BUSINESS IN BRIEF 13/3 HCM City aims to attract Finnish investment Vice chairman of the HCM City People’s Committee Lê Văn Khoa said he hoped to strengthen co-operation with Finland’s investors, particularly in technology during a meeting on Thursday with Lenita Toivakka, Finland’s Minister for Foreign Trade and Development in HCM City. The city is investing heavily in road infrastructure and different kinds of public transport,  Khoa said at a reception held for Minister Lenita Toivakka and a Finnish business delegation. Information technology, communications, education, energy, environment and waste-water treatment are all areas in which HCM City and Finland will cooperate. In HCM City, Finland has invested in six projects worth a total of US$2 million, mostly in the information and communications, science and technology and processing industry. The figure is moderate compared to the total of US$48 billion in foreign direct investment that has poured into the city, he said. Toivakka suggested that the city’s leaders create favourable conditions for Finland’s investors to take part in projects in traffic infrastructure, communications, science and technology. She pledged to support the expansion of co-operation between investors in HCM City and Finland. VN firms urged to focus on branding Vietnamese enterprises, especially small- and medium-sized companies, should accelerate measures to develop their trademarks -- with a view to increasing their competitiveness in the process of regional and international integration, said Deputy Minister of Industry and Trade Đỗ Thắng Hải. Hải spoke on March 11 in Hà Nội at the 9th Forum on Việt Nam National Branding, part of  “The National Việt Nam Branding Programme” organised by the Trade Promotion Department under the Ministry of Industry & Trade. He said that branding development is always a ’hot’ issue for many foreign investors, especially since the M&A transactions are flourishing in the domestic market. Branding development is also an opportunity to evaluate the integration of Vietnamese businesses into the world market. “SMEs currently account for over 90 per cent of the country’s businesses. But most of them are lacking strategies to develop their brands,” Hải said. According to Hải, building brands for enterprises and promoting national trademarks is urgent and important. And it will be even more important when the country opens up the market, in line with free trade agreements it has signed. Samir Dixit, Asia-Pacific Director of Brand Finance, said at the event that according to a Brand Finance evaluation report, Vietnamese companies’ trademark valuation in 2015 totaled US$140 billion, down 19 per cent from the previous year. Compared with seven ASEAN countries listed in the National Brand Ranking drafted by Brand Finance, Việt Nam ranked sixth -- after Singapore, Thailand, Indonesia, Malaysia and the Philippines; and ahead of only Cambodia. This ranking partially reveals the weakness in Việt Nam’s national branding. Plus, Việt Nam still shows shortcomings in product quality, product lifecycle, customer satisfaction, imports, exports, and the social responsibility of enterprises, Dixit said. Sixty-three companies have been honoured with the National Value Awards: more than double the thirty companies honoured in 2008. Dixit says this is absolutely fantastic. But he doesn’t know which 63 companies won, since no information is available about them and there is no website offering this needed information. “How do you show people that these are the 63 most important companies in the national brand, without promoting them properly?” Dixit said. Thierry Noyelle, Senior Adviser to the SECO/Vietrade Technical Cooperation Programme, notes that the websites of the 63 enterprises whose brands qualified for “Việt Nam Value” have English-language website versions, but with very poor content. Noyelle said that only 10 of the 63 companies display the “Việt Nam Value” logo on their websites. The other 53 award-winning companies do not mention Việt Nam Value. He said “Việt Nam Value” is a collective mark promoting the winning 63 Vietnamese companies and emphasizing three values: Quality-Innovation, Creativity and Leadership. But in practice, the three values seem weakly incorporated into the businesses of VV companies, and VV as a brand is poorly promoted. Noyelle said that the National Branding Programme focuses mainly on promoting VV companies, while SMEs are gradually being left behind. To enhance competitiveness in local and foreign markets, Vietnamese SMEs also need branding and a “collective mark”. And they should move up value chains and boost exports with higher value products and higher priced goods and services. Việt Nam has been signing new-generation trade agreements continuously, especially since joining the Trans Pacific Partnership. So brand building is an urgent issue for enterprises to promote their businesses and the country’s image. If businesses do not take  measures to improve national branding, they will not have a chance to take advantage of new international economic opportunities coming soon. Fruit, vegetable exports strengthen Việt Nam’s fruit and vegetables export will continue to enjoy good growth this year, according to the Việt Nam Fruit and Vegetables Association (Vinafruit). Last year, export revenue reached US$1.85 billion for fruits and vegetables, an increase of more than 24 per cent over 2014, the association said. In the first two months of the year, revenue from fruit and vegetable exports went up by 39 per cent over the same period last year. According to the Ministry of Agriculture and Rural Development, Việt Nam exported more than 40 kinds of fruits and vegetables to over 40 countries and territories. Fastidious markets such as the US, Australia, EU and Japan have opened their doors to Vietnamese fruits like longan, litchi and mango. The Châu Thành Co-operative in An Giang Province, for instance, exported more than 100 tonnes of fresh longan to the US and EU last year. Earlier this year the cooperative signed an order to export nearly 100 tonnes of fresh longan to the US. More cultivation areas have met VietGap and GlobalGap standards as well as hygiene and food safety requirements set by importers, the ministry said. In addition, businesses have enhanced their trade promotions to seek new customers. The agricultural sector is speeding up negotiations with countries aiming to boost export of key fresh fruits, including dragon fruit, rambutan, longan, litchi, mango and pomelo. Many other demanding markets will continue to open their doors to Việt Nam’s fruits and vegetables this year, it said. However, exports of fruit and vegetables is largely dependent on Asian countries, especially the Chinese market, the association said. Enterprises need to diversify their export markets. To ensure quality, companies should invest in advanced technologies to process fruit and vegetable products as well as develop closer links with farmers from plantation to processing. Fertiliser firms lament new rules Local fertiliser producers are facing obstacles from the State’s regulations on procuring production licences, producers said at a meeting held in HCM City to discuss the regulations. The producers said that some regulations in the Decree 202/2013/NĐ-CP on management of fertilisers and the Circular 41/2014/TT-BNNPTNT regarding implementation of the decree have created numerous difficulties for local fertiliser makers, leading to a temporary halt in production at some factories. The Ministry of Agriculture and Rural Development’s Cultivation Department said at the meeting on Thursday that since the new rules came into effect, the department has received applications for licences from 140 fertiliser producers, but most of these applications did not meet the requirements. The biggest obstacle faced by most of the enterprises was that they were unable to meet workforce requirements, the department said. Therefore, until now, only 21 producers have been granted licences. According to the new regulations, to procure a licence, the company must have production managers and technicians with professional skills in the chemical, physical and biological fields. However, not many local fertiliser producers have met these requirements. Some other enterprises said at the meeting that the new regulations are for enterprises with available facilities which has proved to be a challenge for new fertiliser producers. Since new producers are unsure about receiving a licence they are hesitant about investing capital into machinery, building a factory and developing a laboratory, the enterprises said. Phan Duy Đức, director of the Hiếu Giang Fertiliser Limited Company, said that they may have to close down their factory due to the numerous changes in regulations. The company will need another year to adapt to the new regulations, he said. The State should create favourable conditions for local fertiliser producers to develop during the period of integration into the world economy and compete with rivals from China, Thailand and Laos, Đức said. Nguyễn Như Cường, deputy director of the Cultivation Department, said that he would collect all opinions from the local fertiliser producers at the meeting and report to the ministry about solving their difficulties in implementing those regulations. He also said that local fertiliser producers should contact the department directly to implement procedures for getting production licences. VN set to become investment magnet Việt Nam is an emerging market for financial investment with favourable conditions created by new policies and fresh impetus given to the equitisation of State-owned enterprises, senior officials said at a conference yesterday. The seminar was titled Vietnam – Korea Capital Markets and Investment Co-operation Prospects. Vũ Bằng, chairman of the State Securities Commission, reaffirmed that the country’s first derivatives market will become operational by the end of this year, with products including covered warrants and GDK (Generalised Derivative Kernel). He also said a new regulation later this year will clarify provisions of Decree 60 issued last June on increasing the cap for foreign stakeholding in local companies up to 100 per cent. The time taken for trading registration will be reduced, State ownership in enterprises lowered to serve strategic partners and restructuring of institutions in securities business sector persisted with, he said. Improvements will also made to listing and issuance criteria, corporate governance and transparency, he added. Meanwhile Dominic Scriven, executive chairman of the investment fund management firm Dragon Capital, said he considers Việt Nam the best emerging market for investment as it is experiencing accelerating growth while other emerging markets are slowing. Other factors that he cited included the country’s large quality, economical labour force (two-thirds of its population of 93 million and labour costs at just 35 per cent of China), increasing middle class segment and improved productivity. He said that productivity has been the ultimate driver of the country’s GDP and its gains are ongoing. “The gains derive from heavy investment in manufacturing and infrastructure… and accumulating productivity gains are turning Việt Nam into a modern economy,” he said. The country’s free trading agreement with the ERU, its major export market and its membership of the Trans Pacific Partnership will facilitate export growth once they take effect. He said the price on earnings ratio could come down to 11.1, from 12.7 in 2015 and 2014, and 13 in 2013. In 2016-2017, big companies like SATRA Corp., MobiFone, Vietnam Engine and Agriculture and the Vietnam Cement Group are likely to be equitized, offering opportunities for foreign investors. Nguyễn Quang Thuân, CEO of StoxPlus Corporation, backed Scriven, saying reforms to currently prevailing State ownership in many industries will create a lot of investment opportunities. The State Capital Investment Corporation’s divestment plan in 2015-2016 will also attract investor interest, the conference heard. Among companies subjected to divesture include Vietnam Construction and Import – Export JSC (State current ownership at almost 58 per cent of its chartered capital of VNĐ4.417 trillion or almost US$200 million) and Quảng Ninh Thermal Power JSC (11.4 per cent of VNĐ4.5 trillion). Kim Soo-Ho, the Korean General Consul in HCM City, said Việt Nam, as a labour/consumer market of 100 million people, has the potential to benefit the most when investors pull out of China (a JETRO survey shows Japan’s businesses in China and Thailand hope to shift their manufacturing bases to Việt Nam). The Government’s determination to attract investment is a positive factor, he added. EU trade deal aims to help firms A conference to review Vietnamese laws on its commitments to the EU–Việt Nam Free Trade Agreements (EVFTA) and transparency heard many opinions on how to create favourable conditions for enterprises. Many delegates said that the review only worked on custom procedures, but without checking other specialised documents. Phạm Thị Thanh Hiền, former Deputy Director of the General Department of Việt Nam Customs’s International Cooperation Department, praised the Vietnam Chamber of Commerce and Industry (VCCI)’s review of the regulations of Vietnamese law and EVFTA commitments to propose adjustments as needed. Hiền said the commitments to EVFTA not only referred to customs, but also trade. "Therefore, there should be participation by relevant agencies such as the Ministry of Industry and Trade, the Ministry of Agriculture and Rural Development, and the Ministry of Finance," Hiền said at the conference held yesterday in Hà Nội by VCCI. According to Phạm Thanh Bình, an expert on customs, the main obstacle to the current clearance of goods by customs was specialised tests performed, as these accounted for 72 per cent of the time it took customs to clear goods. Bình said that specialised testing procedures are implemented with every shipment at the time of customs clearance of goods. "This is the main reason leading to long clearance times," Bình said. EVFTA requires that the Vietnamese Government ensure safeguards against fraud and other damaging activities. However, many agricultural products receive their specialised inspection results only after they have been consumed, Nguyễn Thị Thu Trang, director of the WTO and Integration Centre under the Vietnam Chamber of Commerce and Industry (VCCI), said at the conference. “It shows that we haven’t complied with the commitments towards EVFTA”, said Trang. To solve these problems, Trang suggested boosting administrative reforms to comply with the commitments to EVFTA, as well as to benefit Vietnamese companies. Việt Nam currently doesn’t have a website that announces the laws on customs and other related commercial laws, Hiền said at the conference. Curently, enterprises found it very difficult to access an official website that provides information about regulations on customs and trade. They have to visit individual agency websites such as the Ministry of Finance and the Ministry of Industry and Trade to search for information, she said. She suggested building a website to publish the latest information on customs and trade to help firms easily check updated local laws and regulations. In addition, there is a need of training courses for public employees to improve their skills and experience, said Nguyễn Hoàng Ánh, a lecturer from the Foreign Trade University. Ánh said that the Government should have documents that specify the responsibilities of customs officers. The EVFTA was signed by Việt Nam and the European Union in December 2015. It is one of two new trade agreements which are forecast to have a great impact on the country’s legal regulations and the economy. The agreement is expected to come into effect in 2018. German firm opens first electromagnetic laboratory in VN German independent inspection firm TÜVRheinland on March 1 launched its first electromagnetic compatibility (EMC) laboratory in northern Hung Yen Province. The laboratory covers 1,000m2 of floor space and will focus on emission, pulse immunity and radio testing, as well as providing full EMC conformity assessment for many electrical products. The new EMC laboratory will also provide measurement and testing services follow the latest international regulations. The cost incurred for the laboratory was not disclosed. Speaking at the opening ceremony, TÜVRheinland's executive board of management Ralf Scheller said the laboratory reaffirms the group's commitment to support the development of Vietnamese industries. "To make its mark in international markets, the manufacturing testing organisations in Viet Nam need to support and to verify compliance with conformity assessment schemes. This new laboratory will support that, while at the same time providing the resources necessary to enhance the use of radio frequencies and develop new electric and electronic devices, he said," he said. TÜVRheinland opened its first office in Viet Nam in 2001. The Vietnamese office currently provides testing services for footwear, building products and indoor furniture. Bosch Rexroth introduces cutting-edge technologies, solutions at PROPAK VIETNAM 2016 Bosch Rexroth, the drive and control division of Bosch Vietnam, is introducing its solutions and technologies in drive and control for the packaging industry at PROPAK VIETNAM 2016 - the leading international trade show for food, drink, and pharmaceutical industries in Vietnam. Its flagship product - VarioFlow plus chain conveyor system, which offers advancement in simplicity, flexibility, ease of assembly and configuration, enables packaging lines to deal with ever smaller batches, more frequent product changes, and a large number of product variants. With its low-noise operation, the system also helps reduce noise and improves working conditions in manufacturing areas. Furthermore, this chain conveyor system helps manufacturers achieve a fast time-to market and increase productivity. Participants can visit Bosch Rexroth at booth H10 to experience the cutting-edge technologies and solutions for packaging, and get technical consultation from a team of local and international experts. Moreover, visitors can also watch a demonstration of Bosch Rexroth’s modular Mechatronics Training System mMS4.0, illustrating the steps of Industry 4.0 production. The modular Mechatronics Training System mMS 4.0 focuses on a cube assembly divided into three stations which describes a complete factory and is highly applicable for technical and vocational training at universities and educational institutions. At this event, Bosch Rexroth introduces the station with robot system transferring products to storehouse. PROPAK Vietnam 2016 takes place at Saigon Exhibition and Convention Centre (SECC), Nguyen Van Linh, District 7, Ho Chi Minh City, from March 1 to March 3. The exhibition is expected to attract thousands of local and international visitors. Bosch Rexroth bundles global application experience in the market segments of mobile applications, machinery applications and engineering, factory automation, and renewable energies to develop innovative components as well as tailored system solutions and services. Bosch Rexroth offers its customers hydraulics, electric drives and controls, gear technology, and linear motion and assembly technology all from one source. Bosch started the first operation in Vietnam in 1994. The headquarters of Bosch Vietnam is located in Ho Chi Minh City and is legally registered in Dong Nai province. Bosch Vietnam also has two other branch offices in Hanoi and Danang. Since 2008, Bosch Vietnam has started to invest into the gasoline systems plant in Long Thanh Industrial Zone in Dong Nai. This is the first high-tech production plant for continuously variable transmissions (CVT) pushbelts in ASEAN. The total investment for the plant will be €260 million ($282 million) by 2016. In 2011 Bosch inaugurated the Software and Engineering R&D Center, the Robert Bosch Engineering and Business Solutions Vietnam Co., Ltd., and since then has employed more than 900 engineers. After that Bosch established the Automotive R&D center in Ho Chi Minh City in 2014. Bosch Vietnam is active in 6 different business divisions, namely automotive aftermarket, drive and control technology, packaging technology, power tools, security systems and thermotechnology. In 2013, Bosch also established a technical industrial apprenticeship (TGA) training center in Dong Nai. The dual education program is developed based on German vocational training standards with an initial investment of $1 million to meet the increased need for local skilled labor. Agribusiness a fallow field Vietnam’s agricultural business climate has been on the wane, hampering the country’s efforts to lure more foreign investments into this sector. The World Bank has released its “Enabling the Business of Agriculture 2016” report which examines regulations that affect private enterprise in agribusiness in 40 countries around the world. Results from the report show that Vietnam’s agricultural business climate is well below the 40-country average. Within the ASEAN region, Vietnam is only doing better than Cambodia, Laos, and Myanmar. For instance, the business climate for seed trading hit 62.5 points (out of a maximum 100 points), which is lower than Cambodia’s 68.8, Bangladesh’s 70.8, and the Philippines’ score of 83. The main reasons for this low rating include difficulties in new variety registration and imports, and slow granting of certificates (901 days), versus the Philippines and Myanmar (571 and 306 days, respectively). Vietnam also ranks very low (24.4 points) for its agricultural machinery market. Although the country allows the import of the machines, it fails to manage the standards of the products due to a lack of regulations. With its agricultural financial market scoring only 45.3 points, and its agricultural transport sector reaching just 54.8 points, it is hardly surprising that Vietnam ranks 35 out of 40 nations surveyed. Nguyen Anh Tuan, director of the Ministry of Agriculture and Rural Development’s Institute of Policy and Strategy for Agricultural Development (IPSARD), said that “Vietnam’s agricultural business climate is making it difficult to attract investors, especially foreign ones.” A recently-released IPSARD survey on agricultural business in Vietnam showed that 50 per cent of respondents lamented the lack of land sites, even in rural areas. Some 67 per cent of respondents said the government’s unfavourable land policy was preventing their investments. Only 17 per cent could enjoy the government’s land lease incentives. While 65 per cent could not access preferential bank loans, 76 per cent believed that complicated administrative procedures would continue impeding their business development over the next five years. The Vietnam Association of Advanced Technology Enterprise in Agriculture, representing over 30 hi-tech agricultural enterprises, claimed that hi-tech agricultural enterprises were still hurt by land, tax, and capital problems. Da Lat Flower Biotechnology JSC’s general director Nguyen Dinh Son said that his company found it hard to access medium-term loans. Currently, only short-term loans could be accessed, but with great difficulty. Echoing this view, Dutch-backed Dalat Hasfarm Company’s vice general director Nguyen Van Bao also said that his company was forced to pay duties for its imported modern greenhouses, even though the greenhouses were exempt from import taxes as they could not be produced locally. Can Van Luc, one of the leaders of the Bank for Investment and Development of Vietnam, also stressed the firms’ woes by relating a typical story from several months ago when he received two emails from two local enterprises complaining that they were forced by a customs office to pay a 7 per cent export tax rate for their cassava exports, even though such products were totally exempt from export tax. “I then passed the emails to the Ministry of Industry and Trade asking for clarity. The matter was quickly resolved,” Luc said. “The problem here is that the state’s policy may be good, but implementation in localities is another issue,” he added. Cement companies blocked All but four cement makers in Vietnam - Holcim, Chinfon, Ha Tien and Cong Thanh, have failed to deploy waste heat gas generation systems in their plants by the end of last year, as required by Prime Minister Nguyen Tan Dung. Many cement makers failed to meet government deadlines for applying energy-saving systems to their plants-Photo: Le Toan Under the national cement industry development plan for 2020 with a vision to 2030, all cement plants with a capacity of 2,500 tonnes of clinker per day or more were required to apply waste heat gas generation (WHGG) systems by 2015 to help the plants save at least 20 per cent of their electricity consumption. According to Nguyen Hoang Cau, secretary general of the Vietnam Cement Association, there are more than 40 cement-making production lines across the country subject to the requirement. Among these, foreign cement makers such as Taiwanese-backed Phuc Son Cement, Hong Kong’s Luks Cement Vietnam Limited, and Japanese-funded Nghi Son Cement have failed to abide by the rule. The main reason for the delay is the high cost of applying the WHGG technology, particularly important given the context of low cement sales due in part to recent real estate market woes. Deputy director of Nghi Son Cement Doan Nam Khanh previously shared VIR that the cement sector was facing hard times, adding that “It is necessary to invest in WHGG, but without financial help, it would be next to impossible for the firms to do it.” Previously, a representative of Phuc Son Cement, which holds a 14 per cent share of the market, said that the company was looking into the new technology, but refused to comment further. Cau has already requested incentives from the Ministry of Finance to carry out the cost-saving measure, but investment for the WHGG system is reportedly not included in banks’ incentive lending policies. In a report for the cement sector, Nguyen Quang Thuan, chief executive officer of Stockplus, explained that commercial banks are not eager to lend more, except for the Asian Development Bank’s financing of state-run Vietnam Cement Industry Corporation, which is still being worked out. Cement production is one of Vietnam’s most energy-intensive industries. According to the Vietnam Building Materials Association, the country is currently home to 51 cement plants with 73 production lines and a total capacity of 73.45 million tonnes per annum. Banks suffered foreign exchange losses in 2015 Many banks suffered losses in the foreign exchange market last year, according to their latest financial reports. Many banks suffered losses in currency trading last year. - Photo doanhnhansaigon.vn According to news website ttvn.vn, VPBank lost VND290 billion (US$12.9 million) in currency trading last year, an increase of 220 per cent over the previous year. Techcombank lost VND192 billion ($8.5 million) in the foreign exchange market in 2015, after the bank earned a profit of nearly VND23 billion ($1 million) in 2014. Currency trading whittled away profits of Vietnam International Bank, as the bank lost VND24 billion ($1.1 million) in the foreign exchange market in 2014, and VND10.5 billion ($467,000) also in this market in 2015. Several other banks profitted from currency trading last year, but profitability diminished significantly. Vietinbank, one of the largest banks in Viet Nam, earned a profit of VND19.7 billion ($876,000) in the foreign exchange market last year, a 95 per cent decline from the previous year. Eximbank, at which currency trading was a major service, earned a profit of more than VND62 billion ($2.8 million) in the foreign exchange market in 2015, 64 per cent less than in 2014. Vietcombank posted a profit of VND44 billion ($1.9 million) from currency trading in the fourth quarter of 2015 alone, an 83 per cent fall from the same period in 2014. Currency trading profitability largely depends on exchange rate developments. The exchange rate witnessed significant fluctuations last year, according to industry insiders. In 2015, the State Bank of Viet Nam (SBV) devalued the dong three times and loosened its trading bands twice, leading to cumulative depreciation of five per cent in the domestic currency compared to the dollar. "Dealing in foreign exchange was truly risky over the past months, especially for banks having a negative foreign currency balance," said Nguyen Tri Hieu, a banking and finance expert. Specialists at Vietcombank Securities say opportunities exist for banks to improve their foreign currency business earnings, with the central SBV applying a daily-adjusted reference exchange rate. Since the beginning of this year, SBV has been adjusting the dollar/dong rate daily instead of maintaining a long-term fixed rate. The rate is now set based on exchange rate changes in the inter-bank foreign exchange market, as well as on monetary developments in countries involved in Viet Nam's trade, investment and financing ventures. The SBV expects the daily-adjusted rate to enable it to ensure its management objectives, while allowing exchange rate flexibility as per global monetary fluctuations. Proposed lending changes threaten market recovery Property experts are warning that the draft amended Circular 36 of  the State Bank of Vietnam on credit tightening could have a detrimental effect on the real estate sector, which is still undergoing a process of recovery. The SBV’s draft proposal to tighten bank loans is an effort to curb the risk of a property bubble, however, it has been widely criticised According to this draft, loans pouring into the real estate sector are expected to be tightened so as to prevent the sector’s robust growth from turning into a real estate market bubble. A draft document issued by the central bank (SBV) stated that the risk index of receivable lending for real estate and securities would be raised from 150 per cent (the lowest level), as stipulated in the existing Circular No.36/2014/TT-NHNN on limits and ratios to ensure safety in operation of credit institutions and foreign banks’ branches, to 250 per cent. The maximum ratio of short-term funds used for medium- and long-term loans would also be adjusted down to 40 per cent, from the current 60 per cent. The Vietnam Real Estate Association (VREA) has warned that this draft document, if realised, could derail the smooth recovery of the real estate market. A VREA representative noted that hard lessons were learned in the past when certain adjustments negatively impacted the real estate market. These adjustments also upset investors and buyers, and created stockpiles in the market. Pham Sy Liem, former Deputy  Minister of Construction said that the adjustment of the risk index should be carefully considered. “Some segments of real estate market such as residential, hospitality, and second-homes currently have high consumption rates. So, why should we tighten credit to these areas?” According to Phuoc Vo, director of valuation & research at Cushman & Wakefield Vietnam, if this draft circular is approved, it would immediately have an impact on the real estate market for 2016 and subsequent years for all involved in the sector. “On the positive side, the SBV will manage the credit flow to minimise the risk of a real estate bubble and reduce the fever of the current market, as well as preserve a healthy financial status for the market. For these reasons, only prestigious developers will be given access to financial resources,” Phuoc said. This adjustment, Phuoc added, would unfortunately halt the majority of real estate developers (who are implementing their projects with the use of loans) due to a lack of capital flow. Therefore many projects might have to extend their schedule or more seriously – might have to halt their projects entirely. “Buyers will also face greater difficulty in obtaining loans to purchase properties.” “The risk index should be applied differently to each segment of the real estate market, as each segment has its own level of risks,” he added. David Blackhall, managing director of real estate company VinaCapital, also argued that any restriction on bank lending to the real estate sector during 2016 would significantly slow the rate of recovery that the real estate market experiences, which has only just begun to yield returns for buyers and developers. “If liquidity is limited, then this will hinder growth and there will be a loss of confidence in the market. Real estate investment and growth are the key factors for overall economic growth, and the real estate, construction, and construction material sectors are some of the largest employers of liquidity,” Blackhall told VIR. Meanwhile, Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, requested that the implementation of the draft  be delayed. Chau claimed that the real estate market was currently in a healthy position with high liquidity and stable development. “The risk of a real estate bubble is unsubstantiated as yet, so we should maintain our current market condition to allow the real estate sector to continue developing,” Chau said. To counteract speculation, which could cause a real estate bubble, the government should take effective measures such as taxation against speculative activities, financial and credit tools, and other housing development plans in order to ensure that the market remains stable, Chau added. Banking expert Nguyen Tri Hieu, however, supported the central bank’s proposal. “I personally supported the lowering of the ratio of short-term capital used for medium- and long-term lending, at the ratio of 30 per cent as before. “A year ago, when the SBV decided to lift the ratio from 30 to 60 per cent, I was not in agreement with it… because bank liquidity is very important. Banks that have used up to 60 per cent of their short-term capital for medium- and long-term loans may hurt their liquidity. This is very dangerous. So I think trimming down the ratio is appropriate,” Hieu added. The Ministry of Construction’s Department of Housing and Real Estate Market Management reported that as of November 2015, outstanding loans invested in the real estate market were as high as VND375 trillion ($16.67 billion), a surge of 20 per cent compared to the same figure in December 2014. This is a result of Circular No. 36 which came into effect on February 1, 2015. Hike in deposit interest rates won't affect lending: expert A recent hike in deposit interest rates offered by commercial banks will not likely lead to a raise in lending rates. Economists and policymakers expect them to decrease soon. Nguyen Duc Do, deputy head of the Financial Economic Institute at the Ministry of Finance's Finance Academy, said that at the moment, enterprises in the economy were not strong enough to "suffer" a hike in lending interest rates. With the new foreign exchange regime, the dollarisation had been eased, meaning many would prefer to save their money in dong and saving rates would be more stable, he said. A banking expert who requested anonymity said yesterday that the increase in the deposit interest rate would likely not last long. This was not a reason for banks to raise lending interest rates for now, he said, adding that if there was a reason for higher lending rates, it should rather stem from banks' operation targets, such as liquidity. He explained that calculation of lending rates was based on many factors, including average saving rates, operation costs and expected profits, thus it was not necessary for lending rates to rise immediately. There is no foundation to say the deposit rate hike was a step by banks to prepare for the amendment to Circular No 36, under which the maximum ratio of short-term funds used for medium and long term loans will be decreased from 60 to 40 per cent, according to the expert. An analyst from Bao Viet Securities Company said the higher interest rates offered for long-term or large deposits were to consolidate the medium- and long-term capital sources of the banks. However, she also said the higher lending rates were not worth concerns in the near future. "We have to wait and see whether the rate hike will become a race among banks or not," she said. "If not, we don't have to worry about it." According to Bui Quoc Dung, head of the State Bank of Viet Nam (SBV)'s Monetary Policy Department, there are three reasons for the increase in saving rates. First, the inflation is predicted to reach 4 to 5 per cent this year, much higher than the rate in 2015, which indirectly puts pressure on the mobilsation of deposits. Secondly, GDP growth is expected to hit 6.7 per cent, nearly 1 per cent higher than the average level of the 2011-2015 period. Thus, demand for production capital will likely increase. Third, the interest rate for five-year Government bonds also surged from 5.4 per cent per year to 7 per cent last year, which leads to an increase in demand for Government bonds. Therefore, the medium- and long-term interest rate will be indirectly affected. Dung said the SBV would continue implementing monetary policies consistently through open market operations and other tools to maintain a reasonable level of liquidity in the banking system in order to stabilise the deposit and lending interest rates of credit institutions, keep inflation under control and ease pressure on foreign exchange. He said he believed a slight decrease in medium- and long-term interest rates this year was possible. Expert Le Xuan Nghia, member of the National Financial and Monetary Policy Advisory Council, said there was an upward trend in interest rates, but it was not worth worrying about. The increase was due to the Government's bond issuance, inflation and credit demand. However, the Government and SBV are focusing on interest rate stabilization, as well as bad debt settlement. This means there is even a hope for a lending rate decrease of 0.5 to 1 per cent this year. According to the SBV, short-term lending rates currently range from between 6 per cent and 9 per cent per year, while long-term rates are hovering around 9 to 11 per cent per year, a decrease of 0.2 to 0.5 percentage points compared with the beginning of 2015. Support lacking for women-led firms Vietnamese law system lacks regulations that support companies managed by women, Le Quang Canh, deputy head of the National Economic University's Asian-Pacific Institution of Management, said at a conference in Ha Noi yesterday. About 25 per cent of Vietnamese firms are managed by women. These firms create about a million jobs and contribute VND33 trillion (US$1.47 billion) to the State budget every year, said Canh. However, no regulations detail the rights of these companies, he said. "Many companies don't know how they are supported by laws and other regulated provisions," Canh said. Based on gender equality laws and gender equality strategies for 2011 to 2020, Canh proposed to the Government to include regulations that provisions on women-run businesses be added to the draft law that supports small-and medium-sized enterprises. In addition, the Government should help these businesses access credit loans and provide them information, he said. Representative from Frontier Law and Advisory firm Marika Vilisaar said companies managed by women in Viet Nam face many financial obstacles, such as a lack of transaction information, a lack of collateral and high transaction costs. Also, Vilisaar revealed that these companies also face non-financials obstacles from the cultural and legal environments. It's more difficult for women entrepreneurs to build and maintain networks than for businessmen, because they face cultural barriers. Many Vietnamese still believe women should spend their time raising children, not working, according toVilisaar. To solve this problem, she recommended that Vietnamese related agencies organise courses to improve women's business management skills. At the conference, many delegates agreed on the need to establish an association to support and protect the rights of companies managed by women. Nguyen Hoang Anh, a lecturer at the Foreign Trade University said the association must build a network through which businesswomen can share their experiences and knowledge. The association also needs to help businesses connect more easily with state agencies, she said. Trinh Thi Gioi, deputy chairwoman of the Women's Business Association in Thanh Hoa Province, said the association needs to keep women up to date on the latest policies and implement new ones. Gioi also suggested that the Government create preferential tax policies for businesses managed by women and honour successful women entrepreneurs. Day-trading could benefit individual customers Top brokerage companies with a large number of individual customers will benefit from day-trading as individual customers have high demands within a trading session, said a securities official yesterday. Day-trading is a new instrument that allows investors to buy and sell shares in a single company on the same trading day. Day-trading is regulated in the Circular 203/2015, which was issued in late December 2015 by the Ministry of Finance. Duong Van Chung, Military Bank Securities Corporation's Head of Investment Division, said during an online talk that individual customers may see day-trading as an opportunity to make more money. However, they are likely to suffer losses as their earnings depend on share prices and on the market conditions during the trading session. In addition, day-trading would benefit both listed companies and brokerage firms as market trading liquidity would rise, helping listed companies issue shares more easily and boosting revenue for securities firms, he said. He said that brokerage firms should be prepared with a large amount of shares to provide for individual customers, and ensure a risk management mechanism in order to manage trading activities. Le Duc Khanh, Maritime Securities Incorporate's Head of Strategic Investment Division, said that day-trading would help improve market liquidity, attract more investors to participate in the market and help put Viet Nam on the global stock markets. Individual investors, whose fund is between VND500 million (US$22,300) and VND2 billion ($89,300), would have great interest in day-trading activity, and brokerage firms which meet the requirements of day-trading would see an increase in their market shares in the future, he said. "However, brokerage companies should try to conduct some tests in the early stages instead of getting totally involved in day-trading activity as there are a lot of risks with this new product," Khanh said. The stock market and its participants should not expect too much from day-trading as it was just a new tool, which did not have comparative advantages over other stock trading instruments, Bui Nguyen Khoa, BIDV Securities Corporation's Head of Macro Economics and Markets Division, said, and added that profits that investors could earn depend on various conditions such as company's risk management. Securities companies should develop their own IT systems or import products from overseas suppliers in order to prepare for day-trading activities, Nguyen Son, State Securities Commission's Head of Market Development Department said. It could take about six months to a year for securities firms to get their IT systems ready, he said. Securities firms must take the decisive role now, especially after the Government had provided them with sufficient conditions for day-trading, he added. He also said that securities companies should develop their risk management mechanisms in order to deal with risks that come from trading activities and changes on the global stock markets, which could impact Viet Nam's stock market movements. Son said that the State Securities Commission (SSC) had organised meetings to collect feedback from the two local bourses and market members on the development of Circular 203. One major change is that SSC has reduced the required equity for a securities firm to carry out day-trading activity to VND300 billion from VND800 billion, he said. Market participants, including investors, securities companies and management agencies, should strictly comply with the legal system, and the market should also provide some other securities products such as derivatives and covered warrants in order to minimise the chance of risks for the markets, he said. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR