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BUSINESS IN BRIEF 8/4
Container terminal construction starts in Nghe An
Construction on a container terminal in Cua Lo Port's wharf 5
and 6 started on Friday in the central province of Nghe An's Cua Lo Town.
It will be the first international port in
The project will serve containers handling vessels up to
30,000 DWT. The BOT (Build-Operate-Transfer) project has an investment capital
of VND1.18 trillion (US$54.6 million).
It will allow the port to bring in international vessels, and
could help attract investment in the province and develop the region's
economy as a whole. The port will help enterprises reduce transportation
costs, because they won't have to go to other provinces to load goods like
before.
The port will include direct maritime transport routes to Hong
Kong and
Speaking at the groundbreaking ceremony, Nguyen Xuan Duong,
chairman of the provincial people's committee, said the project would help
the province further its involvement in the transportation market and shorten
cargo clearance times.
The Cua Lo Port upgrade will enhance its transportation
capacity for imported and exported goods.
Agriculture restructuring aims for brand popularity abroad
Senior officials including Deputy Prime Minister Hoang Trung
Hai last Friday called for a restructuring of the agricultural sector to
redress supply-demand distortions and create branded products that are
popular within and outside the country.
Meeting with officials of the Ministry of Industry and Trade
(MOIT) and the Ministry of Agriculture and Rural Development (MARD), Hai
asked them and other concerned agencies to co-operate with each other in
expanding and developing markets for four major agricultural produce: rice,
vegetables, livestock and seafood.
A report on the Government website also quoted the Deputy as
saying the sector must invest more in science and technology to improve the
quality of produce and products.
MARD's deputy minister Vu Van Tam said focusing on the four
major product groups was part of a master plan to restructure the country's
agriculture sector, which included more than 20 projects that would build and
improve policies and mechanisms to boost the production of major agricultural
crops and livestock.
"The agriculture sector is facing a dilemma as
high-quality agricultural products are not reaching consumers who are unable
to trust their origins.
"Supply and demand are being distorted by an army of
middlemen. It is time the country restructured both its agriculture
production model and the market."
Tam urged the MoIT to continue to look for markets for
Vietnamese agricultural products, saying it was crucial to the sector's
restructuring process.
Trade Ministry officials said that a project to review
agricultural production and markets had been undertaken, and policies
recommendations would be made based on the project's findings.
Deputy PM Hai said more and more businesses were investing in
the country's agriculture sector, and this was an opportunity for it to
restructure and modernise itself.
He said the sector's objective should be to establish branded
products that are known for their high-quality in both domestic and
international markets.
Delta seafood firm bucks losing trend
Despite difficulties faced by the Mekong Delta's fish
processing industry, the Truong Giang Seafood Joint Stock Co has set itself a
sales target of VND1 trillion (US$46.5 million) for this year.
Ong Hoang Van, deputy director general of Truong Giang, said
the company had continued to grow over the last few years despite the
fisheries sector facing difficulties and a number of seafood companies
suffering losses.
Fake cosmetics products flood market
Authorities will push for more checks on the cosmetics
industry to be listed in the revised Investment Law, Ha Noi Moi (New Ha Noi)
newspaper quoted a representative from the Drug Administration of Viet Nam.
Up to 50 per cent of cosmetics in the
The unit said that low-quality and fake cosmetics posed a
threat to customer's health.
Many smuggling and illegal cosmetics factories were detected
recently.
The most recent was detected by the Ha Noi's Market Watch's
Unit 14 last Saturday.
The watch unit inspected five stores of the Xuan Thuy Cosmetics
Ltd, confiscating about 100,000 cosmetics and related products. Market Watch
sent samples of confiscated goods to police for testing.
Last year, 164,000 cosmetics products in Ha Noi were found to
be of uncertain origin, according to Market Watch.
The department attributed the large number of low-quality and
fake cosmetics to the smuggling situation in the country's border area and
the high profit from cosmetics trading.
It also blamed the low administrative fine and overlapping
management.
Ha Noi's Market Watch has advised women to be careful in
selecting products and avoid doubtful outlets.
Ministry of Health Circular 06/2011/TT-BYT regulates that
individuals and enterprises trading cosmetics must have a business
registration licence and must ensure that the goods meet regulations set by
the ASEAN Cosmetics Directive.
Firms predict export orders will increase
Several export enterprises are optimistic about receiving
orders from overseas markets in the second quarter of the year, a survey
conducted by the General Statistics Office has revealed.
As much as 42.9 per cent of the 3,245 respondents of the
survey predicted that export orders would increase in the April-June period,
while 43.1 per cent believed that orders would remain stable, and only 14 per
cent foresaw orders decreasing.
Firms that were of the opinion that export orders would rise specialise
in a wide range of sectors, including tobacco production, pharmaceuticals,
motor vehicles, leather and leather-based products, electronics and
computers, and optical products.
Further, about 58.4 per cent of the enterprises that
participated in the survey believed that production costs in the second
quarter would remain stable; 28.6 per cent predict production costs would
rise; and 13 per cent said they hoped for a decrease in production costs.
According to the survey, 65 per cent of businesses expected
inventories to increase; 47.6 per cent expected inventories to remain stable;
and 35 per cent predicted a slump in inventories in the same period.
Export turnover for the first quarter was nearly $35.7
billion, a year-on-year increase of 6.9 per cent, with telephones and components,
and garments and textiles being the key exported commodities.
The two groups of products generated $6.67 billion and $4.75
billion from exports, respectively.
In addition, total import turnover in the first quarter was
estimated at US$37.5 billion, a year-on-year rise of 16.3 per cent.
Mechanics sector must improve
The domestic mechanical engineering sector needs to change
dramatically to become one of the "spearhead" industries designated
by the Government, insiders have said.
The government has invested time and money in the mechanical
engineering sector, as it plays a key role in
As a result, it has gained significant achievements. In 2013,
the production value of the mechanics sector reached US$11.8 billion, up
seven times compared to that in 2000. Export value rose to nearly 35 per cent
of the sector's total value.
However, the industry's growth has not been stable because
most of the production lines and technology have been imported.
Do Phuoc Tong, vice chairman of the HCM City Mechanics
Association, said the domestic manufacturing industry was the top importer in
the country of production lines and raw materials.
However, it had not been able to sell many of its products.
"Product quality, pricing and delivery are decisive
factors that can help sales of mechanical products. However, most
domestically manufactured mechanical products have not been competitive in
these aspects," Tong was quoted as saying in Sai Gon Giai Phong
(Liberated Saigon) newspaper.
Domestic enterprises that manufacture mechanical products from
iron alloy are weak, mainly due to workers' poor skills. As such, the quality
of foundry products is uneven, he said.
Also, the prices of domestically made mechanical products are
not attractive since 80 per cent of the production lines and input materials,
particularly carbon steel, have been imported from abroad.
The manufacturers also cannot deliver their products on
schedule since many of the products are returned due to poor quality.
Tong said that
The Government's policy to support the industry has been
ineffective as it has not fit enterprises' demands, Tong said.
Foreign-invested companies under current regulations are
allowed a zero import tax rate when they import production lines and
equipment. However, domestic manufacturers have to pay taxes for imported production
materials.
Dr. Huynh Thanh Dien of the
As a result, enterprises involved in other industrial sectors
had to import sophisticated machine tools, limiting their competitiveness,
Dien said.
The main exports made by the domestic mechanical engineering
sector are automobile parts, machine tools and motorized machinery for
agricultural and forestry production, and electrical equipment.
Most of the machinery and tools are exported to ASEAN countries,
and
Tong suggested that the Government adjust tax rates on
equipment and material imports of the domestic mechanics sector, particularly
carbon steel used to make machine tools.
Also, in the long term, it is necessary to outline a
development strategy for production of carbon and alloy steel to serve
machine manufacturing in the country.
He also said there was a need to establish financial leasing
companies able to offer loans at preferential interest rates, or to lease
machinery and equipment to help mechanical engineering companies improve
their production technology and skills of workers.
Over 5,100 apartments in the mid- and high-end bracket from 17
projects in
Approximately 22,000 apartments are expected to be sold in
2015, of which sales for the east and northern ends of the city will account
for 42 percent and 24 percent respectively.
According to CBRE Vietnam, high-end apartment options are made
available from big projects such as the Vinhomes Central Park (VinGroup),
Masteri Thao Dien (Thao Dien investment Joint Stock Company) and
The Novaland Group is actively participating by offering 756
apartments in River Gate, The Tresor (phase II), and the Sun Avenue project
during the first three months of 2015.
Average selling price for high-end options increased slightly
in the city centre and suburbs to US$1,717 per square meter, up 1.6% from the
last quarter of 2014.
Meanwhile, the retail market saw an increased average leasing
price in the first quarter of this year due a high occupancy rate in shopping
centres such as Vincom Center B,
In the first months of 2015, domestic and foreign retailers
including Vinmart, VinPro, VinDS actively expanded their business as Japanese
Aeon Group and two Thai giant retailers BJC and Central Group enter the
Vietnamese market.
Besides,
The office market saw the unoccupied rate in grade A and B
offices gradually decrease from their respective 1.9% and 3.8%.
According to CBRE, transferring and expanding offices are a
common tendency due to the country’s improved economy.
Managing Director of CBRE Vietnam Marc Townsend said after a
number of quiet years, the country’s real estate market has seen a strong
return of big projects with luxury options and more sophisticated plans.
Cai Mep int’l port receives largest ship ever
One of the world’s largest container ships pulled into the Cai
Mep international port on April 3 carrying 1,350 containers for Nippon Yusen
Kabushiki Kaisha (NYK) Company based out of
The vessel named the RDO Harmony sailing under the flag of
The Port Authority said it was “delighted” with the arrival of
the RDO Harmony. The success of the run proved the port is capable of
handling the biggest the world has to offer.
The Cai Mep port was established on January 26, 2007 as a
joint venture between the Vietnam-based
It is located strategically in Ba Ria-Vung Tau province.
This newly modernised and efficient container terminal facility will offer
shipping lines and their clients faster and direct access to and from the
main shipping markets in Asia, Europe and the
Hoa Sen Group inaugurates Binh Dinh steel pipe plant
Hoa Sen Group started operation of the Hoa Sen Binh Dinh steel
pipe plant at the
Covering an area of nearly 40,000 square metres, the steel
pipe plant has the total chartered capital of VND433 billion ($20 million).
Out of the two planned phases of the project only the first one is
functional, the second is expected to be constructed in July.
Once completed at the end of 2015, the plant will have the
total capacity to produce 100,000 tonnes of steel pipes, creating the
estimated revenue of VND1 trillion ($46.3 million) a year.
The project is a part of Hoa Sen Group’s plan to enhance
production capacity to meet the increasing demand for steel pipes in the
central region.
The group is currently building plants in Hai Duong and Nghe
An provinces.
VTV says to privately fund television tower
Vietnam Television (VTV) said it will pay for a landmark
636-metre television tower, planned to be the tallest in the world, through
private capital sources, rather than seek state budget assistance for the
project, a VTV official said.
Deputy General Director Nguyen Thanh Luong said a joint stock
company will be set up by VTV, State Corporation Investment Company (SCIC)
and BRG Group to tap capital from individuals and organisations inside and
outside the country to carry out the project.
Earlier, speaking to DTiNews, Minister and Head of Government
Office Nguyen Van Nen said VTV and its partners have considered foreign
loans, adding that the governmetn will not interfere in mobilising capital.
Luong said
He said the tower will be a symbol of
“The tower will become an attractive tourist destination,
contributing to economic development. It will also play a role in receiving
and transmitting TV waves and will be of significance in terms of security
and defense”, Luong said.
Total investment of the project is expected to top USD600m,
with a six-year construction timeline, and capital recovery expected to be 15
years.
“This is a large-scale project, impacting the national
socio-economic situation," Luong said. "VTV will closely conform to
legal regulations, seeking opinions from the public and experts."
Fake goods pose troubles for authorities
Sales of fake products are rampant in the market, and
authorities say they are facing various difficulties trying to curb the
problem, blaming consumer demand.
The Department of Industry and Trade in
In order to deal with shops that sell fake products, officials
had first to take samples and acquire verification that the items are fake,
but by the time the paperwork has been done, the fake items in question have
been sent elsewhere.
Officials need a request from a company citing its products
were being imitated, but many companies do not want to disclose they are
being copied for fear of damaging their reputation.
Penalties, mostly fines, vary and the maximum fine of VND250m
is not considered much of a deterrent considering the huge profits made by
traders of cheap copies.
The authorities maintain that consumer demand is the biggest
obstacle to cracking down on fake goods -- many people will buy them even
knowing they are copies and are willing to engage in cash transactions
without the need for invoices or documentation.
The Department of Industry and Trade in Hau Giang suggested
enterprises closely monitor the consumption of their goods and join hands
with other firms to prevent fake goods. They also said consumers should
protect themselves by saying "no" with fake goods.
Smartphone center launched in town
Local mobile retailer Vien Thong A has launched a smartphone
center on
The center stocks the latest smart phones of popular brands
such as Nokia, Samsung, LG and Sony, as well as offers digital content and
mobile applications.
The presence of the center is expected to boost phone sales
and expand digital content applications at the store chain of Vien Thong A,
said Bui Van Hoa, deputy director of the company.
“The center has investment capital of over VND4 billion. Vien
Thong A will develop three more smartphone centers in big cities namely
Experts doubt
Experts have cast doubt on the recent massive capital increase
of the
The project developer, Hung Nghiep Formosa Ha Tinh Steel Co.,
has decided to revise up the project’s capital from the original US$15
billion of which US$7 billion would be used in the first phase and US$8
billion in the second phase, according to a report by the Vietnam Steel
Association (VSA).
Speaking to the Daily, an expert from
However, Do Duy Thai, general director of Viet Steel Co., said
that even when modern technology was used, the investment capital for the
first phase of the
He said Viet Steel had spent only US$300 million building a
port with annual throughput of three million tons a year, a steel ingot plant
and a steel rolling mill with an annual capacity of one million tons each in
Ba Ria-Vung Tau Province, with site clearance costs already included.
“A furnace steel plant with output of 6.5 million tons per
year only requires a maximum of US$800 million,” said
While local steel firms have to pay taxes, foreign investors
usually pledge huge capital amounts for their steel projects, which allow
them to prolong the depreciation period and report losses to avoid corporate
income tax when the projects are operational.
“There is currently an unfair competition in the steel
industry between domestic and foreign-invested steel companies,” said
He noted Ha Tinh might be unable to assess the
Pham Chi Cuong, chairman of VSA, told the Daily that the
Ministry of Planning and Investment once said contributions by foreign direct
investment (FDI) projects to the national economy had been haphazard. Many
foreign investors have constantly reported losses but continuously expanded
their operations, he noted.
“Ha Tinh should reconsider the capital spike to US$22 billion
of the
Sony inaugurates luxury products outlet
Sony Electronics Vietnam has opened a center in HCMC’s
commercial district to display and sell its high-class products such as
Bravia smart TVs, Xperia S smartphones, Vaio laptops and tablet computers.
High-income people, especially international tourists, are
target customers of the
The electronics giant will launch a similar center in
Bravia smart TV is Sony’s best-selling product, followed by
Vaio laptops, as well as photo and video cameras.
Buyers can join a training program on Sony products. Each
month, Sony offers 100 purchasers free training on its products. In order to
try this service, customers should visit Sony’s website to get further
information.
Customers can also take part in a 30-minute individual
consultancy package to experience the latest tech products from this
electronics manufacturer.
According to the General Statistics Office (GSO), the national
industrial production index rose only 4.3% compared to the same period last
year, which was far lower than the 10% in 2011 and 7.9% in 2010.
Notably, some provinces and cities directly under the central
Government with a large industrial scale posted low growth rates, including
The office pointed out that the nation’s coal production was
hard hit by slow consumption on both local and overseas markets. Coal volume
dropped 3.3% against the previous year, coal exports fell 4.2% while clean
coal inventory increased by 9% to six million tons in early April.
Meanwhile, the national inventory index soared up, especially
in the processing industry. The sector suffered poor results due to economic
difficulties, low demands, narrow export markets and high lending rates.
As of April 1, the sector saw inventory index jumping 32.1%
against the previous year whilst falling 0.5% month-on-month.
Some sectors saw a relatively high inventory index such as
production from ready-made metal up 101.5%, processing and preservation of
fruit and vegetables up 94.8%, production of fertilizer and nitrogen
compounds up 63.4%, production of iron and steel up 44.2%, production of
tobacco products up 90.8%, production of cement, lime and plaster up 44.2%
and production of motor vehicles up 31.6%.
To ease the hardship, GSO suggested expanding consumption
markets inside and outside the country to reduce inventory and stimulate
production. It is necessary to open the retail network for domestic goods in
localities.
The agency also proposed an interest rate subsidy policy along
with lending rate cuts to make businesses, especially small and medium-sized
firms, accessible to capital sources.
Investment attraction key for Mekong Delta
More policies are needed to draw foreign investors to the
Mekong Delta where investment activities have still been insignificant
compared to its economic contribution and potential, heard the conference
‘The Mekong Delta’s investment and development promotion’ held in Can Tho
City last Friday.
The Mekong Delta is known as the country’s biggest farming and
aquatic products producer and exporter contributing 18-19% to the national
gross domestic product (GDP) annually.
Many experts in the conference shared the view that it was the
right time to promote investment and related policies which will allow the
delta to explore its potential and strengths to the max.
Tran Bac Ha, chairman of Bank for Investment and Development
of Vietnam (BIDV), said the delta’s potential has yet to be fully tapped to
serve the country’s economic development. “For instance, the planned rice,
seafood and fruit production schemes have been deployed for years but their
economic value is still very low. Besides, foreign investors find the area
unattractive due to its poor traffic infrastructure system,” Ha stated.
In fact, the nation’s key rice growing area has welcomed
inconsiderable foreign direct investment capital (FDI). From 1988 to 2011, it
only lured 565 foreign-invested projects with total investment of US$9.5
billion or less than 5% of total FDI into the nation.
The area last year only enticed 96 projects worth US$402
million from foreign investors, lower than a quarter of the figure in 2010
and equivalent to a mere 3.5% of the national FDI in the same year.
In the agricultural industry, Mekong Delta provinces enjoy
dozens of billions of U.S. dollars a year, with rice export revenue amounting
to more than US$3 billion with over six million tons per annum being shipped
out. For the aquatic product exploitation and fishing sector, the region
yearly fetches US$8-9 billion from exporting seafood products while its
output volume and cultivation areas account for up to 52% and 70% of the
country respectively.
“In the future, we need to set up a specific mechanism and
policies to attract investment into works and projects in the Mekong Delta to
deal with local social security issues. Also, we need to focus on addressing
human resource difficulties to ensure necessary resources to construct and
develop the region better,” Ha pointed out.
Vo Hung Dung, director of the Vietnam Chamber of Commerce and
Industry (VCCI) in Can Tho City, reported the Mekong Delta contributed over
25% of GDP of the nation in the 90s. However, the figure dropped to 17.5%
during 1995-1996 and now only makes up 18-19% of the national GDP, Dung
added.
Thai auto sector seeks cooperation with Vietnam
Speaking at a seminar on
The market is expected to grow further given the low ratio of
car owners currently, Vichai said.
Besides the potential, the Government is determined to develop
the auto sector. The auto industry is projected to manufacture 220,000 cars
in 2020 and 1.5 million units in 2035.
However, Vichai called for
Thai producers have many advanced technologies that will
benefit Vietnamese enterprises. Therefore, both sides should discuss and
share information to develop the auto and auto parts sectors.
In fact, many experts and auto firms are concerned that
Vietnam would become a big auto consumer in the region as it has started
import tariff reductions in accordance with the ASEAN Trade in Goods
Agreement (ATIGA).
Vietnamese auto makers have seen low localization ratios of
10-30% depending on products. When car import tax turns zero in 2018, part
imports and car assembly in
More enterprises optimistic about Q2
More local enterprises are looking to perform better in the
second quarter of this year as shown in a recent survey conducted by the
General Statistics Office (GSO).
The survey found nearly 88% of 3,245 respondents in the
manufacturing and processing sectors nationwide believe that their operations
in April-June could fare as well as in Q1 or even better given stable
production and more orders.
The survey revealed a jump in the number of enterprises with
optimistic views compared to 57% in the first quarter.
The findings of the survey are similar to the report released
on Wednesday by HSBC. The report painted a better picture of
The enterprises upbeat about Q2, according to the GSO, are
those in the sectors of pharmaceuticals (82.1%), electrical equipment
(69.6%), uniforms (65.4%), electronics, computer and optical device
(65.3%), tobacco (63.6%), beverages (62.8%), and food processing (60.7%).
The survey showed around 62% of State-owned enterprises (SOEs)
expect better production and trading results this quarter while the
proportion of foreign direct investment (FDI) companies is 59.6% and domestic
private firms 52.7%.
According to the survey, only 12.3% hold a gloomy view on
their business operations in the period.
As for goods orders, 88.3% of respondents hope their orders
will stay stable or rise in the second quarter while only 11.7% are
pessimistic about this quarter. The respective percentages in the first
quarter were 68.1% and 32%.
Up to 60.8% of SOEs have higher expectations for good orders
in April-June while the proportion of FDI firms is 57.3%. These enterprises
are active in pharmaceutical (80%), electrical equipment (66.7%), uniform (61.7%),
chemical (60.7%) and beverage (58.7%).
Despite a lower-than-expected rise of 6.9% in the country’s
export revenue in Q1, more exporters (86%) are optimistic about a pickup in
orders while those who project declining sales this quarter account for only
14%. The percentages in the first quarter were 75.3% and 24.6%.
Enterprises expecting better export performance operate in the
sectors of tobacco (66.7%), pharmaceutical and chemical (64.7%), vehicle
(56.5%) and leather and (55.7%).
According to the survey, 65% of respondents said their
inventories will go up this quarter, well below the 70.1% in the first
quarter.
HSBC: OMO rate to drop to 4.5%
HSBC Bank said there is room for another 50 basis points cut
of the open market operations (OMO) rate to send it down to 4.5% as the real
interest rate is at a record high at the moment.
Inflation is muted at 0.9% year-on-year in March even after
the Government raised the average electricity tariffs by 7.5%. Even as price
pressures are expected to pick up gradually in the second half this year,
HSBC expected the consumer price index (CPI) to be well within the central
bank’s target of less than 5%.
The OMO rate is currently 5% and there is scope for the
central bank to lower rates marginally to support growth, the bank said.
In a macro economic report released on April 2, HSBC said the
central bank is mindful of economic developments. The country is export
dependent with shipments making up as much as 81% of gross domestic product
(GDP) in 2014.
Tourism is important as well. The appreciation of the real
effect exchange rate (REER) is taking a bite out of profits. On the other
hand, the central bank has to consider its policy to reduce incentives to
hold dollars and gold in the economy. Foreign-currency deposits have already
declined from 21% in 2009 to 14% of GDP.
In a recent media conference, deputy central bank governor
Nguyen Thi Hong said the central bank assessed possible impacts on imports
and exports by adjusting the dong-U.S. dollar exchange rate and believed that
it will be more beneficial to keep the dong rate unchanged at this stage. The
central bank said that it would not devaluate the dong more than 2% this
year.
“We believe that the deterioration of domestic firms’ exports
and the tourism sector will pose downside risks to the economy. Moreover,
domestic demand was firm in the first quarter this year but the outlook
remains fragile,” she said.
Should lending continue to grow rapidly, import demand will
rise, causing the nation’s trade deficit to snowball. While reforms in the
banking sector are slowly being implemented, rapid loan growth, especially in
poor-performing sectors like real estate, is cause for concern. Credit as a
share of GDP rose to 100% in 2014, up from 95% in 2012.
Another sector that is coming under pressure is tourism.
Increased competition is taking a bite into
Tourist arrivals dropped as much as 13.7% year-on-year in the
first quarter. Part of the reason is the strength of the dong, which has
appreciated on a REER basis.
Japanese, Europeans, and Australians all experienced weaker
purchasing power in greenback terms, discouraging them from traveling.
Enterprises bemoan difficult access to bank loans
Local enterprises find it difficult to access bank loans at
present even though the central bank and commercial lenders said lending
rates have been reduced.
Nguyen Tuan Anh, director Ut Xi Aquatic Products Processing
Co. in Soc Trang Province, said the most time-consuming task of a manager
like him is not seeking consumption markets, but instead looking for capital
for business operation. He said the current lending rates push up input costs
of Vietnamese products against those from Thailand and India.
Given the recent defaults on debt payments by Binh An Seafood
Co. (Bianfishco) in the Mekong Delta, plus the current mass mortality of
shrimp, seafood farmers now demand to be paid before selling their products.
On the other hand, seafood traders have to wait two months
after export to receive payments from their foreign buyers. Therefore,
enterprises are obliged to borrow loans to maintain their production and
business activities.
Ngo Quang Truong, director of Bien Dong Seafood Co., said due
to the relationship with the debt-laden Binh An Seafood Co. (Bianfishco),
banks decided to scale down credits to his company to ensure capital
recovery. Meanwhile, the seafood firm is in dire need of capital to invest in
its material zone.
Without bank loans, enterprises are forced to sell their
products at all costs to quickly regain capital, serving production. The race
to pull down prices will adversely affect the tra fish industry, said Truong.
Reality shows that prices of tra fish exported to Europe are
dropping. “The situation would be different if banks sympathized with
enterprises,” said Truong.
Nguyen Van Chau, director of Thuy Dat Co., a textile and rice
trading business, said his company had accessed dong loans with annual
interest rate of 18-19% and loans in U.S. dollar at 7.5% per annum. Credit
capital now accounts for 30% of the company’s operational capital.
Even though many banks are offering lending packages with
preferential interest rates to assist enterprises in the fields of
agriculture and export production, Thuy Dat still finds it uneasy to approach
loans of low interest rates. The company is operating five factories and
planning to develop a cotton material zone in Laos.
Truong Thi Thuy Lien, director of Lien Phat Co. Ltd., said her
company does not take out bank loans, as the shoemaker does not dare to
expand operation given the current tough times and high lending rates. The
footwear firm still has stable volume of orders shipped to the European
Union, but has made no profit since last year due to high input costs and low
export prices.
New Zealand firms want to tap local market
A trade mission representing 20 New Zealand enterprises has
just wrapped up their business trip in Vietnam thanks to the arrangement of
Australia and New Zealand Banking Group Limited (ANZ).
“We took about 20 firms to Vietnam in order to explore
potential business chances and seek partners here,” David Green, managing
director of Institutional New Zealand, told a press briefing in HCMC last
Friday.
“The Governments of New Zealand and the Australian continent
have also sent many business representatives to Vietnam,” he revealed, adding
what his fellow-countrymen were looking for was local small and medium-sized
enterprises.
Especially, New Zealand businessmen have keen interest in
those local companies specializing in forestry, agricultural, dairy products
and food which are known as the their strengths. Some businesses want to
export food, seafood and dairy products to Vietnam while others need to
import raw materials of farm produce, special food and interior sectors from
the nation, according to David.
Two-way trade revenue between the two countries is worth
around US$6 billion.
SBV eases foreign currency borrowing
Exporters are eligible to take out short-term loans in foreign
currencies to serve their production, but they must sell the money to credit
institutions, according to new regulations by the State Bank of Vietnam
(SBV).
Previously, SBV has issued a circular on limitation of foreign
currency loans in March. Under this circular, branches of international banks
in Vietnam can offer borrowers loans in foreign currencies in all terms for
international settlements in case they are able to repay bank loans.
The circular, which came into effect on Wednesday, stops
export-oriented enterprises from obtaining foreign currency loans to convert
to Vietnam dong. After the circular, exporters have complained about more
difficulties to access foreign currency loans.
The new decision, which has short-term effect until the end of
this year only, is seen a temporary measure to ease difficulties for
exporters.
The newly-issued decision stipulates that credit institutions
are allowed to arrange short-term loans in foreign currencies for exporters
in a bid to satisfy domestic capital demand. Creditors must then sell the
amount of money to credit institutions.
The U.S. dollar last week recorded a gain of VND60-70 in the
formal exchange rate but the forex rate fell on Wednesday. Vietcombank bought
the greenback at VND20,900 a dollar, down VND30 against the previous trading
day.
A rise in the U.S. dollar exchange rate over the past week was
attributed to rising demand for foreign currency loans before the regulations
on dollar restrictions became effective from May 2.
NPV awarded int’l certificate for steel products
Nippon Steel Pipe Vietnam (NPV) announced on Wednesday to have
received Japanese Industrial Standard (JIS) and International Certificate
ISO9001 from Japan Quality Assurance Organization (JQA) after eight months of
commercial operation in Vietnam.
The certification is obtained for JIS A5525-Steel pipe piles,
JIS A5530-Steel pipe sheet piles, JIS G3444-Carbon steel tubes for general
structure, and JIS G3457 Arc welded carbon steel pipes.
Kenichi Kanezaki, NPV’s general director, said the
international recognition assured NPV’s ability and organized system for
production and quality control, helping it provide products and services of
ever-greater reliability to major-scale projects in Vietnam and other
countries.
“Our strategy is to become the supplier of steel pipe piles
and other steel pipes with high quality for global market,” he said, adding
the company would also be firmly intent on seeking Environment ISO14001 and
other certifications.
Located in Phu My 2 Industrial Zone in Ba Ria - Vung Tau
Province, NPV manufactures steel pipe piles and steel pipes sheet piles for infrastructure
such as bridge foundation, port, harbor, pier, building and power plant
foundation.
The factory is the first production base of Nippon Steel
Corporation for construction materials outside of Japan with an investment
capital of US$15 million and production capacity of 5,000 ton per month.
Banks benefit from exorbitant lending rates
Many banks have announced their first quarter earnings that
were higher than in the same period last year even though the economy is
still in a bad way.
Vietnam Bank for Industry and Trade (VietinBank) reported
VND1.39 trillion in after-tax profit in the first quarter, up 60.4% from the
year-ago period. The rise partly resulted from a strong drop in risk
provisions from VND1.98 trillion in last year’s first quarter to VND845.4
billion in quarter one this year.
Military Bank is also on the list of banking institutions
earning big with the first quarter’s net profit amounting to VND1.6 trillion
and pre-tax profit reaching VND885 billion, which rose over 36% and around
25% year-on-year respectively. But a rise of VND257 billion in its risk
provisions affected this bank’s profit.
Meanwhile, Asia Commercial Bank (ACB) obtained a pre-tax
profit of VND960 billion, compared to the VND900 billion achieved in the
year-ago period.
The pre-tax profit of Saigon Thuong Tin Commercial Bank
(Sacombank) was around VND1 trillion, up nearly 71% from the year-ago period.
Its foreign exchange and securities services started to be profitable again
with VND45 billion and VND75 billion respectively.
However, in the current tough economic conditions, such high
profits of banks are not a healthy sign because most profits resulted from
the difference between deposit and lending rates, said Le Dat Chi, a lecturer
at the HCMC University of Economics.
Chi said the lowering on March 7 of the deposit rate cap to
13% had yet to affect banks’ profitability in the first quarter. Banks may
scramble to cut deposit rates while keeping lending rates unchanged, thus
leading to higher profits, he added.
He noted such high profit figures showed banks lacked a
symbiotic relationship with enterprises as seen in other countries where
banks often incur losses in times of economic hardship. But it is the
opposite in Vietnam, with banks earning high profits at a time of enterprises
struggling for survival.
Chi said monetary policy should be designed in a way that
makes it easy for enterprises to gain access to loans and that punishes banks
that do not reduce lending rates in sync with deposit rates.
“If deposit rates are reduced while lending rates are not, the
lowering of the deposit rate cap to support enterprises is effectively
neutralized,” he said.
SCG acquires more stakes in local companies
After acquiring a 99% stake in the Dong Nai-based Buu Long
Investment and Industry Joint Stock Company, Thailand’s Siam Cement Group
(SCG) recently announced it has taken over big stakes in two local plastic
firms.
Particularly, Thai Plastic and Chemicals Co. Ltd., a
subsidiary of SCG, has acquired 9.82 million shares, or a 22.67% stake, in
Tien Phong Plastics Joint Stock Company (NTP) and 5.85 million shares, a
16.73% stake, in Binh Minh Plastics Joint Stock Company (BMP), said SCG in a
press release.
BMP and NTP are leading PVC pipe producers in HCMC and the
northern region respectively.
A representative of the HCMC Plastic Association told the
Daily that local plastic enterprises are facing many difficulties in business
as well as investment expansion. It is because plastic products are now
levied special consumption tax, while consumption slows down and business
expansion is hindered by restricted access to bank loans.
Therefore, several industry players are planning to switch to
other business fields, or sell stakes to expand investment. This offers a
good chance for foreign companies to acquire stakes in local plastic companies.
SCG did not reveal the value of its acquisition deals with BMP
and NTP, but the Thai group informed the total assets of SCG in Vietnam has
increased 28% to US$370 million, versus US$330 million as publicized in March
when it announced the acquisition of Buu Long Co.
Last year, the multi-sector group took over Alcamax Packaging
Co., a Vietnamese producer and distributor of corrugated paper.
Though already having many operational projects in Vietnam,
SCG is still seeking more investment opportunities, including a petrochemical
complex in the southern province of Ba Ria-Vung Tau worth US$4.5 billion.
This February, SCG, Qatar Petroleum International (QPI),
Vietnam Oil and Gas Group (PVN) and Vietnam National Chemical Group
(Vinachem) signed a joint-venture contract to jointly develop the
petrochemical complex. SCG holds a 28% stake in the project.
Vietnam is currently one of the biggest markets of SCG in
ASEAN. In the ASEAN market excluding Thailand, the group earned US$205
million of revenue in the first quarter of 2012, in which SCG’s business in
Vietnam contributed US$75 million, a year-on-year rise of 7%.
The recent acquisition deals are aimed to strengthen SCG’s
foothold in Vietnam, which is part of the group’s ASEAN business expansion
plan.
SCG is active in five core business fields, including
chemicals, paper, cement, building materials and distribution, with more than
200 companies under its umbrella and 38,000 employees. The Thai group entered
the local market in 1992 and now operates 15 companies with over 2,100
employees in Vietnam.
Source :
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
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Thứ Tư, 8 tháng 4, 2015
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