiliser and
agro-chemicals. This technology sustainably provides a stable yield in
harvest and a healthy paddy, resulting in less pest damage and heightened
resilience against storms. The SRI method is also expected to reduce greenhouse
gas emissions.
Farmers'
profits jump after switching to corn
Switching from
low-yield rice to corn has brought higher incomes for farmers in the Mekong
Delta
Over the past two
years, many farmers in An Giang Province have been planting one corn crop and
two rice crops on the same field each year.
Previously, they
rotated three rice crops on the same field every year.
Farmers who
participate in the rotating corn-rice crop model have harvested an average of
10.8-12.3 tonnes of corn per hectare, the highest yield in the country.
An Giang is the
leader in the Mekong Delta province in switching from planting low-yield rice
to corn.
Nguyen Ngoc Khai,
head of the An Phu District Agriculture Extension Centre in An Giang, said
farmers could earn an average profit of VND24 million (US$1,100) per hectare
for a corn crop, three times higher than the profit of a rice crop.
Khai made his
remarks at a seminar held on Wednesday in An Giang.
Mai Thanh Phung,
deputy director of the National Agriculture Extension Centre, said the model
should be developed in other provinces.
The deputy head of
the Ministry of Agriculture and Rural Development's Plant Cultivation
Department, Pham Dong Quang, said the country had to import about 1.5-2
million tonnes of corn a year.
The country has a
large demand for corn, he said.
"However, the
Delta should produce corn at a selling price that is equal to the price of
imported corn," he said, adding that the country's corn was mostly
purchased by animal feed producers.
The ministry has
assigned the Plant Cultivation Department to rotate crop cultivation on paddy
fields to increase farmers' incomes.
Farmers have been
encouraged to grow either two rice crops and another cash crop each year, or
one rice crop and two cash crops.
If most farmers
continue to plant three rice crops each year, rice diseases and poor soil
conditions will persist, according to scientists.
Economy
expected to grow 6% next year
The Ministry of
Planning and Investment is drafting the PM’s Directive for designing the
socio-economic development plan for 2014.
Under the draft
document, the Government should focus on accelerating economic growth,
restructuring, and growth model transformation among others.
The Government also
needs to zero in on effectively addressing pressing issues, especially
pro-longed complaints and denunciations, corruption, crimes, social evils,
traffic accidents.
Enhancing the
network of preventive medicine and strictly controlling medicine prices would
continue to be high priorities.
Specific targets
include the economy expanding at around 6% and inflation under 7%./.
VN,
The draft agreement
includes 22 articles which cover transport rights, aviation security, flight
frequency, taxes and fees and payments.
This is the first
direct round of talks on aviation ties between the two countries, according
to Vo Huy Cuong, Deputy Head of the Civil Aviation Authority of Viet Nam.
The agreement is
expected to facilitate tourism, trade and investment linkages between the two
countries.
Aquatic
exports to
Last year, the
turnover to 25 African countries hit 150 million USD, a 38 percent surge from
2011, with key exports including Tra and Ba Sa fish, shrimp and tuna.
According to the
African, West and South Asian Markets Department under the Ministry of
Industry and Trade, Vietnamese exporters have a good opportunity to promote
aquatic exports to African countries as the nations have to import numerous
aquatic products to meet their domestic demand and their aquaculture industry
is underdeveloped.
Vietnamese
exporters are even able to study the possibility of implementing aquaculture projects
in the continent and exporting aquatic products to surrounding countries.
Moreover, the
profuse domestic supply of Tra fish at stable prices facilitates Vietnamese
exporters’ trade with the continent.
However, Vietnamese
exporters have encountered several difficulties in exporting their aquatic
products to the African market.
It takes around 40
days to transport goods from
In easing the
difficulties and stepping up aquatic exports to
They have also been
asked to set up a distribution network with a common price in the continent’s
key markets in order to avoid dumping.
According to
ministry,
Phu Quoc
pepper looks toward Global GAP
Phu Quoc island
district in the southern
With 385 hectares
of pepper trees, mostly in Cua Duong and Cua Can communes, Phu Quoc reaps
nearly 1,000 tonnes of pepper a year.
The locality plans
to expand its area of pepper trees to 500 hectares by 2015 and 1,000 hectares
by 2020 with expected yield of 3 tonnes per hectare.
In 2011, the
National Office of Intellectual Property of Vietnam granted a licence to Phu
Quoc pepper, helping the district to affirm its product’s traditional value
and quality while creating conditions for it to introduce its product to the
world market.
Phu Quoc district
is working on a pepper growing process in an efficient and eco-friendly
manner and will transfer it to farmers.
Local officials
have said they target clean and safe products to serve both domestic
consumption and export.
According to Nguyen
Minh Truc, Head of Phu Quoc’s Economic Office, the locality targets organic
and sustainable cultivation of pepper trees while paying attention to
promoting its brand name in the domestic and foreign market.
Apart from
specialties such as pearl, seafood, fish sauce and wine, pepper cultivation
in Phu Quoc is developing in a sustainable manner in combination with service
and tourism, contributing to the locality’s socio-economic growth.-
In a press release
issued on June 2 on IE Singapore Global Conversations session with Prime
Minister Nguyen Tan Dung on June 1, CEO Teo mentioned fundamentals, like
rapid urbanisation, a large domestic economy and abundant natural resources
as opportunities to invite businesses.
He highlighted the
consumer sector as a growing area, fuelled by an expanding urban population,
better educational qualifications and rising disposable incomes.
This month, NTUC
opened its first hypermarket in
With urban populations
in
Sembcorp
Development is currently operating four
In the tourism and
hospitality sector,
In the first three
months of 2013,
HCM
City-Brescia cargo air route to be launched
A cargo air route
between the Italian northern city of
The air route is
implemented under an agreement reached by
At the event,
representatives from the Vector Aviation and its Italian counterpart unveiled
their agreement’s first phase worth 15 million USD.
Under the
agreement, the two sides will operate one flight per week with 65-70 tonne
Airbus 330s-freighter between the two cities from this October.
In the second phase
from next April, they plan to use Boeing 747s-400F.
Addressing the
event, Vietnamese Ambassador Nguyen Hoang Long stressed the project will help
promote cooperation programmes in trade, export and import between the two
sides and connect Southwestern European countries and the Southeast Asian
region.
Opening the direct
route shows the increasing demand on cooperation in trade, investment,
production between the two countries’ businesses as well as the two regions,
the diplomat added.-
SBV delays
classification of debt to aid companies
The State Bank of
Viet Nam (SBV) announced on Monday that it would delay the application of a
circular classifying and making provisions for bad debts by one year, until
June 2014.
The delay is
intended to help enterprises access credit, boost lending and reduce lending
interest rates in the current context of economic hardship.
Additionally, it
gives banks more time to prepare for the application of the regulation. The
circular covers asset classification, risk provisioning and unitisation of
provisioning by credit institutions and foreign bank branches. It aims to
make the banking system safer and gradually comply with international rules.
However, many
experts and business community recommended that the regulation be delayed, as
it would turn many existing extended loans into non-performing loans (NPLs),
meaning businesses would have trouble accessing loans.
If the circular
took effect, roughly VND272 trillion (US$12.9 billion) worth of loans at
credit institutions would become NPLs.
Currently, NPLs
account for 5 to 6 per cent of outstanding loans. With the circular in
effect, they would account for 15-16 per cent of outstanding loans – causing
difficulties for both enterprises and credit institutions.
The new regulation
also asks banks to make more risk provisions for credit grants, so banks fear
their profits would be eaten up as they were forced to raise their lending
interest rates to offset the losses.
Businesses claimed
that if the central bank insisted in applying the regulation, it would cause
their production to stagnate, bad debts to rise and credit to be even slower.
Price
stabilisation programme needs to improve co-ordination
The
price-stabilised-product system should be developed nation-wide and
co-ordination among enterprises in creating a "goods reserve"
should be improved, a conference was told yesterday.
The Ministry of
Industry and Trade held the conference to evaluate the price stabilisation
programme and to discuss whether and how to expand it.
Deputy Minister of
Industry and Trade Ho Thi Kim Thoa said the programme together with policies
to help enterprises were among tools to control the consumer price index and
prevent speculation.
Under the
programme, she said, essential commodities such as rice, sugar, oil, meat,
eggs, vegetables and seafood products were sold at 5-10 per cent lower than
market prices.
However,
price-stabilised products had not reached residents in remote rural areas,
said Ha Noi Department of Industry and Trade deputy director Nguyen Van Dong.
Dong said the
distribution network should be enhanced in traditional markets, rural areas
and industrial zones to better serve low-income earners and ensure they enjoy
the benefits of the programme.
Van Duc Muoi,
director of Vissan, said enterprises needed to be provided with preferential
loans to manufacture and store goods for the price stabilisation programme.
"It is also
important that enterprises co-ordinate with each other to ensure stable raw
material sources for production and a smooth transition between production
and distribution," Muoi said.
Director of the
Domestic Market Department Vo Van Quyen said many localities now provided
support to manufacturing enterprises, instead of mainly retail enterprises as
in previous years.
"The price
stabilisation programme was not non-market," Quyen said. He pointed out
that enterprises got Government loans to reserve necessary goods during
economic difficulties.
HCM City Department
of Industry and Trade deputy director Le Ngoc Dao said the price stabilisation
programme should encourage the participation of other economic sectors
besides the Government.
She said that this
year the city called for credit institutions and commercial banks to join the
programme to help enterprises get access to loans at reasonable interest
rates (about 6 per cent for short term and 10 per cent for long term).
Thoa told the
conference that the ministry would have policies to encourage enterprises to
join the programme by themselves without receiving loan support from the
Government.
During 2012 and Tet
holiday, a total of VND1.803 trillion (US$85.86 million) was provided to 45
out of 63 provinces and cities to participate in the price stabilisation
programme. About 300 enterprises got involved in the programme, 20 per cent
of which did not get loan support from the Government, the ministry's report
showed.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Tư, 5 tháng 6, 2013
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