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BUSINESS IN BRIEF 22/12
HCMC’s
total investment in science and technology research from 2011 to 2013 was
pretty small, at around VND4.5 trillion mainly dependent on the State budget.
More
investment is needed from businesses to help unleash the science-technology
potential which could help boost economic growth.
A
recent report on the 2011-2013 activities of the city’s Department of Science
and Technology indicates that the State budget spent around VND2.44 trillion,
accounting for 56% of the total value, while other capital sources totaled
some VND2 trillion, or 46%.
According
to Phan Minh Tan, director of the department, the city’s science and
technology potential is still limited given its modest investment and heavy
reliance on the State budget. Besides, the city still lacks mechanisms and
policies for encouraging the commercialization of research results, he
explained.
In
Science
and technology directly contributes about 0.3% to the city’s gross domestic
product growth on average, the municipal Department of Statistics reports.
In
fact, Tan’s department carried out 270 research projects costing VND90
billion from 2011 to 2013. However, the number of research projects having
results applied directly to management, production and business accounts for
only 30% while the number of projects considered as supportive knowledge for
scientists and policy-making represents 24%. Around 24% of research is still
being deployed and has yet to be applied while 14% is still on paper.
Vietcombank,
Mizuho cut deals to be cashiers for Aeon
When
Aeon launches its shopping center into operation, the two banks will take
charge of cash collection and checking at transaction counters, helping the
retailer better sales management and avoid losses.
Truong
Thi Thuy Nga, deputy general director of Vietcombank, said that the service
is designed for Aeon Vietnam, meeting demands of the modern shopping center.
Yasuo
Nishitohge, general director of Aeon Vietnam, said that besides the
relationship with
Aeon
Mall will be inaugurated in HCMC’s Tan Phu District on January 1, 2014.
Invested with around US$100 million, the shopping center will feature around
3,000 products, including Japanese products, Vietnamese high-quality goods
and those from other countries.
Kinh
Do continues boosting M&A activity
Kinh
Do Corporation (KDC) will continue boosting merger and acquisition (M&A)
activity to boost investments in companies in the confectionery and foodstuff
industries besides developing its business overseas, Tran Le Nguyen, general
director of KDC, said at a function celebrating the 20th birthday of his firm
on Monday.
During
two decades of operation, KDC has been associated with numerous M&A
transactions and joint venture and cooperation deals inside and outside the
country for further development.
In its
next development strategy, KDC will continue embarking on M&A activity to
reduce investment time and utilize available resources to develop its core
business as well as expanding the foodstuff industry in the near future,
Nguyen said.
M&A
activity has helped KDC achieve more successes than failures, according to
Nguyen. Besides expanding its business scale, KDC has also diversified its
lines of products through M&A transactions which partly helps the company
avoid relying on the seasonal factor when doing business.
To
speed up sale growth, in addition to traditional products, KDC will continue
to look for investment chances in a number of other industries in line with
its strategy “Food and Flavor”. The strategy aims to expand KDC’s product
lines to serve essential demands of local consumers and increase the presence
of the company’s products at home.
The
products that KDC is expanding production are instant noodle, cooking oil and
sauce among other foodstuff items.
KDC’s
expansion strategy in near term is to cooperate with strategic partners for
processing products bearing its brand rather than building its own plants.
The firm is expected to introduce instant noodle and cooking oil products to
the market early next year, Nguyen informed.
Besides
diversifying products in the core business industry, targeting global markets
is considered as an important strategic step for KDC to accelerate its sale
growth in the near future. To bolster business on international markets, KDC
now is negotiating with foreign companies to launch items overseas and making
plans to construct factories abroad.
From a
small manufacturing facility 20 years ago with 70 workers only, KDC has
become a corporation with five subsidiaries and four plants specializing in
confectionery, ice cream and dairy products. It is expected to enjoy total
sales of over VND5 trillion and a profit of an estimated VND600 billion in
2013.
In
celebration of its 20th birthday, KDC was given the second grade Labor Medal
by the State President while Tran Kim Thanh and Tran Le Nguyen as the firm’s
two founders were given the third grade Labor Medals. On this occasion, KDC
has donated a total sum of VND2 billion to social organizations.
Green
building materials remain unpopular: architects
All
buildings of nine floors or above are required to use unbaked construction
materials at a maximum of 30% in the 2013-2015 period and 50% after 2015 as
per a new rule, but architects said this can hardly translate into reality as
green materials are not yet popular.
Le
Quang Linh, director of Phong Cach Moi Construction and Designing Company,
told the Daily last week that in the process of designing construction works,
many home owners appeared to lack information about light materials, so they
did not want to use them.
Moreover,
there are more masons used to baked bricks than workers skillful at using
unbaked bricks, he added.
The
Ministry of Construction’s Circular 09/2012/TT-BXD requiring the use of
unbaked materials for construction works took effect from January 15, 2013.
In urban areas of grade three and over, all new buildings must use unbaked
materials from January 15 this year. In other areas the percentage is at
least 50% but must be raised to 100% in 2015.
However,
the use of baked construction materials, particularly bricks, remains
popular.
According
to Linh, it is tough to talk consumers into using light, unbaked and
energy-efficient materials as they have not been provided with sufficient
information about the long-term positive impact of a green home or building,
especially energy saving.
“This
is a tough issue. Some say they will not import and produce green materials
until demand is high enough. Others say they will only train their masons to
use such eco-friendly materials when they are available. This is a vicious
circle,” Linh said.
The
Government has approved a program to develop unbaked building materials in
According
to another architect in HCMC, some office buildings have started to use light
materials like gypsum walls. However, it will take time to see big
construction projects use those light materials as high-rise buildings prefer
concrete and steel.
A
reason for this is light materials are quite expensive and hard to be found
while there is a shortage of workers good at using green materials, he added.
The
HCMC government has also assigned the Department of Construction to draft
regulations on management and development of building materials, including
unbaked ones. The use of unbaked materials is inevitable as it can restrict
the exploitation of clay from agricultural land, make use of industrial
scrap, save baking costs, protect the environment and cut construction time.
In a
document sent to the Ministry of Construction last week, the HCMC government
said it had ended clay brick production at 305 traditional kilns in Thu Duc
District, Districts 2 and 9. Saigon Brick and Tile Joint Stock Company
producing bricks by tunnel kilns in District 9 has also been moved.
Meanwhile,
Long Binh Construction Trading Production Joint Stock Company using Hoffman
kilns in District 9 has stopped operation.
Metro
Line 2 project to need more land
The
current design of Metro Line 2 in HCMC is no longer suitable as it cannot
ensure sufficient land for terminals and stations, so the city will need to
adjust the design by clearing more land.
The
HCMC Management Authority for Urban Railways said in a report sent to the
city government that the construction of this metro line, which will pass
through districts 1, 3, 10, 12, Tan Binh and Tan Phu, would lead to 347
households and 33 organizations being cleared to requisition 33,600 square
meters of land.
According
to the consultancy, the project will require big ventilation towers at
entrances and exits.
Regarding
Tao Dan Park station, the current width of the road in the area is 16.6
meters but it is planned for being widened to 35 meters in future, so the
design should be adjusted to make sure the entrances and exits of the station
would be located on the sidewalks of the expanded street.
Besides,
while building this metro line, there should be parking spaces for buses,
autos, motorcycles and pedestrians. As a result, site clearance should be
expanded to make room for those purposes.
According
to the HCMC Management Authority for Urban Railways, districts have measured
land sites and evaluated properties of those affected by the project and are
preparing to submit their compensation plans to the city government.
Around
2,900 employees working for 285 facilities and stores will be affected by the
construction of Metro Line No. 2.
As
planned, work on the metro line will start next year and the line could be
put into pilot operation in late 2017.
With
nearly 20 kilometers in length, the line will start at Thu Thiem New Urban
Area in District 2 and end at Tay Ninh Bus Station. The project’s first phase
will cover 11 kilometers, from Ben Thanh to Tham Luong.
The
Ben Thanh-Tham Luong section will start at Ben Thanh Market terminal in
District 1, go underground 9.3 kilometers before being elevated in Tan Phu
District, pass through an underground gate of 0.2 kilometer and then go
elevated for 0.8 kilometer to enter station No. 11.
The
project will cost a total of US$1.37 billion, with the Asian Development Bank
(ADB) lending US$540 million, the German Reconstruction Bank (KfW) US$313
million and the European Investment Bank (EIB) US$195 million. The remainder
will be sourced from
MIGA
promises guarantees for
The
Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank
Group, has said it will provide guarantees for
Michel
Wormser, vice president and chief operating officer of MIGA, was speaking
about this forthcoming assistance for the country at his meeting late last
week with
MIGA
is finalizing procedures for financial guarantees for two major
infrastructure development projects in
The
financial guarantees for the two projects will amount to US$1 billion, which
Wormser said is significant with regard to MIGA’s annual guarantees. With
MIGA guarantees secured,
He
said these two important projects would mark a cooperative relationship
between
Deputy
Minister Phuong said he appreciated MIGA guarantees for
He
said the nation would need MIGA guarantees for a slew of projects, especially
those relating to airports, energy, and water drainage and supply.
Wormser
called for
MIGA,
he noted, wants to guarantee as many projects as possible, particularly in
the infrastructure sector and that it would work closely with the World Bank
to harmonize assistance for the country.
MIGA’s
mission is to promote foreign direct investment into developing countries to
help foster economic growth, reduce poverty, and improve people’s lives.
Trung
Thuy to develop new properties in Hanoi, HCMC
Trung
Thuy Group is preparing to develop one more The Lancaster building in Hanoi
worth VND600 billion and a convention-apartment project in HCMC worth VND800
billion next year.
Duong
Thanh Thuy, chairwoman of Trung Thuy Group, said the second The Lancaster
building in
“It is
expected that after two years of construction the project in HCMC will be
operational. The one in
Similar
to the first The Lancaster building in
“Despite
difficulties of the property market, good projects that are close to the city
center and have full services like ours are still attractive to customers. We
have applied the model for The Lancaster Hanoi and have seen good sales,” she
said.
Trung
Thuy Group is active in the sectors of property, tourism services and
healthcare. The firm is the owner of The Lancaster buildings in HCMC and
VFA,
provinces team up for rice production
The
Vietnam Food Association (VFA) and 13 provincial departments of agriculture
and rural development singed a memorandum of understanding (MoU) on Monday to
cooperate in rice production and consumption.
The
most important content of the MoU is that related sides of the rice supply
chain including the agricultural departments, VFA and the Department of Crop
Production will join hands for rice production and exports as requested by
the Government.
Speaking
at the MoU signing ceremony, Pham Van Du, deputy head of the Department of
Crop Production, said that related sides are required to build up
high-quality rice production areas for exports. The areas will cover from 500
to 1,000 hectares each following demands of enterprises.
Besides,
it is important to define rice types for each material area at the orders of
rice exporting companies, Du said.
VFA
will represent rice exporters to supply input materials, and place orders
with farmers to grow one to two rice types in each region for exports. VFA
will also purchase all rice output at market prices, organize the trader
system and build up rice brands.
The
Department of Crop Production will check production process and coordinate
with other sides to define rice types for each material area.
Initially,
there will be 13 material areas in 13 localities in the Mekong Delta.
TPP
will buoy up
Exports
to the
As per
a recent report on the 11-month rice export released by VFA, the American
market buys 7.02% of
It is
probable that in the near future Vietnamese rice will expand its presence in
the American market, especially in the
The
director of a rice exporting company ascribed the strong export growth albeit
modest to the fact that Vietnamese rice has recently beaten Thai rice that
used to dominate the American market.
Duong
Ngoc Minh, chairman of Hung Vuong Seafood Joint Stock Company which has just
supplied agro-products to many retail outlets stateside, informed that
high-grade white rice from
Besides,
local rice exporters also pin high hope on
VFA
suggests the Government prepare conditions for local rice exporters to
penetrate the
VFA
expects rice export volume this year to fall to the lowest level in the last
three years. This year’s rice exports are projected to decline by 1.12
million tons or 14.5% from 2012 while the January-November average export rice
price tumbled 14.53% year-on-year.
The
fall is attributed to lower demands from traditional markets in
Twelve
countries are currently pursuing TPP negotiations so far. They comprise
Prices
of some products rise before Tet
The
Lunar New Year holiday is still one month and a half away but prices of some
products favored in the holiday has risen although the demand of such
products does not increase.
According
to many beer sellers in HCMC, the prices of some beer products have gone up
by VND10,000-20,000 per carton to VND380,000-385,000 for Heineken beer,
VND290,000-295,000 for Tiger and VND295,000-300,000 for Saigon Special.
The
owner of a big grocery store on
Meanwhile,
Vietnam Brewery Limited, producer of Heineken and Tiger beer, said at a
working session with the HCMC Department of Industry and Trade that it had
increased the beer supply for the coming holiday by 20% and that there is no
signs of short supply. However, the firm cannot control the retail price of
beer on the market.
Another
commodity with fluctuating price over the past time is beef. At many markets
in HCMC, the beef price has increased by 3-7% in the past two weeks.
A
trader at Tan Thuan Market in District 7 said that there was no specific
reason for the price hike as the price always increased before the Lunar New
Year holiday.
Contrary
to beer and beef, the prices of most other commodities are quite stable or
have even dropped.
Some
goods distributors told the Daily that the prices of commodities like
confectioneries and processed food products were maintained. Some products
see a slight price increase of only 2-3%.
Distributors
have prepared a large amount of commodities to meet the buying demand of
consumers in the holiday. Besides, producers have coordinated with
distributors to conduct many promotion programs with many activities such as
direct discounts, gifts and lucky draws.
The
purchasing power in the coming holiday is forecast to rise only slightly as
consumers tighten spending. Maintaining the selling prices and offering many
promotions are aimed at stimulating spending of consumers.
Experts:
Japanese firms still disburse in industrial sector
Although
Japanese investors have implemented many foreign direct investment (FDI)
projects in service, finance and banking sectors, they are still pouring
capital into the industrial sector, said economic expert Tran Van Tho from
Looking
at investment structure, Japanese enterprises are shifting to service
industries. But that fact is not completely right in terms of absolute
quantity, Tho told the Daily via email.
According
to the Ministry of Planning and Investment,
Between
January and November,
Tho
said there have been many difficulties in helping
Lastly,
Japan is also the first nation to give assistance to Vietnam in building up
an industrialization strategy until 2020, focusing on the six industries of
electronics, agriculture equipment, farm produce and seafood
processing, shipbuilding, environment and energy-saving.
The
strategy was approved by the Government in July. The Central Institute for
Economic Management, a co-composing agency, will release an action plan of
five sectors (excluding shipbuilding) this month to begin the strategy early
next year.
Although
more Japanese investors are knocking on the door, Tran Dinh Thien, director
of the Vietnam Institute of Economics, told the Daily that Japanese firms
have slowed down in recent times. Therefore, they may lose some opportunities
to South Korean investors.
Meanwhile,
Tho said that South Korean firms such as Samsung and LG have set up
large-scale projects in
Dinh
Van Phuoc, former general director of Tsubaki Yamakyu Chain Company, said
that the Japanese have never been slow-paced.
Japanese
are cautious. As Japanese enterprises want to make long-term investment in
Ba
Ria-Vung Tau Province and
Trade
is basically balanced, says minister
This
year’s trade deficit is estimated at some US$500 million, or only 0.38% of
the export turnover and trade therefore is basically balanced, according to
Minister of Industry and Trade Vu Huy Hoang.
The
minister on Monday had a meeting with minister counselors and commercial
counselors of
According
to the minister, this year’s exports encounter many difficulties, exporting
prices of many products decline, and markets for many types of products buy
less. However, many major exporting products such as garment, footwear, wood
and wood products, electronic products and components record high turnovers.
The
export of processed products tends to rise. Besides,
The
total estimated export turnover is around US$132.5 billion, up 16.5% from
last year. Meanwhile, trade deficit accounts for 0.38% of the export
turnover, which is far lower than the permitted level set by the National
Assembly at 8%.
The
Ministry of Industry and Trade targets to achieve an export growth rate of
10% next year. To boost exports, the ministry will restrict production and
exports of products of low added value but focus on producing products
friendly to the environment and energy-efficient.
The
ministry will seek to maintain trade deficit at 6% of export value or lower,
encourage high-tech imports, and boost development of supporting industries
and industries which can replace imports.
SCIC
withdrawal stimulates markets
The
State Capital Investment Corporation’s capital divestment process is expected
to stimulate the stock market and attract more foreign capital in the near
future.
Tran
Thang Long, head of research at Bao Viet Securities Company, said SCIC’s
divestment process would have a positive effect on the stock market in both
the short and long-term.
“It
meets demands from foreign investors to participate more deeply in the
Vietnamese stock market and underlines the Vietnamese government’s commitment
to a sharp decrease in state involvement in non-essential sectors,” said
Long.
According
to the State Capital Investment Corporation’s (SCIC) restructuring plan
recently approved by the government, the SCIC would reduce its ownership
ratios in 376 companies including major players such as Vinaconex, Bao Viet
Holdings, FPT, Traphaco, Binh Minh Plastics and Tien Phong Plastics.
The
plan aims to redistribute state capital into key industries and help enhance
the financial efficiency of the country’s state-owned enterprises through
2015.
However,
he said that despite SCIC’s divestment plans, there remained little room in
FPT, Binh Minh Plastics, and Tien Phong Plastics for foreign investors and
therefore, the market would have to wait for the government to approve the
draft decision to raise foreign ownership in listed companies to work in
tandem with SCIC’s capital withdrawal.
The
State Securities Commission recently submitted a draft decision to the prime
minister governing foreign ownership limits in listed companies. If passed,
the decision would allow foreign investors to own up to a 60 per cent stake
in listed companies, although this would still require approval from the
prime minister. The draft decision would replace Decision 55, passed in April
2009, which puts a 49 per cent cap on both individual and institutional
investor ownership in public or listed companies, investment funds, and
securities and fund management companies.
Long
added that SCIC’s divestment list included firms that boasted good
performances on the HoSE and HNX, and therefore it was likely that SCIC’s
capital withdrawal would be carried out through an agreement transaction
method to avoid a huge flood of stocks appearing in the market.
Meanwhile,
Pham Ngoc Bich, head of institutional clients at Saigon Securities, said
another positive effect of SCIC’s capital withdrawal was that it would open
up a large amount of good quality shares.
He
added that many of the shares that the SCIC currently holds had not been
traded, so the withdrawal would help boost market liquidity.
Under
the restructuring plan, the SCIC would continue to maintain long-term
investment in Vinamilk, FPT Telecom, Hau Giang Pharmaceuticals, and the
Vietnam National Reinsurance Corporation (Vinare). SCIC will also retain a
100 per cent stake in SCIC Investment, An Giang Quarry and Processing
Company, and Vinaconex Investment and Mineral Trading Company. SCIC will also
retain a controlling stake in Dien Bien Services, Tourism and Trading
Company, and Lai Chau Mineral Company following equitisation.
By
2015, SCIC’s charter capital would be raised to VND50 trillion ($2.38
billion) from its current VND5 trillion ($238 million).
Metro
hawks domestic fruit and veg overseas
Global
wholesaler Metro Cash & Carry is stepping up efforts to increase the
visibility of made-in-Vietnam agricultural products in overseas markets.
“The
first 23-tonne batch of Vietnamese dragon fruits that reached Shanghai
earlier this month signalled the great potential for fruit and vegetable
exports from Vietnam to China and other countries,” said Do Kim Dung, fresh
and frozen sourcing manager, Metro Singapore Trading Office.
Metro
Cash & Carry Vietnam, Metro Singapore Trading Office and ministries in
“This
is the first trial order with Red Dragon, a Vietnamese company,” said Dung.
“The volume of this order is small but we hope it will grow in the next few
years.”
According
to Dung, Metro is currently sourcing qualified Vietnamese suppliers who can
provide diverse agricultural products such as garlic, ginger, passion fruit,
star fruit, rambutan, white and green asparagus and strawberries.
In
2013, Metro purchased more than $6 million worth of food produced in
Next
year Metro is planning to source $12 million in goods from
“
“Instead
of importing uncontrolled and untraceable agricultural products from other
countries,
Entering
With
good agricultural practice training provided to over 20,000 farmers and
fishermen and other public-private partnership initiatives supporting the
agricultural sector, Metro has played an important role in local economic
development.
The
company won two top prizes for sustainable supply chains at the Vietnam
Supply Chain Congress in 2011 and 2012.
Foreign
footwear companies eager for TPP
Foreign
invested enterprises in the footwear sector are likely to rejoice after the
Trans-Pacific Partnership (TPP) goes into effect, planned for next year.
In
only the four months from June to September,
The
company’s general director Jin Woo Bang said, “With its advantages in
material, workforce, high production capacity, and product quality, our
global partner Nike group decided to shift massive volume production from
Indonesia and China to Vietnam in 2014, and this is likely to further
increase in the ensuing years.”
Another
Korean-owned firm Tae Kwang Vina Industrial Limited, based in Bien Hoa II
industrial park in Dong Nai, also invested into upping its production to
maximise TPP benefits.
“Foreign
businesses are the most likely to benefit from the TPP, as they have strong
advantages in scope, governance, and support from their parent companies and
global business partners,” said Nguyen Thi Thanh Xuan, general secretary of
the Vietnam Leather and Footwear Association (Lefaso).
The
export ratio of foreign producers has risen considerably in the last three
years, from 65 per cent of the footwear sector’s total export value to 77 per
cent currently.
Like
the textile-garment industry, footwear mainly imports materials from markets
such as
In
2012 footwear material imports exceeded $3 billion, mostly committed by
domestic companies, whereas the localisation rate of foreign enterprises was
around 80 per cent.
Footwear
is a sector that will see several benefits from the TPP, one of which is a
zero per cent tax rate, but to qualify businesses need to source materials
locally or import from TPP member countries.
According
to an executive of Vinh Binh Footwear based in Dong Nai province’s Trang Bom
district, the sector’s imports primarily come from
“If
This
forecast was acknowledged by Xuan from Lefaso who said, “Domestic firms are
strong in number but small in size, whereas global importers only set their
sights on major suppliers with cutting-edge technology and modern production
facilities. Foreign enterprises are nearly certain to be their first choice.”
Tunnel
project takes steps to ensure success
Efforts
are being scaled up to ensure the construction of
Project
developer Deo Ca Investment JSC just convened a special meeting of all
stakeholders in the projects to set clear financial policies for contractors
handling construction under the build-operate-transfer (BOT) model.
According
to Deo Ca Investment JSC’s general director Ho Minh Hoang, the developer will
advance 45 per cent of the maximum contract value to contractors, a record
high level aimed at pushing progress.
“Contractors
were also told that they needed to set aside 10 per cent of the total tender
package to return to the developer as risk provisioning or rewarding
contractors who meet targets and with high quality standards. In contrast,
they were warned that if they violate their contracts, however small, they
will be penalised, or even replaced,” said Hoang.
Hoang
confirmed that the project was completely transparent to ensure there are no
hurdles to its execution.
Regarding
the progress of the project, by December 15, any contractors failing to
provide the materials and manpower needed to kick-off the bidding package on
opening the tunnel’s northern gate before December 20 would face being
replaced, said a source from the developer.
Opening
the tunnels northern and southern gates is a complex part of the project that
will play a decisive role in its progress. The project also faced
difficulties with site clearance and the lack of service roads, which caused
several delays.
“The
northern temporary service road is now complete and the southern road is in
progress and will be completed before the New Year. The power system will
also be complete by the end of the year. Financial policies were made clear
to contractors to ensure they act capably and responsibly. Delays are
unacceptable,” said Hoang.
Hoang
said the bid package for the opening of the tunnel gates was a test for the
developer in selecting capable contractors to execute the core of the project
– internal construction.
In
respect to the project’s financial policies, general director Tang Van Chuc
at Lung Lo Construction Corporation, leading the consortium on building the
tunnel’s southern section said he thought it was perfect for contractors.
“We
are now poised for kick-off,” said Vu Van Hung, general director of
Tranimexco, leading the consortium on building the tunnel’s northern section.
AmCham
urges more facilitation for commerce
Mark
G. Gillin, chair of HCMC Chapter of the American Chamber of Commerce in
“We do
believe strongly that it does need to be a fundamental change in how
Gillin
insisted on the fundamental change in an interview with the Daily after he
listened to U.S. Secretary of State John Kerry’s speech about expanding
relations between the
Gillin
said that AmCham was optimistic about the future relationship between the two
nations, whose two-way trade soared 50 times since their normalization of
relations in 1995 as mentioned by the U.S. Secretary of State in his speech.
Herb
Cochran, executive director of the HCMC Chapter of AmCham
“Trade
between
Cochran
clarified the projection was based on data from the U.S. Department of
Commerce from January to September this year. “Most noticeably,
Of the
US$28.7 billion two-way trade this year,
The
growth of
According
to Cochran, companies from South Korea, Japan, Hong Kong and China have
announced more than US$1 billion of investment in Vietnam in apparel,
textiles, and footwear in anticipation of the TPP and also because the
business environment in China was no longer so favorable for FDI in these key
industries.
Cochran
quoted sources as saying that TPP would change the apparel sourcing landscape
drastically and
Cochran
said the bilateral trade between the
Allowed
listing of banks looks to be a complex but opportunity-charged challenge
Efforts
are underway to ensure the healthy performance of banks.
The
State Securities Commission and the State Bank of Vietnam (SBV) recently
decided to push forward the listing of public commercial banks.
Senior
banking expert Nguyen Tri Hieu said the listing of banks would be effective
in increasing transparency.
In
doing so, besides the requirement to release quarterly financial statements,
banks will be obligated to announce unexpected shifts in performance and
disclose information at the request of management authorities. Bank
operations will be under the oversight of investors and the public.
According
to veteran economist Bui Kien Thanh, if banks submit their financial
information and ownership structures on bourses, it will improve transparency
and pave the way for the SBV to gradually lessen the current entangled
cross-holding situation between banks.
In
fact, transparency is a major reason banks are hesitant to list.
At
this time, apart from eight listed banks meeting information requirements,
many banks have yet to deliver their information as per regulations. Some
banks have even failed to submit any information at all since their
incorporation.
“It is
perilous for shareholding banks to keep their operations secret, as nobody
knows where their money flows into or from. In the coming time, the SBV needs
to introduce more explicit regulations governing banks’ financial
transparency, whether they are listed or not,” said a source from a
Vietnam-based foreign investment fund.
Numerous
banks such as Maritime, Southern and NamA released plans to list years ago,
but they have been delayed due to the banks claiming “unfavourable market
conditions”.
According
to economists, apart from market and information transparency factors,
another reason banks cannot list was considerable bad debts.
Pursuant
to an SBV circular guiding listing procedures, to enter a bourse banks need
to satisfy several requirements such as having a chartered capital of at
least VND3 trillion ($142 million), generating profits over the previous two
years, and bad debts of less than 3 per cent of total outstanding loans in
the two quarters running up to their listing.
Banks
also need to unflinchingly follow capital adequacy regulations, as well as
those on debt classification, provisioning, internal auditing, and control
systems.
Meeting
these stringent requirements is likely to be a strain on banks given the
current context.
Banks
scrambling to rectify bad debts
After
offloading part of their bad debts to the state-owned Vietnam Asset
Management Company, banks are scaling up efforts to keep bad debts at
manageable levels.
For
example, Saigon Commercial Joint Stock Bank (SCB), after selling VND5
trillion ($238 million) to the Vietnam Asset Management Company (VAMC), has
had its hands full managing its bad debt policies under the guidance of the
state group.
According
to SCB’s acting general director Vo Tan Hoang Van, the VAMC is putting its
trust in SCB to handle bad debts through measures such as postponing due
dates, selling debts, or recouping capital through collateral.
Similarly,
Southern Bank executives said after selling VND200 billion ($9.5 million) in
bad debts to the VAMC in late October, it has cooperated with the state body
to restructure other bad debts with the goal of bringing its rate of these
liabilities to below 5 per cent by the end of the year.
Saigon-Hanoi
Bank (SHB) sold more than VND400 billion ($19 million) in bad debts to the
VAMC in October and another VND1 trillion ($47 million) in November. Its goal
is also to bring its bad debts to below 5 per cent by year end.
“Our
bank is working with the VAMC to develop credit ratings for customers and
restructure our business. Businesses with bad debts, but with feasible
production-business plans will have their debts rescheduled and will be
allowed to continue borrowing,” said the bank’s general director Nguyen Van
Le.
The
move showcase banks’ tremendous efforts to clear bad debts before the State
Bank’s circular on debt classification comes into force on June 1, 2014.
The
circular reportedly contains stringent requirements on classifying debts and
provisioning against loans, and as such, banks from small to big want to sell
off their bad debts to the VAMC.
State
giant Vietcombank and BIDV each sold around $47 million in bad debts to the
VAMC. Agribank sold $81 million and is contemplating selling a total of $476
million by the end of the year.
According
to VAMC executives, over 20 credit institutions have requested to sell a
combined value of $1.9 billion in bad debts to the VAMC, which has said it
will make purchases on a selective basis.
Former
chairman of the National Financial Supervisory Commission Le Xuan Nghia said
this year the banking system would strive to tackle about 30 per cent, $4.7
billion, of total bad debts. The banking system’s bad debts are expected to
go down to 3-3.5 per cent by the end of 2014.
HCM
City to host 2nd MRC Summit next April
The
second Mekong River Commission (MRC) Summit will be held in early April 2014
in Ho Chi Minh City, the commission announced December 12.
The
second summit will be the most important MRC event next year as the heads of
the National Mekong Committees of Cambodia, Laos, Thailand and Vietnam will
revisit their commitments made at the first summit in 2010 on a number of key
issues facing the Mekong Basin and the MRC.
They
will also agree on the best ways to address commitments, said the MRC, which
is an inter-governmental body set up by the four countries in 1995 to promote
and coordinate sustainable management and development of water and related
resources.
The
heads will discuss, among other key priority areas, the best ways the
commission can promote its effectiveness and ownership by the member
countries through 2030 and refresh regional cooperation in the trans-boundary
management of water and related resources ahead of the establishment of an
ASEAN economic community by 2015.
The
MRC Summit is convened every four years with the first in Thailand’s Hua Hin
district, bringing together regional political leaders and a range of experts
in the field of water resources management to address current challenges and
opportunities facing the Mekong Basin.
The
first summit served to strengthen regional cooperation between the four
countries, dialogue partners, and civil society. The prime ministers of the
three nations were in attendance.
Corporate
responsibility needs a boost
Vietnamese
enterprises have failed to implement effective corporate social
responsibility projects in a strategic way to create long-term social
benefits and improve their reputations, a study revealed on December 6.
The
study was jointly conducted by the Centre for Community Support and
Development Studies (CECODES), the Asia Foundation and the Vietnam Chamber of
Commerce and Industry (VCCI).
Of the
516 Vietnamese enterprises surveyed in Hanoi, Da Nang and Ho Chi Minh City
last year, more than 390 understood their social responsibility and invested
113 billion VND (5.3 million USD) and 19,500 man hours.
However,
for many, giving is an ad-hoc, short-term activity.
Dang
Hoang Giang of the CECODES said that in western countries, corporate
responsibility is a way to bolster the reputation of enterprises, but this
thinking seems to be absent among Vietnamese firms.
"Giving
is not considered a part of business," Giang said. "Many
enterprises do it randomly, such as supporting flood victims or distributing
New Year's gifts to the poor."
He
cited the HCM City-based Hoa Sen Group as an example. In May, the group
brought Nick Vicijic, an Australian disabled motivational speaker, to
Vietnam. The event was widely publicised across the country and put the
company in the media spotlight. However, according to the group's
representative, it was totally unplanned.
Many
activities were also half-hearted, he said.
According
to the study, only 15 percent of enterprises conducted social responsibility
projects to enhance their reputation and image, while the rest said they had
no business agenda.
They
also failed to evaluate the results of their contributions, and as a result,
few had sustainable plans in place. One third of the enterprises surveyed did
not have corporate responsibility plans for next year.
According
to Giang, non-governmental organizations (NGOs) should work with enterprises
to plan and implement strategic corporate responsibility initiatives.
However, only 9 percent of businesses said they had cooperated with NGOs
because they were unsure of their roles or trustworthiness.
Pham
Chi Lan, former vice chairwoman of the VCCI, said the practice of giving
among enterprises is unpopular because some doubt their cash will reach those
it was intended for. Others worried about the media and public opinion,
wanted their contributions to remain anonymous.
She
said to boost social responsibility efforts the State should form a policy to
incorporate it into business activities. Reports on corporate social
responsibility should also be made available to help connect enterprises and
those who need help.-
Source:
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Bảy, 21 tháng 12, 2013
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