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BUSINESS IN BRIEF 25/1
Retailers face foreign competition
Vietnamese retailers are facing fierce competition from
several new foreign players in the market, who also have strong financial
potential and experience.
Responding to concerns about Thai commodities flooding the
supermarkets, outdoor markets and convenience stores of the country, Prof Le
Cao Doan from the Viet Nam Institute of Economics, said foreign enterprises
from not only Thailand, but from South Korea, Japan, the United Kingdom, as
well as the United States are planning to foray into the Vietnamese market.
However, the arrival of the new retailers will only benefit
consumers, and local enterprises might fail in this competition, Doan stated.
The Deputy Minister of Industry and Trade Nguyen Cam Tu
agreed, commenting during an online discussion held yesterday in Ha Noi that
"This could be an opportunity for Vietnamese companies to
access new capital, and tap new and effective management experience," Tu
added.
Tran Nguyen
For example, billionaire Charoen Sirivadhanabhakdi's retail
conglomerate Berli Jucker (BJC) recently announced a plan to buy
The Central Group has two outlets in Ha Noi and
However,
Doan of the Viet Nam Institute of Economics said Vietnamese
retailers lack capital and experience, and have low competitiveness.
Specifically, capital has been mainly invested in State-owned
enterprises instead of small entities.
Dang Dinh Dao, the former head of the
In addition, Vietnamese firms should also strive to improve
their prestige in the international market, he suggested.
Firms urged to prepare for AEC
Vietnamese firms have been urged to take initiative and
prepare for participation in the ASEAN Economic Community (AEC), which is
expected to be formed by the end of this year.
At a forum on the Government's e-portal held yesterday,
experts said that besides offering many opportunities, the AEC will also pose
challenges, such as the influx of products and services from neighbouring
markets and skilled labourers, adding that, if Viet Nam does not enhance its
competitiveness, the country might become a consumption market for other
countries in the region.
According to Deputy Minister of Industry and Trade Nguyen Cam
Tu, AEC is expected to create a firm base for
The integration process has put Vietnamese firms in urgent
need for changes to promote advantages, Tu said. However, he pointed out that
firms are seemingly not paying enough attention and businesses lack detailed
information about the AEC.
Tu stressed that
Economist Nguyen Hong Son said there is a lot of work to be
done ahead, including stabilizing the macro-economic situation and improving
the business climate for enterprises.
Son added that coordination amongst the Government,
enterprises and associations is also critical for the integration.
He pointed out that detailed information should be provided to
companies to enhance their awareness about the AEC, as well as opportunities
and challenges that will stem from being part of the association.
A recent survey conducted by the Ministry of Planning and
Investment revealed that 76 per cent of domestic firms had no knowledge about
the AEC, 94 per cent did not understand the content of negotiations, while 63
per cent were unaware of the opportunities and challenges involved in
participating in the AEC.
Support should also be provided to the firms to connect with
foreign-invested companies, which will help Vietnamese firms to participate
further in the regional and global value chain, and to enhance their capacity
to deal with potential risks, which might arise from changes in the global
market and policies of foreign countries, Son stated.
It is therefore important for firms to enhance their
management capacity, he added.
Experts at yesterday's forum also pointed out that human
resources pose a major problem ahead of the formation of the AEC as
When the economic community is formed, there will be a free
flow of human resources among member countries, which might put
"The quality of our labour force must be enhanced to meet
regional standards," Son said.
AEC is expected to be formed by the end of this year by 10
member countries, with an estimated combined GDP of US$2.5 trillion.
ASEAN figures among the important trade and investment
partners of
Cassava exports rebound, but still vulnerable
For calendar year 2014 MARD reported exports were up 5.4%
on-year in volume and 2.6% in value to 3.29 million tonnes at US$1.3 billion.
In the first half of last year, MARD said exports of cassava
dipped 24% against the prior year while its stockpiles increased twofold on
the back of stiff price competition from
In addition, the RoK– the second largest importer – limited
imports as its government called on producers to use potatoes to replace
cassava to protect domestic production.
In the second half of last year, consumption markets began
notching upwards and by the end of October most cassava producers had cleared
their stockpiles.
In the fourth quarter prices began moving up and pushed to
US$252 per tonne at the Saigon Port and to US$247 per tonne at the Quy Nhon
port, up on average around US$20 per tonne over the prior year.
According to the MARD’s Plantation Department, cassava
cultivation areas reached 548,800ha in 2014, yielding more than 10 million
tonnes. Cultivation areas doubled and productivity increased over twofold
from 15.35 tonnes per ha in 2005 to 18.5 tonnes per ha in 2014.
Cassava development in localities remained plagued with
obstacles such as overproduction, low productivity, undiversified products,
unstable consumption markets and loose coordination between producers and
processors.
Deputy Head of the Plantation Department Tran Xuan Dinh said
the cassava industry's development remained unsustainable for 2014 adding
that it is necessary now to make timely and proper adjustments.
The department plans to reduce cultivation areas to 500,000ha
over the next two years and to 450,000ha by 2020 to maintain production at a
capacity of roughly 11 million tonnes.
President of the Vietnam Cassava Association (VCA) Nguyen Van
Lang in turn said cassava products are mainly exported to
He added that
Over the next five years, demand for material cassava to
process and produce ethanol has been forecast to increase by 50%, opening up
a huge window of opportunity for the cassava sector.
In order to sustainably develop businesses need to pay more
attention to finding ancillary outlet markets in order to avoid
overdependence on
For his part, VCA Secretary General Pham Vu Ha said over the
past 20 years, the cassava sector has concentrated solely on producing starch
to the detriment of technology, quality and trademark development.
As a consequence the market has been much weaker than in
neighbouring
It is high time for producers to diversify their products and
produce higher added value and alternative products such as ethanol and food,
Ha underscored, which would benefit the sector in the long run.
A gradual reduction of exports of raw products would be
replaced by increased domestic demand at higher and more stable prices, Ha
said.
He added that to stimulate production and consumption of
bio-fuel E5 that is made from cassava; the State should consider building
support policies for producers, distributors and consumers.
VN farmers benefit from medicinal plant crops
A new cooperation model in farming and trading medicinal
plants has brought initial results in the northern province of Nam Dinh ,
where resources from the public sector (government and donor), private sector
and from different communities are used for joint activities.
Farmer Nguyen Thi Suu, who lives in the province's Hai Hau
District's Hai Loc Commune, is among the first applying the model.
She is oblivious of the freezing winter around her as she
fertilizes her day thia canh (gymnema sylvestre) field and is only focused on
the upcoming harvest.
Suu started planting day thia canh six years ago. Her family
owns 360 square meters of land that grows medicinal plants, and harvests
thrice per year on average, which generates an ncome of VND4.5 million (US$214)
each time.
"Compared with rice planting, medicinal product planting
has doubled our profits and does not take much time," she said.
Since planting the field in 2013, Suu has earned more than
VND15 million ($714). Along with 18 other households in the commune, her
family has seen their annual income rise, with significant contribution from
the farming of medicinal plants.
Their life as farmers in the Hai Loc and Hai Toan Communes
changed after receiving support from the BioTrade project funded by the Swiss
Government through the State Secretariat for Economic Affairs (SECO). The
programme is also supported by the Vietnamese governmental agencies, notably
the National Institute of Medicinal Materials (NIMM) under the Ministry of
Health.
The three-year project was implemented by the HELVETAS Swiss
Intercooperation from 2012 to 2014 in the Hai Toan and Hai Loc Communes.
Farmers transformed their paddy fields, which had not earned them much, into
two cultivation zones for the two medicinal plants.
The Hai Toan's group has 28 participating households, with
five hectares allocated for planting dinh lang (polyscias fruticosa), while
another Hai Loc group has 19 members, with three hectares set aside for
planting day thia canh.
Mai Van Quyet, the vice chairman of the Hai Hau People's
Committee, says the district has used a total area of 647 hectares for
growing medicinal plants, mostly dinh lang and day thia canh. He added that
the plants have reaped economic benefits for the local people, contributing
to their socio-economic development.
"The implementation of the project has drawn the
participation of HELVETAS, NIMM, experts from enterprises, farmers, and local
management agencies. This is an effective approach to the process of meeting
targets for the project," he stated.
"At the moment, the district has harvested 15 hectares of
medicinal plants, following GACP-WHO standards. Two collaboration groups
currently operate in the area, which are necessary requirements for
production and consumption that helps boost the farmers' incomes."
The Hai Hau District also offers many good conditions for
expanding production and processing medicinal plants. Its ground water
resources meet hygiene requirements and its soil has heavy metal content
below a certain threshold. These result in favourable conditions for the
production of medicinal plants, based on GACP-WHO standards.
Vu Van Trien, head of its agriculture office, said the
district has successfully built a closed production process, thanks to the
support rendered by HELVETAS, NIMM, Traphaco and the Nam Duoc enterprises.
"The district has 647 hectares with more than 20 species
of natural ingredients, including 172 hectares of dinh lang. The total
revenue generated by fresh dinh lang will be VND910 million ($43,300) per
hectare per year. With a harvested area of 45 hectares, its profit will be
VND40 billion ($1.9 million) per year," he pointed out.
Trien noted that day thia canh brings in an income of VND423
million ($20,140) per hectare per year, and its total revenue will reach
VND6.3 billion ($300,000). "Planting medicinal plants contributes to
stabilising the life of farmers. Many households have grown wealthy through
planting and selling medicinal plants, especially dinh lang," he added.
Under the scope of the Biotrade project, HELVETAS has
supported the Hai Hau People's Committee to develop its plan for farming
medicinal plants until 2020, with its orientation aimed at 2030.
In 2014, the collaboration group of the Hai Loc Commune
reported an average income of 423.8 million per hectare, which is triple the
amount of returns offered by rice planting. Therefore, the total area brought
under day thia canh plantation was increased to 8.2 hectares.
Lam Thanh Van, the head of the group, said the medicinal plant
was cultivated separately by households and the project helped them localise
it in the area. It was harvested after six to seven months, and harvesting
360 sq.m brought in VND15 to 16 million per year ($714 to 761).
"The output for each year has been growing because
farmers have much more experience planting day thia canh. The Nam Duoc
company is committed to purchasing all products at a negotiated price.
Meanwhile, the dinh lang planted in 2013, will only be
harvested in 2017. Farmers in the collaboration group of Hai Toan were taught
the techniques and given practical training for all processes, from seed
selection to transport and treatment under the supervision of HELVETAS and
Traphaco.
Tran Khac Luong, chairman of Hai Toan People's Committee, said
based on market information; the communes still believes there will be a
market for the products during the next three to four years.
"The localisation of day thia canh in one area has helped
people get regular work and raise their incomes. Earlier, farmers used to
plant it spontaneously, but now they cooperate with each other and find it
more convenient to sell products," he said.
Farmer Nguyen Thi Ha had planted dinh lang trees more than a
decade ago, and sold them for thousands of dong per kilogram. When informed
about the project, she joined the group from the first day because "it
earns more economic profits for my family".
"There are many advantages of joining the group. We are
instructed on the ways for planting and caring for trees by following
GACP-WHO standards. They also help us sell products to the Traphaco company
at a price higher than what the market offers," the 42-year-old farmer
said.
Selling pressure hampers growth on City exchange
Rising selling pressure in the afternoon restrained the market
uptrend on the HCM City Stock Exchange yesterday as investors sat on the
sidelines awaiting a clearer market outlook.
The benchmark VN-Index inched up 0.12 per cent to close the
session at 572.22 points but the market condition was negative with 103
stocks declining, 100 increasing and 105 ending flat.
Reduced cash flow in the market showed in drops in both market
volume and value. Almost 80 million shares worth VND1.5 trillion (US$70
million) were traded by the end of the session, down 10 per cent compared
with Monday's level.
The rally of several large-cap stocks like PV Gas (GAS),
Vietcombank (VCB), Vinamilk (VNM), Bao Viet Holdings (BVH), Phu My Fertiliser
(DPM) and Hoa Phat Group (HPG) kept the market afloat by the day's end.
On the other end of the spectrum, Vietinbank (CTG), Eximbank
(EIB), BIDV (BID), Sacombank (STB) and PetroVietnam Drilling and Wells
Service Corp (PVD) all plunged, pulling the VN30, which tracks the top 30
shares by market value and liquidity, down 0.4 per cent to 609.19 points.
FLC Group (FLC), a member of the VN30, remained the most
active code with trading of nearly 5.8 million shares. FLC closed unchanged
at VND10,800 a share.
On the Ha Noi Stock Exchange, the HNX-Index widened its loss
to another 0.32 per cent to finish yesterday at 84.99 points.
The HNX30, the tracker of the top 30 shares by market
liquidity, also slipped 0.46 per cent to stand at 165.60 points.
Liquidity kept waning here with market volume reaching the
lowest level since mid-August at 40 million shares worth VND545 billion
($25.5 million).
FLC's investment arm, KLF Joint Venture Global Investment Co
(KLF), was again the most active code with 9.5 million shares exchanged,
decreasing 0.87 per cent to settle at VND11,400 a share.
Foreign investors turned to be net sellers in HCM City with a
net sell value of VND33.43 billion ($1.6 million) but rebounded to be net
buyers in Ha Noi after heavy selling on Monday, picking up shares worth only
VND6.9 billion ($322,400) in the capital city.
Food Ingredients Viet Nam expo to be held in HCM City
Some 150 companies from 20 countries will participate in the
second Food Ingredients Viet Nam exhibition in
They will showcase many kinds of ingredients with the main aim
of supplying to Vietnamese companies.
According to the organiser, UBM Asia, the first exhibition
held last year was very successful.
While last year most of the ingredients on show related to
flavours and colours, this year there will be more health-related ingredients
and halal food, according to UBM.
"Four thousand visitors are expected to visit the
exhibition," it said, adding that this year would see the participations
of Chinese companies and others from the EU and ASEAN.
The organisers are hoping that with many of the companies now
knowing each other after last year, the second event will be more successful.
Besides the display of products and co-operation
opportunities, the exhibition will also feature exhibitions and seminars
about the food sector.
VN Steel Corp to withdraw from non-core sectors
The Viet Nam Steel Corporation plans to withdraw capital from
non-core businesses as part of an approved restructuring plan, according to a
corporation official.
The corporation's Deputy General Director Vu Ba On said it
would give priority to withdrawing capital from companies that had reported a
low operational efficiency and losses, as well as firms in the non-core
business sectors.
Last year, the corporation gradually withdrew capital from
companies with low operational efficiency and losses as scheduled, including
from the Bac Thai Metallic, the Tan Thuan Steel and Vnsteel Thang Long
companies. Meanwhile, it did not withdraw its capital from some sectors, such
as finance, cement and property, as scheduled earlier.
The corporation's Design Consulting and Metallurgical Company
has not been converted into a joint stock company as planned and the
dissolution and operational stoppage at the Southern Steel Sheet JSC has been
slow due to disputes related to partners and rent.
Additionally, this year, the corporation would continue to
adjust its development strategy for the 2015 to 2025 period, On revealed,
adding that the corporation would implement the strategy after getting
approval, reported vietnamplus.vn.
The corporation would also promote an inspection and
supervision of operations in the sectors of investment, product quality
management, input material source management, as well as technical
improvement at subsidiaries and joint ventures to reduce production costs and
boost efficiency in production and business.
For production and business, member companies of the
corporation would have to prepare essential materials for production since
the beginning of this year and also conduct steel market studies at home and
abroad to ensure a reasonable inventory and competitive prices.
Trading and service companies should come up with solutions to
enhance collaboration and for the management of goods bought and goods in
stock, as well as follow market development to buy input goods at competitive
prices.
According to the corporation, it consumed 2.97 million tonnes
of steel last year, 4.2 per cent higher than 2013, but saw a 7.1 per cent
drop in revenue last year to VND24.9 trillion (US$1.19 billion), due to lower
selling prices.
The corporation stemmed losses in production and business
profits and the parent corporation gained VND70 billion ($3.33 million) in
profit for the whole of 2014, nearly doubling its plan.
Meanwhile, total pre-tax profit at its subsidiaries and joint
ventures in 2014 saw a year-on-year increase of 65 per cent to VND847
billion.
Rubber industry faces falling prices
The rubber industry is expected to continue struggling this
year, with profits declining or even reporting losses, owing to the sharp fall
in rubber prices in the world market.
Experts said the sector must reduce exports of raw material
and diversify export markets to avoid reliance on a single market to overcome
this difficult time.
According to the Viet Nam Rubber Industry Corporation, the
rubber industry's profits will narrow as rubber prices in the market are
forecast to slip to VND31,000 (US$1.5) per kilogramme this year, while
production costs will hover around VND30,000 ($1.4).
The rubber industry of
Statistics from the Ministry of Agriculture and Rural
Development also showed that
The average export price for rubber during the first 11 months
of 2014 was $1,695 per tonne, falling by 27 per cent from the same period
last year.
Vo Sy Luc, Chairman of the Viet Nam Rubber Industry
Corporation was quoted by Thoi Bao Kinh Doanh (The Business Times) as saying
that rubber prices had been slipping since 2012 from more than VND100 million
($4,670) per tonne to around VND29 million ($1,355).
This has hit rubber farmers hard, with many in the
south-eastern region cutting down their trees to switch to other crops. The
total area under rubber tree plantation that was cut down is estimated to be
more than 4,000 ha.
According to the group's General Director Tran Ngoc Thuan,
Industry insiders estimate that rubber values could increase
by up to 20 times if raw materials are processed into finished products.
Doan Xuan Hoa, Deputy Director of the Department of Processing
and Trade for Agro-Forestry-Fisheries Products and Salt Production, pointed
out that only 18 per cent of the latex from
Experts have urged rubber companies to invest more in latex
processing to boost added value, warning that the industry will continue to
be at a disadvantage in case no improvements are made.
The Minister of Agriculture and Rural Development Cao Duc Phat
said that in the long term, the rubber industry must restructure for
sustainable development, and focus on enhancing quality and efficiency.
Domestic cassava businesses go in search of new markets
Vietnamese cassava businesses should look for new export markets
to avoid dependence on the Chinese market, the chairman of Viet Nam Cassava
Association (VCA) told Thoi bao Kinh te Viet Nam (Vietnam Economic Times)
newspaper.
Nguyen Van Lang said most of the cassavas were exported to
However,
The country last year exported 3.29 million tonnes of sliced
cassava and cassava products, earning an export turnover of $1.3 billion, an
increase of 5.4 per cent in volume and .6 per cent in value compared to 2013,
according to the Ministry of Agriculture and Rural Development,
Pham Vu Ha, general secretary of VCA, said for the last 20
years
As a result,
Thus, domestic businesses would need to review changes, for
instance, and invest in starch processing instead of production only.
Businesses could also make processed products such as
foodstuff or ethanol to increase product value.
Ha said to promote ethanol production and consumption, the
State needed to issue financial support policies for producers, distributors
and consumers.
For a long period, the cassava sector would have to decrease
raw cassava exports to focus on satisfying domestic production.
Moreover, there would be some adjustment in cassava growing
and production in order to promote sustainability, Tran Xuan Dinh, deputy
head of Cultivation Department, said.
For instance, the country's cassava growing area would be
reduced from 549,000 in 2014 to 500,000 ha by 2017 and to 450,000 ha by 2020.
The harvested cassava output would be stabilised at 11 million
tonnes.
According to the Cultivation Department, cassava has been
grown in mass quantities with unplanned development, leading to low
productivity.
Last year, cassava productivity was 18.2 tonnes per ha, much
lower than
There are still now many diversified products because of poor
varieties, and the link between producers and processors is not close.
Moreover, cassava-starch processing facilities have caused
environmental pollution in many localities.
In the first six months of last year, sliced cassava exports
fell by 24 per cent over the same period in 2013. The sliced cassava in
storage at factories doubled compared to 2013.
This occurred because Thai businesses had exported a high
volume of sliced cassava at lower prices, which led to more purchases made by
Chinese importers.
For the remaining months, the market has gradually recovered.
By October, the Vietnamese businesses sold out all the cassava in storage.
In the fourth quarter of last year, the cassava export price
was US$252 per tonne, an increase of $20 per tonne.
However, the businesses at that time did not make a profit
because last year's transportation fee increased 1.5-2 times compared to
2013.
The sliced cassava price is expected to increase only slightly
this year.
MoIT tells EVN to update power tariffs
The Ministry of Industry and Trade has asked Electricity of
Viet Nam (EVN) to update power tariffs, based on input factors, following the
group's proposal to raise electricity selling prices.
According to the ministry, the calculation for revised tariffs
should be based on electricity tariffs for the period between August 1, 2013
and December 31, 2014.
The new proposed price should include inputs, which are not
taken into account while calculating the current average tariff.
The ministry will co-operate with the relevant ministries and
agencies to review updated information from the EVN and adjust power prices
going forward.
The group's Deputy General Director Dinh Quang Tri said the
adjustment would not be implemented before the Tet (Lunar New Year)
EVN had earlier requested that the supplemental emerging costs
be factored into power tariffs this year.
Deputy General Director Duong Quang Thanh told a press
conference in Ha Noi that the group's business in 2014 would be reviewed and
launched plans for 2015, saying the new inputs would include raising coal
prices, gas and taxes on water, which have significantly affected its
operations.
In addition, supplemental fees levied on the forest
environment in 2011 and 2012 had driven up electricity production costs and have
not been included in the current power prices.
It was for these reasons that EVN proposed to the Government
that it should revise the state budget and Official Development Assistance
(ODA) to complete power projects for rural and remote areas, while supplementing
those costs into power tariffs.
EVN reported a significant loss of VND16.8 trillion (US$789.6
million) in 2014, despite having increased retail electricity tariffs.
Its revenue in 2014 was pegged at VND196.3 trillion ($9.3
billion), up 13 per cent over 2013. Also, after-tax profits last year were
estimated to be VND300 billion ($14.2 million), while its return on equity
(ROE) was 0.2 per cent.
Scarce recompense for victims of real estate frauds
Frauds in real estate cause significant financial damages to
investors but the chance for victims to collect what they have invested is
very slim.
The recent arrest of National Assembly deputy Chau Thi Thu
Nga, chairman of the real estate developer Housing Group, was predicted two
years ago. At that point, all the contracts putting money into the real
estate projects of Housing Group reached their deadlines at which Housing
Group was legally obligated to payout its investors but Nga did not honour
them.
Between 2008 and 2014, for two blocks in the B5 Cau Dien
apartment project in Hanoi, Nga and accomplices signed 752 contracts with a
cumulative worth of VND377.2 billion ($17.7 million). Now the money is
nowhere to be found, because her house was determined by the police as
collateral for a loan at Vietinbank and her car is rented, not bought.
The Housing Group case is one of many real estate frauds
busted recently. In another case, Le Hong Bang, general director of the
Vietnamese real estate exchange JSC, signed 578 contracts with 397 people,
collecting VND347 billion ($16.3 million) in 2009. As of now, Bang has
repaid VND63 billion ($2.9 million) to 82 people while the remaining money
cannot be found anywhere.
Similarly, Tran Ung Thanh, general director of Hong Ha JSC,
mobilised VND169 billion ($7.9 million) from 143 people, under the agreement
that the money will be invested in an apartment project in Hanoi, but after
Thanh was given a life sentence and court-ordered to pay back the money, he
was unable to and victims were left without any form of compensation .
According to Vietnamese law, perpetrators of fraud have to
return misappropriated properties to the victims. However, this
part of the sentence has largely proven difficult to enforce.
SBV looks set to resolve weak banks in 2015
In 2015, the State Bank (SBV) is going to restructure the
banking system vigorously via mergers and acquisitions (M&As) between
banks.
Big names in the local banking sector including Vietcombank,
BIDV and Vietinbank are said to be merging with smaller and weaker banks in the
first half of the year.
According to SBV, in 2015, SBV will speed up the process of
bank restructure. SBV has set target to resolutely deal with weak banks with
no prospects for recovery and further development. SBV may announce
dissolution, bankruptcy or entail compulsory intervention to resolve
cross-ownership and to form large-scale, stronger and more competitive
commercial banks.
SBV revealed that there will be at least six to seven bank
M&As in 2015 alone. The authority is also firm on the banking
restructuring by stressing that it will not exclude circumstances where it
has to impose extreme measures such as compulsory purchases of shares and
designated M&Á for some banks.
During the Vietcombank conference on Business Implementation
2015, SBV Governor Nguyen Van Binh emphasised that the process of
restructuring has gone through the first phase in handling weakest banks
across the banking system. In the second phase, SBV will focus on stronger
banks and direct these banks to take on smaller banks.
The first merger to be expected the most is the case of
Vietcombank and Saigonbank. As a largest bank in
Meanwhile, BIDV is expected to merge with another bank,
possibly MHB, while Vietinbank is said to pair up with a smaller bank,
perhaps one of PGBank, Ocean Bank or GPBank.
Other bank M&As could include Maritime Bank merging with
Mekong Bank and SouthernBank to join Sacombank.
SBV aims at reducing the total number of banks to around 20
commercial banks to 2017. As such, there will be more than 10 bank M&As
expected to happen in the coming time. M&As in the banking system will
prepare a common ground for competitions and growth in the economy, according
to the National Financial Supervisory Commission chairman Vu Viet Ngoan.
“In principle, financial institutions must ensure the mutual
benefit of the whole economy in each country they are in. In other countries,
weak institutions are often required to go bankrupt. As for us, merger is a
fundamental change to overcome the weaknesses in the banking sector”, said
Ngoan.
Vietcombank to become No.1 bank in Vietnam
The State Bank (SBV) Governer Nguyen Van Binh urged
Vietcombank to become a leader in the banking sector in a conference for
Business Implementation in 2015 held by Vietcombank on January 16.
Vietcombank showed healthy results and indicators in its 2014
financial results, as such, the bank should focus on restructuring, improving
corporate governance in accordance with international practices and managing
bad debts as a role model amongst other banks in
“To be considered as the leader, Vietcombank must show its
ability in many aspects including managing bad debts, total assets and
accounting for a bigger proportion in both wholesale and retail banking,”
stressed Binh.
The bank’s 2014 total assets was reported at VND500 trillion
($23.36 billion), however, to become the number one in total assets, it could
take years to achieve if there is no step forward, Binh added.
The governor also encouraged Vietcombank to merge with other
banks in 2015 in a bid to strengthen the banking system and shrink down the
number of local commercial banks this year.
"To become the number one in terms of size and market
share, there is no other way better and faster than merger and acquisition.
Vietcombank has long-established strengths in wholesale banking, thus merging
with banks who have strong retail edge will help Vietcombank rapidly expand
the retail market”, said Binh. “As such, the bank will be one step closer to
be the No.1 bank in
During the conference, Vietcombank general director Pham Quang
Dung shared that after its success in 2014, Vietcombank will strive to
achieve the minimum profit of VND6 trillion ($280.37 million) in 2015 and at
the same time build up a plan for mergers and acquisitions in accordance with
SBV’s direction.
Masan Food Corporation, a subsidiary of Masan Consumer,
recently announced it had bought 2.66 million shares, or 32.8 per cent, of
Cholimex Food JSC.
Consequently, Cholimex Food has become an associated company
of
HDBank finances resort project in Ba Ria-Vung Tau
HCMC Development Joint Stock Commercial Bank (HDBank) has
inked an agreement to provide a credit package worth VND300 billion for Cotec
Asia Company to develop the Blue Sapphire resort project in Ba Ria-Vung Tau
Province.
The bank will offer preferential loans at an interest rate of
3.8% per annum in the first six months to customers buying villas and luxury
apartments of the project and meeting certain requirements. The preferential
interest is applied to the lending contracts signed between now and the end
of March.
HDBank said loans would be disbursed at the request of
customers.
Cotec Asia, a member of Cotec Group, began work on the Blue
Sapphire resort project in 2010. The luxury resort covers an area of around
76,900 square meters and consists of 36 villas and 260 seaview apartments.
The basic construction of the 36 villas is complete and ten of
them have been sold to customers.
VPBank supports rice, seafood firms
* Vietnam Prosperity Bank (VPBank) has set aside VND1 trillion
to offer preferential loans for rice and seafood companies based in the
Mekong Delta.
Each of the small and medium enterprises (SME) buying,
processing, supplying and exporting rice and seafood in the region can borrow
a maximum of VND100 billion in 12 months.
VPBank said the preferential loans for rice and seafood firms
in the Mekong Delta have simple procedures and flexible lending terms.
Power tariff hike proposal under consideration
The Ministry of Industry and Trade is consulting the Ministry
of Finance, the Ministry of Planning and Investment and the central bank over
a power price adjustment plan, Tuoi Tre reports.
Earlier, Vietnam Electricity Group (EVN) proposed adjusting
the power price annually.
According to the trade ministry, with comments of related
ministries and agencies late last month and early this month, it asked EVN to
update its power price calculation plan based on input costs.
The period for power price updates is between August 1, 2013
(the most recent power price adjustment) and December 31, 2014. After
receiving a report and related documents from EVN, the trade ministry will
consider the power price plan.
Recently, EVN sought approval to add costs to this year’s
electricity tariffs as its profit margin was low last year when it was
profitable.
More foreign tourists go to Phu Quoc
Phu Quoc has welcomed more international travelers, thus
helping cushioning the impact of declining Russian arrivals in the island off
mainland
Le Minh Hoang, director of the Kien Giang Department of
Culture, Sports and Tourism, said some 600,000 travelers visited Phu Quoc
last year, a staggering rise of 37% year-on-year. International tourists
accounted for 55% of the total number, which was higher than an average of
22% in previous years.
“International air routes and the opening of Vinpearl Resort
have helped bring more international tourists to Phu Quoc. Particularly, the
Phu Quoc-Siem Reap route has attracted many travelers from a third country,”
Hoang said.
Many chartered flights transporting Russians to Phu Quoc have
been suspended. Hoang said previously there were four chartered flights a
month but travel agencies now only arrange chartered services when they have
had enough bookings.
The strong increase in foreign visitors to Phu Quoc last year
was also attributed to the Prime Minister’s decision that allows foreigners
to have a visa-free stay of less than 30 days on the island.
The tourism sector of
Auto prices unlikely to fall this year
Falling prices of some auto models in the two final months of
the lunar calendar have given consumers hopes that prices will drop in line
with an import tax cut road map, but experts predict that the auto prices
will decline this year.
Truong Hai Auto Corporation (Thaco) has announced to provide
special offers of up to VND50 million for each of its customers. However, a
representative of the firm told the Daily that such a move simply aims to
encourage customers to buy cars at the year-end and have nothing to do with
Lowering the selling prices is impossible this year as the
Ministry of Finance set the road map for import tax cuts early this year.
Accordingly, up to 90% of nearly 10,000 groups of items imported from ASEAN
are subject to tariff exemptions from this year and only 7% will have import
tax lowered gradually to 0% by 2018, including completely built-up (CBU)
vehicles.
CBU autos of under ten seats imported from ASEAN countries are
entitled to a 50% rate this year and the rate will be lowered to 40% next
year, 30% in the following year and 0% in 2018. Therefore, the prices of
imported cars may not drop this year as expected by many.
The Vietnam Automobile Manufacturers’ Association (VAMA) also
shares the same opinion.
With the aforementioned import tax adjustments, the
Government, according to industry insiders, wanted to create opportunities
for domestic auto assemblers to be better prepared when the import tax in the
ASEAN region is cut to 0% in 2018.
As anticipated by analysts, if the import tax rate is more
than 30%, domestically assembled autos still can compete with imported units
as the import tax rates slapped on auto components are much lower.
Due to less competition from imported cars, many domestic auto
assemblers are not much affected and still manufacture models which sell well
on the market.
In the past few years, the import duty on CBU vehicles has
declined gradually with the most considerable reduction recorded last year.
Under the road map of the ASEAN Free Trade Area (AFTA), the
tax rate on CBU imports from the bloc has dropped from 60% in 2013 to 50%
early last year, leading many consumers to expect auto prices to fall this
year.
However, the prices of some car models, especially those of
small capacity which auto joint ventures do not manufacture, are even higher.
According to analysts, automakers and joint ventures have
become both manufacturers and importers. Therefore, it is obvious that they
cannot let car models they assemble domestically compete with imports.
Regarding special consumption tax imposed on autos, VAMA said
the current tariffs are still valid while the new law on the tax will not
take effect until January 1 next year with the rates slapped on autos unchanged.
Besides, the Ministry of Finance has not approved proposals to lower special
consumption tax.
As a result, according to VAMA, there is little chance of auto
prices declining this year.
Nevertheless, the Ministry of Industry and Trade is studying
proposals concerning special consumption tax which may affect auto prices and
buyers.
Since the Prime Minister approved the auto development
strategy last July, the ministry has considered incentives for strategic car
lines. According to one plan under consideration, luxury cars and ones with
high capacities may be subject to a high special consumption tax of up to
195%, up 135 percentage points against the current rate.
On the contrary, the rates on autos of small engine capacity
may be low, at 30% for cars of less than 1.5 liters (down 15 percentage
points) or 45% for those of 1.5-2.0 liters. With such proposed tax rates, the
ministry wants to develop small cars with a focus on small, fuel- and
cost-efficient models.
Though the tax rates are still under discussion, importers of
luxury cars and consumers have objected.
An expert said the proposed tax rates are infeasible as
consumers will not buy cars if the tax is too high, thus affecting budget
collections.
On the other hand, such proposed tax rates would affect policy
stability which the Government wanted to last 10 years when approving the
auto development strategy.
Source :
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Bảy, 24 tháng 1, 2015
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