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BUSINESS IN BRIEF 6/1
Ministry urges bank listings to boost transparency
The Ministry of Finance will cooperate with the State Bank of
This resolution was made a year ago and included a roadmap
aiming to have all commercial banks listed by 2015. However, the stock market
has been sluggish, and bank stocks have been immensely unstable. Therefore,
watchdogs have not issued a clear direction for the listing of the banks.
While non-performing loans (NPLs) and cross-holding remain
challenges in the system, there are still 26 commercial banks staying out of
the stock exchanges.
The Bank for Investment and Development of Viet Nam (BIDV) was
the only bank to become listed last year. It was one of the most anticipated
listings of the year, offering more than 2.8 billion shares. However, its
trading volume remains low at a few hundred thousand units as the state still
holds a dominant stake of nearly 96 per cent.
In addition to BIDV, there are currently eight listed banks,
including Vietcombank (VCB), Vietinbank (CTG), Asia Commercial Bank (ACB) and
Eximbank (EIB). Rounding up these banks are Military Bank (MBB), Sacombank
(STB), Sai Gon – Ha Noi Bank (SHB) and Nam Viet Bank (NVB).
Nam Viet Bank planned to delist in October 2013 due to high
NPLs and operational losses.
Unlisted banks avoided going on the exchanges because they
believed that the unfavourable conditions of the stock market would drag down
their share prices. Some banks prioritised other goals, such as mergers and
acquisitions.
Among the criteria for banks to get listed is the requirement
to have an NPL ratio under 3 per cent. This will be difficult to achieve by
the end of this year.
Untapped potential in
There remains untapped potential for Vietnamese plastic
exporters in
According to the Import-Export Department under the Ministry
of Industry and
The department noted that
The department suggested that Vietnamese firms increase their
market research and trade promotion as well as seek new Turkish trade
partners to accelerate exports to this lucrative market.
After posting a positive export turnover of $20.7 million in
2013,
Processing, manufacturing industry performs well in 2014
The processing and manufacturing industry was the highlight of
the industry and trade sector in 2014, with a growth rate of 8.7 per cent and
an 11.1 per cent increase in sales index, the Ministry of Industry and Trade
(MOIT) reported.
The ministry's 2014 trade and industry performance review showed
that the national industrial production index recorded a 7.6 per cent rise,
and the export value of the industrial sector rose by 13.6 per cent from that
recorded last year to US$150 billion. This surpassed the set target by 3.6
per cent.
Such positive outcomes will boost the development of the
sector in the coming years, Minister Vu Huy Hoang affirmed.
Furthermore, Deputy Minister Nguyen Cam Tu noted that besides
the processing and manufacturing industry, the production and distribution of
electricity also saw a high growth of 12.1 per cent, which reflected the
solid recovery made by production-related activities.
Minister Hoang acknowledged that the domestic industrial
production sector fully met the local demand for goods ranging from normal to
essential ones. This helped stabilise supply and demand in the markets of
electricity, petrol, coal, chemicals, and food, thereby preventing
"price fever" due to shortage of items.
In addition, the minister pointed out that the under-developed
supporting industry was a major weakness of the sector. Domestic
manufacturers have to import most of their required materials, spare parts,
and components, which affects the competitiveness of their products in terms
of prices.
Director of the Heavy Industry Department of the MOIT Truong
Thanh Hoai said that the growth of some industries, particularly those of
textile and garment, footwear, automobile, and electronics, is still based on
scale, with most enterprises engaging in sub-contracting or assembling. As a
result, their products have low added value and local content ratio.
This year, the ministry aims to see a 7.8 to 7.9 per cent
growth in industrial production and to earn $165 billion in export revenue.
Also, the retail sales of goods and services should increase by 11 to 12 per
cent and consumer price index be maintained at around 5 per cent.
To achieve these targets, the trade and industry sector needs
to exploit its advantages in every sector. Enforcing concerted measures to
stabilize the economy, raising the quality, effectiveness and competitiveness
of human resources, strongly boosting scientific applications, and enhancing
information dissemination are important measures that should be taken into
consideration for the benefit of the trade sector, Minister Hoang emphasised.
Customers hold on to cash as bank lower interest rates
Cash flow into the banking sector will likely fall as lenders
have reduced their interest rates, according to independent market observers.
Early last week, Vietcombank cut its deposit interest rate for
the fifth time in 2014.
As of December 22, the bank's highest deposit interest rate
fell from 6.3 per cent to 6.2 per cent per year.
In particular, Vietcombank's interest rate on deposits with
terms of between 24 and 60 months is 6.2 per cent, while the rate of 12-month
deposits is down by 0.2 per cent to 6 per cent.
After Vietcombank, many other commercial banks have also cut
their deposit interest rates.
BacABank has reduced its highest deposit interest rate from
8.2 per cent to 7.9 per cent per year. Meanwhile, Techcombank's highest
deposit interest rate has fallen from 7.1 per cent to 65.96 per cent per
year.
Analysts have attributed the banks' deposit interest rate cut
to several reasons, one of which was low inflation.
According to the National Financial Supervisory Committee's
latest report, the country's inflation in 2014 was estimated at around 3 per
cent.
Such a low inflation index has allowed the banks to cut their
deposit interest rate to minimize costs, particularly as many of them have
had rather plentiful sources of funds.
The deep reduction in the deposit interest rates has affected
cash flow into the banking sectors, according to bank executives.
Le Quang Trung, deputy general director of VIB, told Dau Tu
(Investment) newspaper that "in the first 11 months of 2014, the banking
sector's mobilised capital increased by 13.3 per cent, lower than the 15 per
cent rate recorded in the same period last year."
"With such a low interest rate, people's idle money would
likely be injected into other investment channels," Trung said.
Many leaders of commercial banks also said the current deposit
interest rates have nearly touched bottom, so some deposits would likely be
moved to and invested in other sectors such as securities, real estate and foreign
currencies.
According to Deputy Governor of the State Bank of Viet Nam
Nguyen Thi Hong, the deposit interest rate level in 2014 decreased by between
1.5 and 2 per cent per year, and the lending interest rate level was down
about 2 per cent per year compared with the rates in 2013.
These reductions have also made these two kinds of interest
rates lower than those recorded in 2005 and 2006.
Analysts, however, said that a big gap was seen between
deposit and lending interest rates, thus creating opportunities for banks to
make profits.
Before deciding to cut its deposit interest rate on December
22, the difference in the interest rates of short-term deposits and loans in
Vietcombank had been only 2.5 to 3 per cent.
But for long- and medium-term loans and deposits, the interest
rate gap may climb to 3.8 and 6.8 per cent. This is because the popular
interest rate of medium- and long-term loans on the market are about 10 and
13 per cent.
MSN
sells Masan Agri, divests from Mivipack
Masan Group Corporation (MSN)'s board of directors has
announced it will transfer Masan Brewery's charter capital to Masan Consumer
Holdings.
MSN will sell Masan Agriculture which holds 40 per cent stake
of the country's largest cattle feed manufacturer Proconco.- Photo
cafef
The board also made public its decision to sell its 51 per
cent stake in Masan Agriculture, which holds a 40 per cent stake of
Vietnamese-French Cattle Feed JSC or Proconco, the largest cattle-feed
manufacturer in the country.
Further, MNS revealed its divestment in HCM City-based Minh
Viet Packaging Company(Mivipack), which produces packaging for the
corporation, adding that money from the divestment will be used for new
packaging factories in areas with high product sales, in a bid to reduce
operation and transportation fees.
After the sales and transfers, Masan Consumer Holdings (MCH)
will include Masan Consumer, which specialises in food and beverage, and
Masan Brewery, which produces the beer brand "Su Tu Trang".
MNS currently holds a 75.9 per cent stake in Masan Resources
and 30.4 per cent in Techcombank.
In November, MSN reported revenues of VND10.833 trillion
(US$508.5 million) in the first nine months of 2014, an increase of 44.3 per
cent over the same period last year.
On December 31, MSN shares closed on the HCM City Stock
Exchange at VND83,000 ($3.9) each.
Domestic firms brace for tough competition
Domestic firms will have to face tough competition as
thousands of goods from other
Do Phan Thanh Bao, director of Dona Newtower Food and Beverage
JSC, said even though some of their materials were exempted from tax, others
still have high import duties. That's why the prices of their products are
still high and they will be at disadvantage compared to other tax exempted
products.
According to Van Duc Muoi, General Director of the Vissan
Company, the productivity of Vietnamese farms is low and the cost for animal
feed is high. Food companies will be in difficulties, especially when frozen
meat will not have to bear import duty.
If the Trans-Pacific Partnership (TPP) also took effect,
domestic firms would not only have to face competition from South East Asian
countries but also from large agriculture industries such as the
Foreign firms are carrying out strong promotion programmes in
Meanwhile, a retail company showed optimism and said customers
would have more choices but it's unclear what products they would stick with.
The retail companies only choose to import products that suitable with their
targeted customers.
Domestic firms should upgrade their product's appeal and
quality as well as other customer services for future competition.
The ATIGA was signed in February 2009, replacing earlier
Agreement on Common Effective Preferential Tariff of the ASEAN Free Trade
Area. ATIGA aims to establish an integrated market and production base with a
free flow of goods by 2015.
Since then, the government have reduced the import duty of some
products to 5% or eliminated the duty completely. Starting from January 1,
1,715 tariff lines have been exempted from import duty.
Leaders insist public debt increases no cause for alarm
Public debt has increased in recent years, but remains within
the safety zone set by the National Assembly.
In a report issued by the NA last October, Prime Minister
Nguyen Tan Dung said that public debt would account for 60.3% of GDP by late
2014, compared to 51.7% in 2010. This rate is expected to reach 64% by the
end of the year.
According to the PM, the total public debt would account for
64.9% of GDP in 2016, a record high. However forecasters expect it to fall to
60.2% of GDP in 2020.
Prime Minister Dung added that, despite the annual increases,
public debt is still at a safe level, as it has not reached 65% of GDP, the
limit set by a National Assembly resolution.
Nguyen Duc Kien, vice chairman of the National Assembly's
Committee for Economic Affairs, said that, although
Inaccurate accounting of public debt would affect the
government's ability to take measures in dealing with the problem and
possibly forestall needed actions which might be spurred on by increased
pressure to settle debts. Faulty figures could also blindfold public servants
as to their responsibility in dealing with a looming problem.
According to The Economist's Global Debt Clock,
Gov’t determines to fight trade fraud, counterfeit goods
The Government will focus on realizing socio-economic
development targets, restructuring the economy while making more resolute
efforts to defend national sovereignty in 2015, according to its latest
resolution.
It will step up efforts in fighting smuggling, trade fraud and
counterfeit goods, especially in economic hubs and border provinces.
The Cabinet members must ensure the progress of promulgating
legal documents guiding the implementation of new laws, the resolution says;
mull the draft versions of the Law on Information and the Law on Information
Access.
The Government will also continue the realization of the
Resolution 19/NQ-CP dated March 18, 2014 on major tasks and solutions to
improve business environment and national competitiveness in a bid to reach
the average level of the ASEAN-6 countries by the end of 2015.
Meanwhile the National Council for Sustainable Development and
Competiveness Improvement will coordinate with the Ministry of Planning and
Investment to submit a new resolution on improving business environment and
competitiveness in February this year.
State-owned enterprises must drastically carry out their
restructuring plans approved by competent agencies so as to complete the
process by 2015. The Ministry of Finance is assigned to comprehensively
review this process in the last quarter of 2015./.
New preferential import tariff for FTA
The Ministry of Finance has issued five circulars on
preferential import tariffs to implement
Accordingly, imported goods shall be subjected to new special
preferential import tariffs since the beginning of 2015 if they meet all the
conditions stated in the circulars.
Specifically, the five circulars are: Circular
No.165/2014/TT-BTC for the implementation of the ASEAN Trade in Goods Agreement
(ATIGA); Circular No.166/2014/TT-BTC for the implementation of the
ASEAN-China Free Trade Area; Circular No.167/2014/TT-BTC for the
implementation of the ASEAN-Republic of Korea FTA; Circular No. 168/2014 /
TT-BTC for the implementation of the ASEAN-Australia-New Zealand FTA; and
Circular No.169/2014/TT-BTC for the implementation of the ASEAN-India FTA.
Forestry production value hit VND24 trillion in 2014
The forestry production value reached about VND24 trillion
(over US$1.12 billion) in 2014, a year-on-year 7.09% increase, according to
the
General Department of Forestry under the Ministry of
Agriculture and Rural Development.
The value of forestry product exports reached US$6.3 billion
in 2014, marking an increase of 14% compared to 2013.
The country's forest coverage also reached 41.5% in the past
year.
The whole industry has grown nearly 220.000 hectares of
concentrated forest, fulfiling 105% of the annual plan.
In 2015, the forestry sector set a target of reaching VND25
trillion in production value, increasing the value of forestry production
from 7% to
7.2%, raising the proportion of the forestry production value
in agriculture, forestry and fisheries sector from 3.9% to 4%.
Forestry product exports are expected to reach US$6.7 billion;
while forestry coverage is expected to increase to 42%.
Over 1,400 small and medium-sized enterprises (SMEs) and
family-run businesses took out preferential loans worth around VND40 trillion
(US$1.87 million) in the bank-business matching program in HCMC last year.
Nguyen Hoang Minh, deputy director of the central bank’s HCMC
branch, said the program has enabled enterprises to access bank loans to
improve their financial capability and competitiveness over the past two
years.
In 2014, banks lent around VND40 trillion to enterprises,
three times higher than the previous year. Over 1,200 enterprises (up 516
firms against 2013), including over 1,100 SMEs, 58 family-run businesses and
six cooperatives, received support from the program.
Corporate borrowers were offered lower lending rates than
normal on the market by one to two percentage points. Most banks applied
short-term interest rates of 7% per annum and medium- and long-term rates of
9-10% per annum.
Pham Ngoc Hung, vice chairman of the HCMC Union of Business
Associations, said that enterprises taking parting in the program could enjoy
low interest rates while the loan approval process is made simple. The
program also helps enhance the relationship between banks and enterprises.
However, enterprises must meet requirements of the program for
asset collateral, good credit ratings and having no bad debts.
Some businesses and traders at traditional markets said that
they can take out loans from banks easily but still join the program to
benefit from lower lending rates.
Last year, HCMC-based banks mobilized over VND1,200 trillion
(over US$56 billion), up 10.3% against 2013. Their outstanding loans were
over VND1 trillion, with loans in
The city’s banking system posted credit growth of 11%, well
below last year’s target of 12-14%. Loans for the business and production
sector accounted for 80% of the total outstanding loans.
Medium to long-term loans were estimated at VND532 trillion at
the end of 2014, rising by 5% from 2013 and accounting for 50% of the total
outstanding loans.
HCM City enterprises prepare ample goods for Tet
Enterprises in HCMC have stockpiled goods worth some VND15.85
trillion for the upcoming Lunar New Year holiday (Tet) which falls on
February 19, a whopping increase of 109% compared to the previous holiday.
The HCMC Department of Industry and Trade said of the total
supply, local enterprises will sell more than VND8.3 trillion (some US$387.8
million) of goods under the city’s price stabilization program during the
biggest holiday in Vietnam, up nearly 69.5% in value over last Tet.
Particularly, local companies have stored a total supply of
goods valued at VND9.26 trillion for the peak sales period from January 20 to
February 18, including items worth more than VND4.86 trillion for the price
stabilization program.
The department said the HCMC Union of Trading Co-operatives
(Saigon Co.op) has stored goods worth over VND4.6 trillion, including VND1.92
trillion for the price stabilization program, Saigon Trading Group (Satra)
with nearly VND9.82 trillion and VND742 billion, Pham Ton Co. Ltd. with
VND411 billion and VND406 billion, and Vinatextmart with VND364 billion and
VND164 billion.
Le Ngoc Dao, deputy director of the department, said
participating enterprises of the price stabilization program have prepared
sufficient goods to meet the soaring demand of residents in the city during
the traditional holiday.
Dao said their goods supplies are 10-134% higher than the
target of the city’s government and grow 18.4-260.4% compared to last Tet. Of
which, vegetables and seafood are forecast to jump nearly 134% and over 103%
respectively over the previous Tet.
The goods stored in large quantities include poultry, cooking
oil, sugar, processed foods, cattle and eggs.
Three wholesale markets in the city have mapped out plans for
Tet. They wholesale a total of 8,000 tons of goods daily on normal days but
their supplies are predicted to surge by 50-70% in the several days prior to
the holiday.
As usual, Binh Dien Wholesale Market will organize a flower
festival from the 15th to 30th of December of Lunar Calendar (from February 3
to 18). The event will feature 480 stalls for pots of flower and ornamental
trees, up 350 booths over last Tet.
Dao said the logo of the price stabilization program will be
printed on the packaging of all products chosen for the program this year.
There had been nearly 8,960 selling points set up for the
price stabilization program as of December 1 last year, up 756 points against
April when the annual program was launched. Participating enterprises plan to
add 286 points between now and Tet.
After three consecutive years of enjoying a trade surplus,
At a review meeting on Wednesday, Deputy Minister of Industry
and Trade Nguyen Cam Tu said this year’s exports are targeted at some US$165
billion, up 10% from last year, while imports are estimated to jump 15.2% to
US$171 billion.
If the scenario comes true,
Deputy Minister Tran Tuan Anh told the Daily that Vietnam
would continue its integration into the world’s economy this year as a number
of trade agreements the country joins take effect as planned. In addition to
tapping into more markets, Vietnam will have to open its door wider to
product and service imports.
There will be more opportunities for Vietnam to attract new
projects and huge material and equipment will be imported for such sectors as
textile and garment, supporting industries, mechanical engineering and
electronics.
“This year’s import demand tends to rise considerably compared
to previous years while exports will not spike this year given the country’s
technology and added value and manpower” Anh said.
According to the ministry, Vietnam exported US$150 billion
worth of products last year, up 13.6% and imports rose by 12.1% to US$148
billion.
The foreign direct investment (FDI) sector took a large
proportion of the total exports with US$94.4 billion while domestic
enterprises contributed only US$48.44 billion worth of products.
Besides, FDI enterprises accounted for over 57% of the total
imports of last year with nearly US$84.56 billion.
This year, the ministry also targets to achieve industrial
production growth of 7.8-7.9%, retail sales of goods and services up 11-12%
and consumer price index at some 5%.
HCM City to have 10,000 more resettlement, social condos
HCMC will complete resettlement and social housing projects
this year to provide 10,000 more apartments with a total usable area of more
than 1.2 million square meters for the needed residents, according to the
city’s Department of Construction.
The department said in its development plan this year that 13
resettlement projects with around 7,104 apartments and land lots will be
completed in 2015. Five social housing projects with 3,573 condos will also
be put into use this year.
Last year, the city government allocated more than 6,400
apartments and land lots to the citizens living in the riverside areas prone
to landslides in districts 2, 6, 8, 9, 11, Go Vap, Tan Binh, Binh Tan and
Binh Chanh.
The city handed over 2,460 resettlement apartments to
beneficiaries, and 1,100 of which were part of the program to build 12,500
condos for the households affected development of Thu Thiem New Urban Area in
District 2.
The construction department said the city had invested and
bought 34 resettlement projects with 10,643 condos and land lots covering
more than a floor area of one million square meters in 2011-2014.
In the past four years, the city has had 15 social housing
projects with more than 2,400 condos covering over 228,000 square meters
completed. These included 304 apartments developed by Thu Thien Joint Stock
Co. in District 2 and 432 condos by Ha Do Corporation.
The city has sold 1,653 social housing apartments built by the
funds of enterprises, including property developer Hoang Quan and Gia Phu
Cooperative.
Last year, the city government approved transforming three
commercial housing projects with 880 condos on 2.7 hectares into social
housing developments.
Vietnam Air profitable despite woes
Vietnam Airlines Corporation (VNA) managed to earn profit last
year though it was facing a host of challenges, including a decline in
passenger numbers from certain important markets.
The corporation made consolidated revenue of over VND71.97
trillion (US$3.3 billion), up 2% year-on-year, and pre-tax profit of VND647
billion, up 28% against last year. Its seat occupancy averaged out at 80%, a
rise of 0.5 percentage point versus 2013.
The corporation operated over 118,000 flights and transported
around 15.7 million passengers, up 3.8% and 7% year-on-year respectively.
Last year was a difficult year for airlines due to unfavorable
events, including political unrest in Thailand, the Ukraine crisis, and
China’s illegal installation of an oilrig in Vietnamese waters in mid-May. As
a result, Vietnam Airlines suffered significant falls in passengers on its
flights from and to some key markets.
Air incidents heavily affected air travels, and competition on
home and foreign markets turned fiercer.
Late last year, Vietnam Airlines launched an initial public
offering and will operate as a joint stock company this year. One of the
corporation’s priorities is to expand its aircraft fleet and improve service
quality.
This year, it is among the first carriers in Asia to operate the
most advanced aircraft Boeing 787-9s and Airbus A350-900s, and plans more
domestic and international air routes.
PVN to lose revenue on oil price plunge
The Vietnam National Oil and Gas Group (PVN) would lose over
VND230 trillion (US$10.7 billion) in revenue this year if the world’s crude
oil price hovers around US$60 per barrel.
PVN said in a report that if the oil price is US$60 per
barrel, the State-owned firm would get total 2015 revenue of around VND515
trillion (US$24 billion), down from VND745.5 trillion estimated for 2014.
If the scenario is realistic, PVN will be able to pay VND104.2
trillion in tax this year, a year-on-year drop of VND74 trillion.
This year, PVN plans to pump 16.8 million tons of crude oil,
500,000 tons lower than last year, and exploit some 9.8 billion cubic meters
of gas, down 400 million cubic meters against last year.
Local firms urged to mark down price-stabilized products
The HCMC Department of Finance has requested participating
enterprises of the city’s price stabilization program to review costs and
reduce prices of the products selected for the program following sharp fuel
price cuts in recent months.
Nguyen Quoc Chien, head of the department’s price division,
told a meeting with participating companies of the program late last year
that fuel prices have gone down by 30% since July 7 and that transport cost
accounts for 3-10% of prices of the products of the program.
Therefore, prices of the products should have fallen by 1-3%.
“In reality, the drop could be deeper because not only transport cost but
other input costs have declined after fuel price cuts,” Chien said.
The department urged participating enterprises of the program
to slash prices of their products to share difficulties with consumers.
Representatives of the enterprises at the meeting said they
are now in the process of recalculating their production cost and will report
the adjustments to the department as soon as possible.
Chien told the Daily on the sidelines of the meeting that the
department will have to delay the deadline for the enterprises to submit
their reports until January 5 instead of December 30. Otherwise, the agency
will work with them before announcing new base prices for the products of the
program.
Chien said a number of local goods and passengers transport
enterprises have registered with the department to revive down their fares
but the suggested fares of some firms are not corresponding to sharp fuel
price reductions in the past months.
“We have not approved fare reduction plans of some transport
enterprises. Many transport firms have not announced their fares and the
department will impose punitive sanctions on those which are late in fare
adjustments,” Chien said.
The department also requested coach operators to slash their
fares before applying new fares for their services during the forthcoming
Lunar New Year, or Tet.
Nghe Tinh Port sells out 3.89 million shares
Nghe Tinh Port Holding Limited Liability Company, a subsidiary
of Vietnam National Shipping Lines (Vinalines), sold out 3.89 million shares
with the starting price of VND10,100 each (47 U.S. cents) at its initial
public offering (IPO) on Wednesday.
According to the Hanoi Stock Exchange, 47 investors attended
the IPO auction and registered to buy nearly 8.6 million shares, over two
times higher than the volume put up for sale.
The biggest volume of shares investors wanted to buy was 2.2
million while the highest bid was VND12,500 per share, up over 23.7% against
the starting price.
Closing the auction, all the shares offered for sale were
acquired by nine investors with the average winning price of VND12,129. The
enterprise raised VND47.2 billion (US$2.2 million) from the auction.
Nghe Tinh Port’s IPO was the most successful compared to other
IPOs of Vianlines subsidiaries such as Nha Trang, Quang Ninh, Danang and
Haiphong ports.
Nha Trang Port put up 5.5 million shares for auction but
raised only VND3.5 billion from selling a mere 350,800 shares (6.3%). Quang
Ninh Port sold only 854,500 shares, or 7.5% of the total 11.3 million shares
put up for sale.
Danang Port sold over 1.6 million shares, equivalent to 19.6%
of the 8.3 million shares. Haiphong Port, the biggest port in northern Vietnam,
found investors for only 17.6 million shares (47%) out of 37.6 million shares
offered.
Cash-strapped vision
Worries among State agencies are increasingly piled up
alongside the steady fall of oil prices over the months, and meetings are
being called to look for solutions to cope with a huge shortfall of the State
budget revenue due to diving oil prices. Ministerial agencies have calculated
that if the crude oil price falls by one U.S. dollar per barrel, the State
will lose some VND1 trillion, or nearly US$50 million. If the current price
of around US$60 a barrel stays unchanged next year, as much as VND43
trillion, or over US$2 billion, would be evaporated.
The grave concerns among may State agencies are
understandable, as the country has faced a huge, chronic budget deficit in
recent years, and any further erosion to the State revenue will put the
budgeting at stake. Such warnings have thus been repeatedly voiced aloud
these days, viewing the oil price fall as a highly-menacing challenge
although many economists have inversely considered the oil price fall as a
precious opportunity for the national economy.
As covered in local media, measures are being weighed to
minimize the negative impact – or even to neutralize it where possible – on
the State budget. Such measures, if not taken into prudent consideration, may
finally neutralize the precious opportunities ushered in by the low oil
price, according to experts.
Vietnam is still a net oil importer, so any oil price drop
will only benefit the country.
Data from the General Department of Customs show that as of
December 15, the country had exported US$6.92 billion worth of crude oil plus
US$890 million worth of oil products and US$500 million worth of coal, says
Thoi bao Kinh te Sai Gon. During the period, the country also imported up to
US$8.5 billion worth of oil products and other fuels. The fuel trade is
fairly balanced, so to say.
But, says the weekly newsmagazine, Vietnam is also heavily
reliant on various other imported oil-derived materials for domestic
production, including nearly US$9 billion worth of plastics, over US$1.5
billion worth of synthetic yarn and fiber, US$6.2 billion worth of chemicals,
over US$600 million worth of synthetic rubber, and some US$1 billion worth of
other materials like asphalt. These materials will be much cheaper in sync
with the oil price.
Vu Dinh Anh, a financial expert, says in Tuoi Tre that both
negatives and positives exist in the oil price fall, but “overall, the
positive impacts on economic development are quite strong.” He furthers that
revenues for the State coffer from import-export and other business
activities will outweigh the shortfall from the oil price fall.
In the same tone, Minister of Finance Dinh Tien Dung says that
the national economy stands to benefit from the oil price fall, as all major
inputs will be lower, which boosts the competitiveness of domestic
enterprises and improve the country’s competitiveness on the international
arena. “As such, the more the oil price falls, the greater we will benefit.
We will only suffer in the short term,” the minister asserts in Vneconomy.
VietnamPlus under the Vietnam News Agency comments that the
oil price fall will basically bring about huge benefits, since it has been
ascertained that the high oil price is the killer, impeding all efforts to
step up economic recovery.
Tran Hoang Ngan, a member of the National Assembly’s Economic
Commission, recalls how high oil prices have devastated the economy. “When
the crude oil hit a high of US$147 a barrel in 2008, inflation shot up to
20%, paralyzing numerous enterprises,” Ngan says in an interview with Tien
Phong.
When oil prices stood high over a long period in the recent past,
revenues for the State budget have always been fully realized, but
enterprises went bust en masse, and the economy was in distress. Under such
circumstances, the State had to spend huge to rescue businesses, according to
Thoi bao Kinh te Sai Gon.
Minister of Planning and Investment Bui Quang Vinh observes in
Baodautu.vn that in the medium and long term, the low oil price will bolster
domestic businesses, and more importantly, it will support national economic
development while lessening the economy’s reliance on crude oil.
Despite undisputable benefits from the oil price fall, worries
over the frail State coffers have prompted State agencies to map out
solutions to cope with the revenue shortfall. There have been proposals to
slap higher tax and fee on oil products, there have been schemes to hike
electricity tariffs now that inflation no longer poses concerns, and there
have been other suggestions by State corporations to make the most from the
oil price fall, including a latest suggestion by State-owned oil traders for
the State to intervene in the petrol market to keep prices higher. Such
proposals can be seen to have come from a cash-strapped vision.
Opportunities from the oil price fall are precious ones to
spur growth, and it should be noted that the lost revenue from crude oil is
not evaporated. Instead, it multiplies and only moves from the State budget
to the economy, says Thoi bao Kinh te Sai Gon.
Top 10 major export products for 2014
Ten major products accounted for export value of over US$3.5 billion
each in 2014, with telephones and components topping the list in overall
value at US$24.08 billion.
In 2014, the country’s exports grew 13.6%, grossing US$150
billion in revenue compared against 2013.
In particular, the country reached a record high trade surplus
of some US$2 billion.
The country’s ten key export products were telephones and
components; garment and textiles; electronics, computers and components;
footwear; seafood; machines and equipment; crude oil; wood and wooden
products; means of transport; and coffee.
Vietnam domestic market gaining a foothold in high tech
Samsung, Intel, LG Electronics, Panasonic and Microsoft's
handset units are just a few of the leading global tech firms to have
relocated manufacturing to Vietnam over the past few years.
The movement represents one of the fastest economic
transformations ever, as shipments of smartphones and computer parts have
begun to overtake exports of coffee, garments and shrimp.
It marks a definite shift away from China and comes about as a
result of tax benefits and a relatively lower cost labour force that makes
Vietnam an appealing alternative to its northern neighbour.
Microsoft, which took over Nokia in a US$7.2 million deal last
April, closed all its plants in Hungary, contracted production in China and
Mexico, and shifted the bulk of phone manufacturing to Bac Ninh province.
Microsoft Mobile Vietnam Limited Liability Company began
production of smartphones in August 2014 and has since exported more than 5
million Lumia phones to markets around the globe.
To date, Microsoft has moved 39 production lines from Komarom
(Hungary), Beijing, Guangdong (China) and Reynosa (Mexico) to Bac Ninh
province and the Vietnamese plant has become a key factor in its global
supply chain.
Last November Samsung Electronics revealed a plan to invest up
to US$3billion to create a new smartphone factory in the Yen Binh industrial
zone in Thai Nguyen province.
The announcement came a month after Samsung Electronics
revealed is set to construct a US$1.4 billion factory in Ho Chi Minh City,
where it intends to make TVs, washing machines and air conditioners.
The new facility in Thai Nguyen would operate alongside
another US$2 billion plant the company already runs in the country, which
began production in March 2014.
Other divisions from the South Korean company are also
expanding in the country, including Samsung Display and Samsung
Electro-Mechanics.
According to the Yonhap news agency, the conglomerate as a
whole has invested about $11 billion to date in Vietnam.
LG Electronics Vietnam Co. Ltd meanwhile has begun operation
of its new US$1.5 billion plant located in the Trang Due industrial zone in
Haiphong city where it produces washing machines, microwaves,
vacuum cleaners, televisions and smartphones.
Vietnam has advantages of taxes and human resources along with
a Government that places high priority on assisting hi-tech enterprises, says
General Director of LG Electronics Vietnam Co. Ltd Ko Tae Yeon.
Many Chinese companies have been moving into essentially
higher value design and manufacture work in the high tech industry and,
Chinese smartphone maker Xiaomi has also announced plans to shift some of its
production to the Vietnamese market.
World’s large smartphone maker Apple has also announced it
would cooperate with one of technology trademarks in Vietnam to increase its
presence and competitiveness in over 90-million market.
Nguyen Mai, FDI Business Association President, says he hopes
that Vietnam will become a key place in the world producing tablets, mobile
phones, home electric appliances, and electronic chips.
Currently the sector accounts for about 16% of the nation's
total exports, in terms of value - making it bigger than its textile and
garment industry.
Korean giant Samsung alone accounts for more than 10% of
Vietnam’s exports and the transformation sees no signs of abating in 2015.
Investors bullish on real estate in 2015
A new policy allowing foreigners to invest in real estate is
forecast to attract higher overseas remittances in 2015.
According to Nguyen Hoang Minh, deputy director the State Bank
of Vietnam (SBV) in Ho Chi Minh City, overseas remittances to HCM City
reached US$5-5.1 billion in 2014, up US$200-300 million over 2013 as results
of great efforts to better the macro-economy policy with lower inflation,
good growth rate and increased state foreign exchange reserves.
Phan Huy Khang, Sacombank joint stock commercial bank general
director in turn, says overseas remittances transferred through the bank hit
a milestone surpassing US$2 billion last year, 15% higher than 2013.
Most of the remittances came sent from the US, Taiwan (China),
Australia and Middle East, Khang added.
In 2014, the country attracted a total of US$12 billion of overseas
remittances, setting a new high record. The figure in 2015 is expected to
increase by 10%.
In Ho Chi Minh City, overseas remittances mainly were funneled
into production (71.4%) and real estate (22.1%).
Khang forecasts with the change in policy, more and more
overseas remittances will flow into real estate in the coming year.
Tran Van Trung, Director of Dong A Remittances Company noted
the new policy permitting foreigners to purchase houses in Vietnam still
consist of many complicated conditions, adding that the property and stock
markets are the best choices for remittance recipients to earn profits.
Source:
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Ba, 6 tháng 1, 2015
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