BUSINESS IN BRIEF 9/3
When
buying high and selling low makes sense
Even though
the Vinalines and Vinashin cases have ended and the guilty sentenced, the
scandal continues to play out.
In 2007,
former Chairman of Vinalines Duong Chi Dung spent USD9m on buying a floating
dock which had been removed from active service by the Russian Maritime
Register of Shipping. About USD5.1m was spent on repairing the dock but it
remained unfit for use.
In February,
Vinalines proposed to sell the dock to recoup some of the losses. However,
due to it deteriorating condition and low steel prices, the dock now only
worth USD1.6m. Vinalines suggested holding an auction to sell the dock as
soon as possible.
There are
many sayings about buying high and selling low being the description of
unskilled or unlucky businesspeople. While the original purchase may have
looked foolish on the surface, it can be argued it was a wise calculation
because the buyers were able to embezzle state money due to the
unrealistically high high price for the obsolete dock.
At the
hearing for Duong Chi Dung, it was disclosed that the dock's real price at
that time was only USD2m. If Dung had bought the dock at that price then even
with USD2.4m of repairing and maintenance fees added to the sum, the losses
would not have been too unbearable. But instead Dung wrote off USD9m just to
buy the dock.
Even though
Dung and his accomplices caused huge losses to the state budget, they have
failed to provide anywhere near adequate compensation. Dung and his
accomplices were asked to return nearly VND359bn (USD17.1m). The court also decided
to seize Dung's three houses in Hanoi and former General Director Mai Van
Phuc's house in Quang Ninh.
However, as
of last August, only VND13.4bn have been repaid, of which Dung paid VND5.2bn,
Phuc paid VND3.9bn, Tran Huu Chieu, former deputy general director of
Vinalines, paid VND340m and Tran Hai Son, former director of Vinalines, paid
VND4bn. This is well short of the figures involved and their assets will not
cover the debt.
In 2012, the
former Vinashin executive was blamed for losses of more than USD43 million,
most of which came from the illegal procurement of an Italian-made high-speed
passenger vessel and two electric generators. Former chairman Pham Thanh Binh
was asked to repay USD23.8m and pay USD31,000 court fee but he said flat out
that he did not have the money.
Based on
these kinds of issues and the way in which state agencies work, it's no
wonder that the country has incurred rising bad debts.
Hopefully
cases such as those involving Vinalines and Vinashin will never happen again.
Increased
post-Tet strikes blamed on new minimum wage
Le Dinh
Quang, deputy head of the labour relationships department under Vietnam's
Federation of Labour said the rising number of strikes after Tet is a result
of firms avoiding higher minimum wages.
On February
20, around 3,000 workers at Nissey Vietnam in HCM City took part in a strike
to complain about new wage levels. The worker's wage was about VND4m (USD180)
a month and VND1m in allowances, such as housing and health hazard
allowances. When the government raised the minimum wage, Nissey raised its
base wage by VND200,000 then deducted the same amount from the allowances.
In February,
thousands workers at Pouchen Company in Dong Nai Province held a strike over
a new work evaluating system which may affect allowances and bonuses.
Unofficial
statistics show that over 30 strikes occurred before and after the Tet
Holiday, in which 20 strikes are related to minimum wages. The strikes which
involve hundreds of workers often occur in HCM City, Dong Nai and Binh Duong
provinces.
Le Dinh
Quang, the deputy head of the labour relationships department said while in
previous years, most strikes were held before Tet and over end-year bonuses,
the strikes this year have occurred after Tet and the number has been on the
rise.
Resolution
122 stipulated that starting from January the monthly minimum wage would be
increased from VND2.4m to VND3.5m, depending on regions. However, many
companies didn't apply the new wages right away and some companies tried to
find loopholes.
Quang said.
"Unions at localities must work with businesses to deal with disputes
quickly. However, there are several unions that haven't worked hard to
protect their members."
Quang said
unions at localities should improve to better connect employees with
employers during the integration process and when Vietnam was joining in free
trade agreements. He also warned that enterprises should treasure their
relationship with workers more.
"Authorities
must conduct more inspections to make enterprises abide by the law," he
said.
Twenty-three
Vietnamese fish plants eligible to export to US
The US
Department of Agriculture (USDA) on March 3 announced a list of foreign
catfish plants from four countries eligible to export their products to the
US under the USDA inspection programme for Siluriformes fish including tra
and basa fish.
The list
defines 23 qualified fish establishments including 19 from China, 13 from
Myanmar, seven from Thailand and 23 from Vietnam.
The 23
Vietnamese plants showing the equivalence of their Siluriformes inspection
system with that of the US include Workshop 3 under Vinh Hoan Corp, Workshop
2 under Vinh Hoan Corp, Bien Dong Seafood Co, Goldenquality Seafood Corp, Van
Duc Tien Giang Food Export Co, Southern Fishery Industries Co, NTSF Seafoods
JSC, CADOVIMEX II Freezing Factory No.1, Thuan An Production Trading and
Service Co, Tan Thanh Loi Frozen Food co, Ben Tre Aquaproduct Import and
Export JSC, Viet Phu Foods & Fish Corp, Asia Commerce Fisheries JSC,
C.P.Vietnam Cor - Ben Tre Frozen Branch, Hung Vuong Corp, Factory 7 under An
Giang Fisheries Import-Export JSC, Factory 8 under An Giang Fisheries
Import-Export JSC, Frozen Factory AGF 9, Agifish Food Processing Factory,
Hung Vuong Cor - Workshop II, Europe JSC, GEMPIMEX 404 Co and Vinh Hoan
Corporation.
The
inspection programme for Siluriformes fish took effect on March 1, 2016 and
has a 18-month transitional period. By the end of the transitional period on
September 1, 2017, the programme will be fully applied.
During the
18-month transitional period, the USDA’s Food Safety and Inspection Service
(FSIS) will re-inspect and conduct species and residue sampling on imported
Siluriformes fish shipments at least quarterly at US import establishments on
a random basis.
After the
transitional period, foreign countries seeking to continue exporting such
products to the US must submit adequate documentation showing the equivalence
of their Siluriformes inspection system with that of the US.
Malaysia
imposes temporary anti-dumping duties on Vietnamese rolled steel
Malaysia’s
Ministry of International Trade and Industry has announced a preliminary
decision on the anti-dumping investigation regarding cold rolled steel
imported from Vietnam, thus imposing dumping tax rates of 4.58-10.55% on
Vietnamese steel.
The
information was released by the Vietnam Competition Authority under the
Ministry of Industry and Trade on March 3.
The
investigation was initiated on August 27, 2015 into the alleged dumping of
alloy and non-alloy cold rolled 0.2-2.6mm thick and 700-1300mm wide steel
exported to Malaysia from Vietnam, China and the Republic of Korea (RoK).
The
preliminary investigation results showed that the imports of such steel
products from the three countries have caused significant damages to the
Malaysian steel industry and domestic market.
Therefore,
Malaysia has decided to impose temporary anti-dumping duties ranging between
4.58-10.55% on Vietnamese steel, 8.32-21.64% on RoK's steel, and 23.78% on
Chinese steel.
One steel
enterprise from the RoK and two enterprises from China were found to have
escaped anti-dumping duties, thus avoiding taxes.
The final
decision on the case will be issued within 120 days from January 25, 2016.
Demand
for GM corn varieties seen good
Suppliers of
genetically modified (GM) corn varieties including Syngenta and Monsanto have
described demand for such varieties in Vietnam in the coming years as good
given the fast expansion of the GM corn growing area in the nation.
The corn
acreage in Vietnam has expanded to 5,000 hectares one year after mass
production of GM corn was allowed in the country.
Syngenta said
after GM corn variety NK66 Bt/GT was commercialized, the company got good
feedback from farmers with more than 3,000 hectares grown in the first
season.
Nguyen Hong
Chinh, an executive at Monsanto in Vietnam, said the farming area of GM corn
varieties sold by the company has neared 2,000 hectares.
According to
farmers, planting GM corn helps them save VND2-4 million from the use of
herbicide and pesticide. Many of them said they will grow such corn varieties
in the next crop.
Chinh said
Vietnam will have three more corn crops this year and forecast GM corn would
account for 10% of the total acreage by the end of this year.
Syngenta is
optimistic that GM crop will continue developing as the Government has issued
Decision No. 11 supporting an increase in the area under GM corn farming by
30-50% in 2020. The company said the expansion target is obtainable.
Therefore,
Syngenta and Monsanto will introduce more GM corn varieties.
According to
the Department of Crop Production under the Ministry of Agriculture and Rural
Development, last year’s corn farming area was estimated at 1.1 million
hectares, down about 80,000 hectares year-on-year due mainly to drought. Corn
output was about 5.1 million tons in 2015, down 90,000 tons compared to 2014.
GM crops,
especially corn, are still a controversial issue in Vietnam. Supporters said
GM corn helps farmers cut costs on herbicide and insecticide, while
protesters cite issues relating to the environment and social ethics to call
for people not to use GM products.
The ministry
said GM corn is a significant addition to material supply used to process
animal feed as the current supply can only meet 50% of demand. The country
has to import the remainder with 90% from Brazil and Argentina.
Brunei
goods bound for Viet Nam
Brunei firm
SAHAMADA Corporation Sdn Bhd, a local company, yesterday signed a Memorandum
of Agreement with the Halal Vietnam Trading Construction Import Export Company
Limited (IMEX).
Mohd Nur
Khalid Hj Ilias (L), Managing Director of Sahamada Corporation Sdn Bhd and
Domalux, General Director of Halal Vietnam Trading Construction Import Export
Company Limited after signing the Memorandum of Agreement. - Picture:
Courtesy of Abdul Rashyid Hj Osman
With the
signing of the MoA, IMEX will become the distributor for Sahamada's different
chili sauces and crackers under the brand of ‘CINTA' in Viet Nam for three
years.
In an
interview with The Brunei Times, Mohd Nur Khalid Hj Ilias, Managing Director
of Sahamada, said they decided to explore the opportunity of penetrating the
market in Viet Nam due to the potential of a high demand for their products
and a higher chance of them going into other markets from Viet Nam.
"Vietnam
is growing in terms of industry and it's also easier to penetrate the market
around the region. From Viet Nam, the company can bring its products to the
neighbouring countries like Laos and Myanmar," he said. Sahamada will
start exporting its products to Viet Nam sometime in April, starting out with
one container, equivalent to 30,000 bottles of chili sauce and this supply
will increase in the following months depending on market demand.
Mohd Nur
Khalid said that while they plan to export to Japan in the future, they need
to work on upgrading their packaging and producing more innovative products
in order to compete with the market in Japan. "We're now in discussions
with a company in Indonesia, we hope to be able to start exports in the near
future but we're still sorting out the details. It seems like a viable market
because of the population size and the food is quite similar to ours,"
he said.
Abdullah
Abdul Rahman, Director of Syariah at IMEX said that they hope the signing of
the MoA will motivate other SMEs in the country to tap the market in Viet Nam
as there is a huge demand of Halal products.
"Even
non-Muslims prefer Halal products now because of the cleanliness that it
guarantees," he said. Signing the MoA between Sahamada and IMEX was Mohd
Nur Khalid Hj Ilias, Managing Director of Sahamada and Domalux, General
Director of IMEX, witnessed by Siti Norhamidah Hj Ilias, Marketing Director
of Sahamada.
A second MoA
was signed between Sahamada and Golden Corporation Sdn Bhd, under which
Golden Corporation will supply raw materials such as blue shrimps and fish
for the production of different flavours of crackers to be sold in Vietnam
under the brand ‘CINTA'.
The Golden
Corporation was represented by Chuang His San, Managing Director and
witnessed by Karen Yap.
GS
E&C, Kumho E&C seek major construction deal
Two major
South Korean investors are looking to boost their investment portfolios in
Vietnam as they seek an opportunity to build a large-scale water treatment
system in the northeastern province of Quang Ninh.
Nguyen Duc
Tiep, deputy head of the Quang Ninh Investment Promotion Agency’s
Investment Promotion Division, told VIR that South Korea’s GS E&C and
Kumho E&C had been working with the agency on constructing a major water
treatment system, with the total investment capital expected to reach more
than $100 million, in the province.
“GS E&C
met with the agency last week, stressing that they want to start this project
as soon as possible,” Tiep said. “But Kumho E&C is also co-operating with
another South
Korean firm, Kuhwa, in a bid to build this project. Kumho E&C has met
with the local authorities on several occasions.”
The local
authorities have asked GS E&C and Kumho E&C to make official
investment proposals for this project in the form of either build-lease-operate-transfer
or build-operate-transfer, or any kind of public-private partnership model.
The potential
investors can also base their proposals on the project’s construction time,
as the project has been listed by the Quang Ninh People’s Committee as one
which is “in critical need of construction”.
“The two
investors have said that they would submit their investment proposals to
provincial officials soon. Officials will then make a decision,” Tiep said.
“In the case whereby the proposals are equally attractive, the province will
organise a public tender to select an investor.”
This project
includes many sub-projects to be built in the province’s cities of Cam Pha
and Uong Bi, and Van Don district. Specifically, the project will cover two
water treatment plants with a total daily capacity of 63,000 cubic metres in
Cam Pha, a 52,000 cubic metre per day plant in Uong Bi, and two plants in Van
Don with a total daily capacity of 61,000 cubic metres.
According to
the Quang Ninh People’s Committee, upon implementing this project, the
investor will be given special investment incentives, including in terms of
corporate income tax. The province will also support the investor in site
clearance, provision of water and electricity, and employee recruitment, as
well as in the processing of administrative procedures.
In Vietnam,
GS E&C has been participating in many infrastructure projects, such as
Tan Son Nhat-Binh Loi expressway, Ben Thanh-Suoi Tien metro line, and several
urban areas in Ho Chi Minh City. The company is also the
engineering-procurement-construction contractor of Nghi Son oil refinery in
the north-central province of Thanh Hoa, and LG Electronics’ manufacturing
complex in the northern port city of Haiphong.
Meanwhile,
Kumho E&C, a subsidiary of South Korea’s Kumho Asiana Group, has also
been actively operating in Vietnam with several infrastructure projects, such
as Kumho Asiana Plaza in Ho Chi Minh City. It has also constructed a number
of water treatment facilities across the nation.
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.
Experts
bullish on property prospects
Foreign
developers are looking to secure their foothold on the back of the voracious
appetite seen in the local real estate market.
Linson Lim,
president of Keppel Land Vietnam, told VIR that with its improving economy,
Vietnam was poised to be one of the best-performing countries in ASEAN over
the next few years.
The country,
particularly Ho Chi Minh City, continued to attract foreign direct investment
capital. This, coupled with a young and dynamic population, and a growing
middle-class, would continue to drive demand for quality homes and
investment-grade offices.
“Thus we
remain confident in the long-term growth potential of Vietnam’s property
market, which is one of our key growth markets, with a focus on Ho Chi Minh
City, covering upper-middle to high-end residential and integrated mixed-use
developments,” Lim said.
In tandem
with the strategy to further expand its commercial portfolio, Keppel Land has
advanced with the development of Saigon Centre phase 2 to meet the demand for
prime office and retail space in Ho Chi Minh City.
According to
Lim, when fully completed, Saigon Centre phase 2 will comprise 40,000 square
metres of premium Grade A office space, seven levels of 50,000sq.m in retail
space, and about 200 units of luxury serviced apartments. The retail mall is
fully committed and is scheduled to open in the third quarter of 2016.
Construction works for Saigon Centre Phase 2 office tower is also progressing
on track.
In addition,
the sales for Keppel Land’s projects, Estella Heights phases 1 and 2 and
Riviera Point, have been encouraging. The company sold about 930 units in
2015, more than five times the 164 units sold in 2014.
He went on to
state that the positive take-up of its homes reflected homebuyers’ and
investors’ confidence in the Vietnamese economy and in the developments’
strong attributes and value offerings, as well as in Kepple Land’s products.
The company was confident that they would continue to see healthy demand and
were planning to launch the next phase of Riviera Point in District 7 and
South Rach Chiec in District 2 later this year.
Another
developer, Sapphire, has a strong project pipeline and is actively seeking
well-located, medium- to large-scale projects for office, industrial,
residential apartments and houses, as well as mixed-use developments in
Vietnam. The group is willing to acquire land or form joint ventures with
land owners. Together with established investor relationships, Sapphire is
supported by Sakkara Group in Australia, whose global experience spans 86
projects valued at more than $2.5 billion since 1997.
Since the
beginning of the real estate market’s strong recovery a year and a half ago, Sapphire
has launched the first of its prestigious villas at HOLM – a residential
community in Thao Dien area in Ho Chi Minh Cit, and has also commenced
selling units in the second phase of Sanctuary Resort, a luxury beachfront
residential community in Ho Tram in the southern province of Ba Ria-Vung Tau.
Recently
Sapphire has divested its minority shareholding in both Refico Real Estate
Group and in the City Garden Apartments joint venture.
“As our
business grows, we recognise that when we are a meaningful shareholder and
are able to manage the project, the outcome is better,” said Sapphire joint
managing director David Bedingfield.
Meanwhile,
VinaCapital continues to capitalise on the upswing in the property market by
selling off the last of its remaining units in Danang-based projects The
Point and Azura. In addition, they are launching a new 381-villa project in
Saigon South called Nine South Estates.
Cracking
down on cross-ownership of banks
Commercial
banks are actively reducing cross-ownership in other credit institutions by
selling cross owned stakes or restricting the buying of stakes in accordance
with the State Bank of Vietnam's circular No.36 on safe ratios in operations
of credit institutions.
According to
the circular issued in late 2014, commercial banks owning shares in more than
two credit institutions must have carried out disinvestment to abide by the
rules before February 1, 2016. It also regulates that a commercial bank can
only hold shares in no more than two credit institutions except its subsidiaries.
In addition, the circular limits a bank's holdings at 5% of a credit
institution's stakes, except for special cases.
There remain
several commercial banks under pressure of disinvestment to obey the
regulations on ownership limits including Vietcombank, Eximbank,
Southernbank, Saigonbank, and MaritimeBank among others.
Maritime Bank
sold 64.2 million shares in Military Bank to Dragon Capital on February 19,
2016 to earn nearly VND1 trillion (US$45 million), reducing its ownership in
Military Bank to 4.96% instead of 8.97% , congruent with the rules on
ownership limits.
Maritime Bank
invested in Military Bank shares at a rate of 8.86% since 2011. At the same
time, it owned a 10.16% stake in Mekong Bank and an 11% stake in the Textile
Finance Company. The mergers of Mekong Bank with Maritime Bank addressed
cross-ownership issues at the banks.
Meanwhile,
Eximbank owned a 9.6% stake in Sacombank and the rate was reduced to 8.76% in
late 2015. The bank will continue to carry out disinvestment in Sacombank to
lower its ownership to below 5%.
After more
than a year implementing the circular No.36, many banks are now in breach of
the Central Bank's rule and have yet to disinvest as regulated.
Vietcombank
is an example, which is holding stakes in four banks and a financial company.
Vietcombank is holding more than a 9.6% stake in Military Bank; 8.24% stake
in Eximbank; 5.07% stake in Orient Commercial Joint Stock Bank (OCB); 8%
stake in Saigonbank and 10.9% stake in Cement Finance JSC.
The stagnant
disinvestment was attributed to the bleak stock market, declining prices of
banking shares, high non-performing loans and high provisions, resulting in
heavy losses if carrying out divestment.
The ownership
cap of 5% was set to restrict large shareholders, cross-ownership and the
manipulation of bank operations. However, it has been shown that bank
shareholders can break the ownership rules by transferring their stakes to
other organisations or individuals to ensure the ownership rate under 5% for
their benefits. Whether bank stakes are being sold transparently or not has
been a question raised during the disinvestment process.
State Bank
Deputy Governor, Nguyen Phuoc Thanh said that the State Bank would crack down
on cross-ownership in the future, advising weak banks to seek partners to
carry out mergers to erase cross-ownership.
Liquidity
rises in banking system
Liquidity in
the banking system has improved over the past two weeks as residents and
businesses have deposited more money at banks.
Banks said
they have attracted more corporate and individual depositors after the
nine-day Lunar New Year holiday (Tet). This is why their liquidity has been
rated as good after the nation’s longest holiday, which ended on February 14.
As a result,
open market operations (OMO) were seen quiet last week as a few banks
borrowed via this channel. The State Bank of Vietnam (SBV) did not inject
money into the system via OMO but some VND48.28 trillion (US$2.15 billion)
fell due, leaving a net withdrawn amount of VND48.02 trillion, the highest in
months.
The central
bank did not issue treasury bills in the past 11 weeks.
Interest
rates for Vietnam dong loans of different tenors continued dropping sharply
on the interbank market after Tet.
Last week saw
the rate of overnight credit dipping to 1.79% per annum, one-week tenor to
2.27% per annum and two-week tenor to 2.69% per year, falling by 1% each
against the week earlier.
To tap into
good liquidity in the banking system, the State Treasury issued large volumes
of three-year, five-year and 15-year Government bonds. Notably, all G-bonds
offered for sale were snapped up.
Money dealers
said such good liquidity at banks is a supporting factor for the issuance of
G-bonds to raise capital for the State budget in the next few weeks. Lenders
registered to acquire large volumes of bonds last week so bond yields are
expected to inch down 0.1 percentage point for all tenors next week.
On the
secondary bond market, bond yields of all tenors contracted slightly last
week. According to Bao Viet Securities Company, the respective coupons of
one-year, two-year, three-year and five-year bonds declined to 4.864% per
year, 5.143% per year, 5.583% per year and 6.365% per year. Seven-year,
10-year and 15-year bonds carried coupons of 6.858% per annum, 7.108% per
annum and 7.7% per annum respectively.
Jan-Feb
capital mobilization in city up 18% y-o-y
* Total
capital mobilized by banks in HCMC exceeded VND1,579 trillion (US$70.5
billion) in the first two months of this year, up nearly 18% year-on-year,
according to the HCMC government.
A report on
the city’s socio-economic performance in January-February released by the
city government on February 29 showed that deposits in the Vietnam dong at
banks increased and accounted for 85% of the total.
Total
outstanding loans in HCMC had amounted to VND1,247 trillion by end-February,
up 15.44% from a year earlier. Of the amount, medium- and long-term
outstanding loans made up 57.5% and short-term credit the remainder.
The city government
said short-term outstanding loans for the five priority sectors of
agriculture and rural development, export goods production, small- and
medium-sized enterprises (SMEs), supporting industries and high-tech
enterprises had totaled VND144 trillion in the year to February, with SMEs
accounting for 60%.
In the next
three months, the city government will draw up programs to support local
businesses to boost production and deal with difficulties, and improve the
investment environment to attract more domestic and foreign investors.
The city
government will find solutions to do away with red tape to back enterprises,
organizations and investors in the city.
HCM
City seen kicking off breakthrough programs in July
The HCMC
government plans to start implementing seven breakthrough programs in July to
boost growth, heard a meeting of the Office of the HCMC People’s Committee on
February 29.
Vo Van Hoan,
head of the office, told the meeting that departments and agencies in the
city have prepared the action plans for the programs, which are expected to
be approved no later than the end of March.
Earlier,
deputies of the 10th meeting of the city’s Party Congress for the 2015-2020
tenure approved the seven breakthrough programs for human resource
development, administrative reform, growth quality, competitiveness
improvement, traffic congestion and flooding control, and cityscape
rehabilitation.
The programs
will benefit local residents and businesses as they will deal with pressing
issues like flooding, traffic congestion, seawater intrusion, air pollution
and bureaucracy.
Hoan said
HCMC’s leaders will meet domestic enterprises and join a meeting with foreign
firms in March to discuss supporting measures for them. He noted that
businesses could make proposals to remove specific hindrances and the city
will find solutions to cope with firms’ difficulties.
Departments
and agencies in HCMC will have to meet to find ways to improve the
competitiveness of retail enterprises given Vietnam’s signing more free trade
agreements.
Hoan said if
the city’s retail sector is not strong, foreign companies will gain a bigger
market share and this will leave negative impact on domestic enterprises. In
March, the city will find ways to expand the retail system here and in other
provinces, and consider purchasing some projects of retail businesses based
in the city.
Hoan said the
city’s consumer price index (CPI) was up 0.05% in February versus the
previous month, much lower than the country’s average of 0.46%.
February saw
HCMC’s industrial manufacturing index falling by 27% month-on-month as firms
suspended operation for the week-long Lunar New Year holiday (Tet). In the
first two months of this year, the index edged up 5.7% against the same
period of 2015. Enterprises resumed operation and have stable production
plans in the coming months.
The city’s
total retail sales of goods and services in February were estimated at
VND56.2 trillion (US$2.5 billion), down 13.2% against January but up 10.5%
year-on-year.
Pepper
prices decline sharply
Pepper prices
plunged to around VND150,000 per kilogram on February 29 from nearly
VND200,000 in September last year due to more supply on the domestic market.
The director
of a major pepper exporting firm said the price has dropped quickly after
Vietnamese authorities announced that the pepper growing area has reached
almost 100,000 hectares, two times higher than zoned and well above the
acreage previously forecast by the Vietnam Pepper Association (VPA).
He noted when
Vietnam only had 50,000 hectares of pepper, Vietnam’s pepper output accounted
for 30% of global output and up to 50% of total pepper volume traded on
global markets.
With 100,000
hectares of pepper and average yield of 2.6 tons per hectare, experts
calculate that Vietnam can produce at least 200,000 tons. This piles pressure
on prices on global markets.
Another
reason, according to the director, is that Spain has recently warned that
Vietnamese black pepper contains a higher-than-permitted residue of
Carbendazim fungicide. Although this European country has taken measures to
control it, instead of suspending its import, this is a reason for importers
to force Vietnamese exporters to reduce prices.
Do Ha Nam,
chairman of the Vietnam Pepper Association (VPA), told the Daily that local
pepper growers usually store the commodity when prices fall to prevent
further drops. Farmers and enterprises will sell it when it is profitable.
Nam said
pepper growers have earned much in the past years thanks to high prices, so
they are not under pressure to sell the product when the price falls.
Pepper prices
started to increase strongly from the second half of 2010 to VND80,000 per
kilogram in October of 2010 and VND200,000 in September last year. As a
result, pepper export revenue shot up from US$419 million in 2010 to US$1.26
billion last year.
New
rule for goods sales through mobile apps
Organizations
and individuals selling products and services online through mobile apps will
have to register with the Ministry of Industry and Trade from the end of
March, according to the ministry’s Circular No. 59/2015/TT-BCT.
Mobile apps
are those installed on mobile gadgets like smartphones and tablets, and allow
users to access the database of merchants, organizations and individuals to
buy and sell goods, supply or use services. Mobile apps include those
involving e-commerce services.
The circular
on management of e-commerce through mobile apps regulates that enterprises
owning mobile apps with features similar to online sales will have to send
their notifications to the Ministry of Industry and Trade.
At the same
time, enterprises managing e-commerce apps will have to register as
e-commerce platforms. The ministry applies the online form of notice or
mobile apps registration so that businesses can register once for each
version of sales mobile apps or apps offering various e-commerce services.
Some
e-commerce firms said the method for notification and registration of
e-commerce mobile apps is virtually similar to those applicable to e-commerce
websites, e-marketplaces, auction and promotion websites operating through
the portal of e-commerce operations management (online.gov.vn) of the
industry-trade ministry.
However,
companies must clarify which types of information their mobile apps collect
(customer name, address and bank account) and ensure safety information
relating to business secrets of traders, organizations, individuals and
personal information of consumers.
The circular
specifies owners of sales apps must be responsible for notifying consumers
which kind of information these apps will collect when installed on a mobile
device, and at the same time they have to remove information about banned
goods and services from the apps in accordance with the prevailing
regulations.
Registration
of mobile apps set up and operating before the circular takes effect is
required within 60 days from the date the circular comes into force.
Therefore, businesses in the industry will have to complete registration with
the ministry by the end of May.
The list of
registered mobile apps will be published on the website online.gov.vn after
firms get certification from the Ministry of Industry and Trade.
Fewer
Cambodians visit Vietnam
The number of
tourists from Cambodia, one of Vietnam’s top 10 source markets, declined
sharply in the second month of this year as shown by data of the Vietnam
National Administration of Tourism (VNAT).
In February,
Cambodian arrivals numbered fewer 10,000, dropping 71.5% year-on-year.
Overall, the number of visitors from the neighboring country totaled 23,000
in the January-February period, down 64% from the same period last year.
In 2011,
423,440 Cambodians traveled to Vietnam, rising by 66.3% against the previous
year. However, the number has dipped sharply since 2012.
Most
Cambodians come to Vietnam in their own trips through Moc Bai border gate in
Tay Ninh Province. According to some travel firms in HCMC, some of them
travel to Vietnam for medical treatment.
In recent
years, more travel firms have dropped tours for Cambodian visitors due to low
profit, and price undercutting. Lack of Cambodian-speaking tour guides,
tourism promotion programs and tourism products is also to blame.
On the
contrary, more Vietnamese have traveled to Cambodia in recent years. Vietnam
is one of the top markets for Cambodia with more than one million visitors a
year.
Also
according to VNAT, except for the strong fall in Cambodian visitors, February
saw good growth in many other markets. For instance, Chinese arrivals rose by
72.6% year-on-year to 219,000, Korean visitors over 33.9% to more than
142,000, Taiwanese tourists by 29.5% to 52,000, and Japanese travelers by
11.4% to 59,000.
In all,
Vietnam welcomed around 834,000 foreign visitors last month, up 20% from a
year earlier. The number in the first two months of this year was more than
1.63 million, a year-on-year increase of 16%.
Relaxing
tra fish decree faces difficulties
The
Government last year gave the green light for relaxing some requirements in
Decree 36 on tra fish to support enterprises, but experts said revising the
decree is facing difficulties due to the strict U.S. Farm Bill.
Last
September, the Government approved amendments to Decree 36/2014/ND-CP on tra
fish farming, processing and exporting, and assigned the Ministry of
Agriculture and Rural Development to make the revision based on comments of
ministries, agencies and those directly impacted by the decree.
In a document
issued last September, the Government agreed to consider the replacement of
the rule on maximum water content and ice-to-fish ratio with enterprises
providing information about product ingredients and quality.
Earlier, the
agriculture ministry proposed the Government maintain such a rule, which sets
the water content and ice-to-fish ratio at no more than 83% and 10%
respectively, but lengthen the road map for implementation.
In
particular, the respective highest ice-to-fish and water ratios of 20% and
86% will be applied until December 31, 2018 and the 10% and 83% will be
introduced from 2019.
The deadline
for tra fish farming sites to apply and be certified VietGAP standards is
also expected to be delayed from December 31, 2015 until December 31, 2016.
In addition, the agriculture ministry proposed loosening some export
requirements.
That the
Government agreed to revise Decree 36 is regarded as a positive move to help
enterprises overcome difficulties. However, some said the drafting of a new
decree to supplement or replace Decree 36 would not be as simple as thought
because the U.S. Farm Bill contains stricter requirements than Decree 36.
A source who
wanted to remain anonymous told the Daily that if the tra fish decree is
amended, Vietnam would loosen its quality standards while the Farm Bill does
otherwise.
As a result,
Vietnam should stop revising Decree 36 to avoid trouble and promote the
quality of Vietnam’s tra fish, he said.
However,
Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood
Exporters and Producers (VASEP) said there is no relation between the
amendments of the decree and the Farm Bill. Vietnam is still striving to meet
requirements of the Farm Bill.
According to
Hoe, the agriculture ministry is working to increase the quality of tra fish
and request a road map extension to improve the decree.
Transport
ministry’s nod sought for hospital equitization
The Health
Department under the Ministry of Transport has proposed the ministry’s
leaders approve an equitization plan for Nam Thang Long general hospital in
Hanoi’s Bac Tu Liem District.
As of June 30
last year, the district-level hospital had had a book value of VND22.5
billion (over US$1 million) but its value after assessment was put at VND29.5
billion, including VND11.8 billion held by the State.
According to
the equitization plan, the hospital will sell part of its State capital and
issue shares to increase its chartered capital.
After
equitization, the hospital’s chartered capital will rise to VND30 billion. The
State will hold a 30% stake while another 17.3% will be sold to staff at
preferential prices and the remainder to strategic shareholders or auctioned.
In specifics,
780,000 shares will be sold to strategic shareholders, making up 26% of
chartered capital, and 799,000 shares (26.6%) will be offered for sale
through an public auction at the starting price of VND10,000 per share.
As such,
investors can become strategic shareholders of Nam Thang Long hospital and
buy more shares of the hospital at the auction to increase their ownership.
The real value of Nam Thang Long is not high but as the hospital is a
district-level hospital and opening a new hospital at this level requires the
investor to spend big and meet a series of strict conditions, the health department
has set conditions for the equitization of the hospital.
Accordingly,
enterprises wanting to invest in the hospital must operate in the healthcare
sector and run a business having the same scale as Nam Thang Long, which has
120 beds. Besides, the investors should have equity of at least VND50
billion, post a rise of at least 10% in pretax profit, and had not incurred
losses by the end of last year.
In case the
investors do not operate in the healthcare sector, they would be required to
have equity of no less than VND200 billion and gain pretax profit growth of
at least 10%.
So far, four
enterprises have registered to buy shares of the hospital, including Him Lam
Co Ltd.
In October
last year, the transport ministry sold 70% of shares at Vietnam Central
Transportation Hospital at VND26,000 per share at auction. The remaining 30%
was acquired by strategic shareholder T&T Group at half the price at
auction.
India
hits VN with anti-dumping duty
India has
decided to impose anti-dumping duties on plastics processing machines, or
injection moulding machines, imported from Viet Nam, Taiwan, Malaysia and the
Philippines.
The Viet Nam
Competition Authority said on February 29 that the decision was made by
India's Directorate General of Anti-Dumping and Allied Duties (DGAD) after
finding that they were being sold low cost machines. Viet Nam will be levied
duties at 23.15 per cent, while Malaysia, the Philippines and Taiwan will be
taxed at 44.74 per cent, 30.85 per cent and 27.98 per cent, respectively.
DGAD said they
did not receive detailed answers for their questions from exporters in Viet
Nam, the Philippines and Malaysia. Therefore, they used available data to
identify violation levels for the businesses.
There were
two Taiwan-based manufacturers who enjoyed a favourable tariff from 0 per
cent to 6.06 per cent for submitting complete financial information to prove
their cases.
DGAD's
investigation was conducted from April 2013 to March 2014 after it received
complaints from the Plastics Machinery Manufacturers Association of India,
saying that the mentioned countries and territories had exported low cost
plastic processing machines to India, causing considerable damage to the
Indian industrial sector.
The damage to
India's domestic machinery industry due to dumped imports from Asian
manufacturers was counted in the period between 2010 and 2014.
ADB,
SHB, HDBank sign TFP deal
Asian
Development Bank (ADB), HCM City Development Bank (HDBank), and Sai Gon-Ha
Noi Commercial Joint Stock Bank (SHB), signed mutually beneficial agreements
yesterday.
These
agreements enable the trade finance programme (TFP) to provide guarantees of
up to US$100 million per year.
The
beneficiaries are exporting and importing companies, including small and
medium-sized enterprises in the country, Steven Beck, ADB's head of trade
finance, said at the signing ceremony held in Ha Noi.
"The
agreements will help increase economic growth and create jobs," Beck
said.
HDBank
Chairwoman Le Thi Bang Tam said joining the ADB's TFP programme was part of
her bank's determined effort to improve its financial management capacity and
service quality.
"This is
a golden opportunity for HDBank to expand its business into the world
market," Tam said.
TFP's loans
and guarantees will be complemented by workshops and seminars to increase
knowledge and expertise on trade finance, resulting in more support for
export and import companies in Viet Nam.
Previously,
ADB had signed onto the programme with nine other Vietnamese banks, including
Military Joint Stock Bank, Viet Nam Export Import Commercial Joint Bank and
Sai Gon Thuong Tin Commercial Joint Stock Bank.
ADB's TFP has
been operating in Viet Nam since 2009. The programme has conducted more than
4,300 transactions and supported $6.5 billion in trade in the country.
Across
Southeast Asia, the TFP has supported more than 6,000 small and medium-sized
enterprises since 2009, through some 10,000 transactions valued at over $20
billion in sectors ranging from commodities and capital goods to medical
supplies and consumer goods.
HDBank has
more than 20 years of experience in the banking sector and has total assets
worth more than VND100 trillion ($4.47 billion), with 220 offices nationwide.
SHB had total
assets worth VND205 trillion as of December 31, with 7,000 employees in Viet
Nam, Laos and Cambodia.
VN-Korea
FTA support centre opens
The Korea
Trade-Investment Promotion Agency (KOTRA) inaugurated the Viet Nam-Korea Free
Trade Agreement (VKFTA) Support Centre in Ha Noi yesterday.
The centre
aims at disseminating areas related to the FTA as well as supporting
businesses of the two countries to make use of the FTA, which came into
effect on December 20, 2015, to boost commercial transaction and investment.
The VKFTA
covers many areas including certificate of origin, trade protection, hygiene
and food safety, and plant quarantine, apart from technical barriers to trade
and service, investment, intellectual property, competition and other legal
issues.
The centre
will consult and provide accurate and detailed information on FTA for
businesses and help them solve difficulties related to non-tariff barrier and
granting of certificate of origin.
Speaking at
the opening ceremony, Deputy Minister of Industry and Trade Do Thang Hai said
VKFTA had opened opportunities to embrace economic co-operation and
investment in the two countries.
In the last
10 years, trade turnover between Viet Nam and South Korea reached an average
growth rate of 23 per cent per year. In 2015, South Korea continued to be one
of the three biggest trade partners of Viet Nam with a bilateral trade
turnover of US$34.3 billion, more than 29 per cent higher than that of 2014.
The South Korea
mostly shipped to Viet Nam computers, electronic products and accessories,
equipment and machines, and various kinds of fabric. Meanwhile, Viet Nam's
main export products to South Korea are garment and textile products, crude
oil, and seafood, and wood and wooden furniture.
Kim Jae Hong,
KOTRA president said the centre would help companies from the two nations
apply the VKFTA with flexibility and bolster their exports to China, the
United States and the European Union.
Vice Chairman
of the Viet Nam Chamber of Commerce and Industry (VCCI) Hoang Quang Phong
said South Korea had advantage in technology, investment capital, production
process and modern management experience.
He said the
centre would be a reliable and useful address for businesses of the two
countries during the co-operation and business development process.
The centre
can co-ordinate with the VCCI's WTO and Integration Centre to build
programmes and solutions to give best support to businesses of the two
countries, Hai said.
At the
ceremony, KOTRA and the Viet Nam Directorate for Standards, Metrology and
Quality inked a Memorandum of Understanding to simplify administration
procedures that Korean companies have to go through when exporting to Viet
Nam. The Korean side also agreed to transfer technology in safety evaluation
to Viet Nam.
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR
|
Thứ Ba, 8 tháng 3, 2016
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