BUSINESS IN BRIEF 3/4 Budget collection rises in March Total budget collection was estimated at VND 70.4 trillion in March, bringing the total to VND230.5 trillion in the first three months. As of late March, budget collection met 22.7% of the estimate, up 0.3% against the same period in 2015. In March, domestic budget collection amounted to VND54.7 trillion, equivalent to the level of February but up 10% against the same period last year. Since the beginning of the year, tax agencies have accelerated operation to control tax registration and payment; manage debts. Thus budget collection was higher than the same period last year. Meanwhile, budget spending was estimated at VND 92 trillion in March and VND 277 trillion in Q1. Budget overspending was around VND 21.6 trillion in March and VND 47.08 trillion in Q1, equivalent to 18.5% of forecast. The General Statistics Office reported that in Q1, industrial production grew 6.2% against the same period last year of which the processing and manufacturing sector picked up 8.8%; electricity production and distribution up 12.2%; water supply and treatment up 9.5%. Mining production decreased by 1.2%. Vietnam Airlines announces sale-leaseback plan for three A350s Vietnam Airlines is poised to find buyers for three new-generation A350s it will receive in 2016-17 and lease them back for use, in a move to cut debts, the Vietnamese national flag carrier said on April 1. Such a sale-leaseback plan has been submitted to the carrier’s shareholders for approval, a Vietnam Airlines representative confirmed to Tuoi Tre (Youth) newspaper. Sale-and-leaseback is a financial transaction, where one sells an asset and leases it back for the long-term. The plan will be carried out in accordance with the law and ensures interests for the national airline, the representative said. The move is to control the money Vietnam Airlines has to borrow to afford the purchases for the Airbus 305-seat aircraft, while still ensures an adequate number of planes for its operation, according to the source. Vietnam Airlines has had to borrow both commercial and government-backed loans to purchase the new-generation A350 XWB’s. The national flag carrier received the first A350 XWB last year and inaugurated the modern aircraft for the Hanoi – Paris route on October 1, 2015. The latest service to use the modern aircraft is the Ho Chi Minh City – Shanghai, which the first flight launched on March 28, Vietnam Airlines announced on Friday. Vietnam Airlines’ A350 XWB is equipped with the latest aerodynamic design, carbon fiber fuselage and wings, and fuel-saving Rolls-Royce Trent XWB engines, which Airbus says will deliver “unrivalled levels of operating efficiency.” The jetliner, the latest member in the Airbus widebody family, also features the lotus flower logo and distinct gold livery of Vietnam Airlines, whereas its interior design is enhanced to further increase comfort and spaciousness, according to Airbus. Airbus has a 20-year relationship with Vietnam, after its aircraft became the first Western types to be operated in the Southeast Asian country in 1995. Airbus jetliners have since served as a platform for Vietnam Airlines to grow at home and abroad, and also have contributed to the Vietnamese economy’s development, the planemaker said. Besides the A350 XWB, Vietnam Airlines currently operates 59 Airbus-built aircraft, including 49 single-aisle A321s and 10 widebody A330s. Ocean tuna sells for record price in Japan   An ocean tuna caught off the coast of Binh Dinh Province sold for a record high US$14.28 per kilogram at an Osaka auction on March 29, according to an official from the local government. Mr Tran Chau, vice chairman of the provincial people's committee said all told, eight wild-caught tuna were sold for an average price of US$11.07 per kilo at the sprawling fish market in the Japanese port city. The fish's tender pink and red meat is prized for sushi and sashimi. Overall the price is comparable to the better slices of fatty Bluefin – called ‘o-toro’ in Japan – that often sells for US$24 per piece at upmarket Tokyo sushi bars. Japanese consume the largest portion of tuna caught worldwide. Mr Chau attributed the higher price to the improvement in fishing technology in the region that was provided via support from the Japan International Cooperation Agency, which equipped fishing vessels with modern tackle and other fishing gear. Mekong Delta businesses study impacts of AEC, TPP A conference on the impacts of the ASEAN Economic Community (AEC) and the Trans-Pacific Partnership (TPP) agreement on the enterprises and economy of the Mekong Delta was held in Can Tho city on March 30. The event was organised by the Can Tho branch of the Vietnam Chamber of Commerce and Industry (VCCI), attracting the participation of numerous economic experts, managing authorities, and the business community in the region. Participants scrutinised possible influences of international integration on the local economic situation and business environment and suggested changes to macroeconomic policy and mechanism to make them align with the AEC and free trade agreements. Director of VCCI Can Tho Vo Hung Dung said that the region should transform economic and labour structures in order to take full advantage of economic opportunities during the international integration progress. He added the locality should also create an efficient start-up environment and encourage a business incubator model thought suitable policies and supporting funds. Vo Thanh Thong, Chairman of the municipal People’s Committee said the domestic business community should enhance their linkage if they want to make good use of opportunities and effectively tackling difficulties. The Mekong Delta is home to over 53,000 enterprises, with 40 percent operating in trade; 20 percent in industry, nearly 14 percent in construction and 7 percent in agriculture and seafood sectors. 1,000 enterprises attend garment industry expo in HCM City More than 1,000 enterprises from 24 countries worldwide flocked to Ho Chi Minh City to join the 28th Sai Gon Textile and Garment Industry Expo (Saigon TEX 2016) which opened in the city on March 30. The exhibition creates a golden chance for domestic garment companies to foster relations and investment oppertunities with foreign enterprises, while enhancing technology transfer to increase the rate of locally made content within garment products. Along with exhibiting products to potential foreign partners, Vietnamese businesses have a chance to view advanced technology used in the garment and textile industry, so as to orient their new technology investments. Addressing the event, Vice Chairman of the municipal People’s Committee Le Van Khoa highlighted that the garment and textile industry is among the key economic sectors in Vietnam and Ho Chi Minh City in particular. He underlined the importance of cooperation with the world’s top providers of garment equipment and materials, as the country is eyeing to become one of the five largest garment exporters in the world. An array of activities are scheduled at the exhibition, including talks and forums on measures to increase garment supply chains between support enterprises and garment producers, as well as trade remedies for the textile-garment sector. The exhibition, jointly held by the Vietnam National Textile and Garment Group (Vinatext), VCCI Exhibition Services Company (Vietcham Expo) and CP Exhibition Hong Kong, will run until April 2. RoK shares development experience with VN Outcomes of the 2015/16 Knowledge Sharing Programme (KSP) launched by the Republic of Korea (RoK) to share experience in socio-economic development with Việt Nam were announced at a conference  in Hà Nội yesterday. The Knowledge Sharing Programme (KSP) Reporting Workshop was coorganised by the Institute for Development Strategy under Việt Nam’s Ministry of Planning and Investment, the Korea Development Institute (KDI) and several other agencies of the RoK. In his speech, Vice Minister of Planning and Investment Nguyễn Thế Phương said the KSP was the result of practical cooperation between the two countries. “KSP helps build and upgrade the capacity of Vietnamese governmental officials and agencies in policy management and design by giving consultations and support for the implementation of the policies,” Phương said. The 2015/16 KSP is titled “Fostering Sustainable Development and High Value-Added Industries in Việt Nam” with specific policy consultation topics launched, including “Improving the Vietnamese Technology Evaluation System as  a method of financing innovative small and medium size enterprises (SMEs)” and “Việt Nam’s Electronics Industry Development Strategy through the Establishment of Industrial Cluster in Hà Nội Metropolitan Area”. Kim Jonghyun, Senior Manager of Korea Technology Finance Corporation (KOTEC), said in Korea the SME policies that are carried out by several national organisations and a technology-based financing system is being put into practice to develop technology-oriented innovative SMEs for global competitiveness. Jonghyun said Việt Nam should co-operate more with relevant authorities, especially in finance, to develop the Research and Development (R&D) acitivities in the country, as well as build up a concept of technology finance that covers the broad topics of economic development, technological innovation, promotion of innovative SMEs and technology appraisal in Việt Nam. He said in the future, Việt Nam should enact a basis law to establish a dedicated institution, and then polish up the legal grounds to enable the institution to play specialised roles in or based on technology appraisal. "For its part, KOTEC will keep working with Việt Nam for financial support for innovative SMEs based on the policy and programme recommendations made in this report," Jonghyun said. The establishment of an electronic industry cluster in the future in Hà Nội was also a topic of the conference. Nam Sang-Woo, programme manager for 2015/16 KSP, said Việt Nam should conduct a plan for the establishment of an innovation park in the electronic industry cluster if it is built. Innovation park can be defined as a congregate system of lands, buildings and facilities in which colleges, companies, research institutions as well as government organisations jointly perform their functions of technology developments and transfer, information exchanges, business start-ups, test productions and so on. As the innovation park needs to be located on a college campus, this research has tried to differentiate the innovation park from a techno park in the perspectives of innovation centre build-ups focusing on R&D, start-ups and business incubating centres, Sang-Woo said. RoK’s Former Minister of Policy Co-ordination Yoon Dae Hee said Việt Nam is one of the best case story of KSP projects, adding that it is time for South Korea and Việt Nam to share knowledge and experiences on specific economic development projects. “To Korean businessmen and finance specialists, Việt Nam is termed as the ’Next China’ and in the face of promising opportunities, they are eagerly preparing to initiate aggressive investments in the region,” Dae Hee said. He also said that knowledge sharing is paving an innovative road toward sustainable global development and co-operation. To a developing country like Việt Nam, the most effective methods to mobilise development resources is to increase the domestic resources through reformation of tax policy, reinforcement of tax management and promotion of international tax co-operation, Dae Hee said. Attracting private capital through fostering the capital market such as improving the financial system and establishing financial infrastructure is also an important pillar in the mobilisation of development resources, he added. Launched in 2004, the KSP is a knowledge-intensive development and economic cooperation programme designed to share the RoK’s development experience with partner countries.It offers comprehensive policy consultations tailored to the needs of partner countries encompassing in-depth analysis, policy consultation, and training opportunities. Hà Nội hands-over investment certificate to Samsung The Hà Nội People’s Committee yesterday issued an investment certificate to Samsung Electronics for a research and development centre in the capital city’s Hoàng Mai District. To cost US$300 million, the 21-storey centre will develop high-tech electrical, electronic and telecom products. Construction will begin July 2017, and it will open in January 2020 when it will hire 4,000 employees. Speaking at the licensing ceremony, Hà Nội chairman Nguyễn Đức Chung said the project would help the city attract more foreign direct investment and develop skilled human resources and high technology. It would also create co-operation among local companies to develop supporting industries, he said. Hà Nội has attracted FDI worth over $810 million in the first quarter, five times the amount in the same period last year. Samsung is one of the biggest investors in Việt Nam, with a report from the Ministry of Planning and Investment saying it had invested $14 billion as of September 2015 in many big projects in the northern provinces of Bắc Ninh and Thái Nguyên and in HCM City. Garco 10 Corp. posts $2.17 million profit Garment 10 Corporation – JSC (GARCO 10) reported a post-tax profit of VND48.55 billion (US$2.17 million) in 2015, 7.4 per cent higher than in 2014. The company’s revenue reached VND2.71 trillion in 2015,  a 15.7 per cent increase compared to 2014. But Garco 10’s cost of goods sold  increased 16 per cent, totalling VND2.33 trillion. Garco’s financial costs more than doubled, totalling VND30.5 billion in 2015. As of December 31, the total value of Garco 10’s assets soared by VND220 billion to total VND1.031 trillion. Of this total, the company’s cash and cash equivalents were valued at VND73.5 billion. Inventory was valued at VND312.3 billion. On Tuesday the State Securities Commission decided to sanction Garco 10 a total of VND60 million, as the company did not disclose documents on time, including their 2013 Annual report and their 2013 and 2014 financial statements. SBV ups anti-dollar efforts The State Bank of Việt Nam (SBV) will tighten lending in foreign currencies in some cases from today in an effort to step up its anti-dollarisation drive. Under Circular 24/2015/TT-NHNN, commercial banks will no longer be allowed to provide lending in foreign currency to exporters who do not need it for offshore payments. Such exporters often used to obtain foreign currency loans from banks and would later transfer them into đồng to buy machines and materials for their production activities for the domestic market. Short-term loans in foreign currency to meet the short-term capital needs for the export of goods via Việt Nam’s border gates will also be prohibited. However, foreign currency lending will still be available as long-, medium- and short-term loans for offshore payments when importing goods and services, provided that the borrowers have sufficient foreign currency revenue from their production or business activities to repay these loans. Besides short-term loans to leading petroleum import enterprises that are allocated annual petroleum import quotas by the Ministry of Industry and Trade, allowing them to make offshore payments for imports, commercial banks will also still be allowed to provide loans for overseas investment in key national projects and programmes that the National Assembly, the government or the Prime Minister has approved and for which the Ministry of Planning and Investment has granted overseas investment certificates. Director of SBV’s Monetary Policy Department Bùi Quốc Dũng said that previously, the central bank had eased lending in foreign currency to support exporters in the context of an economic slowdown. The exporters had benefited greatly from this previous policy as the lending interest rate in foreign currencies was much lower than that of the đồng. Nguyễn Hoàng Minh, director of SBV’s HCM City branch, said the tightening of the lending policy would have a negative impact on firms, but it was a necessity for the central bank’s agenda to promote anti-dollarisation in the economy. Banking expert Nguyễn Trí Hiếu also said the new policy would affect the competitiveness of exported Vietnamese products. Without the foreign currency loans, whose interest rate is often roughly 6-9 per cent lower than that of the đồng, input costs for exported Vietnamese products would rise, he said. Besides this, Hiếu forecast that the tightening of lending policy would also push up the demand for loans in đồng, causing a hike in the interest rate for loans. The central bank’s policies in favour of anti-dollarisation have so far proved to have a positive effect. To date this year, the đồng versus the US dollar exchange rate has not seen much fluctuation. The dollar price on the unofficial market was even lower than that listed at banks by VNĐ20-30. The dollar price has also slid by VNĐ200, from VNĐ22,540 in early January to VNĐ22,340 on March 26. Analysts said this was understandable because dollar holders have gradually withdrawn their deposits from the banks. The latest data from the SBV showed that as of March 10 this year, the mobilisation of foreign currency by the banking system fell by 3.5 per cent compared with December 31 last year. The reduction in US dollars deposited in banks showed that speculators are not interested in foreign currency, the analysts said. Start-ups must join int’l community: Deputy PM We should change the way we think, look beyond the country and become part of the world community as it has shrunk, Deputy Prime Minister Vũ Đức Đam said. This has been made possible thanks to closer connections and exchanges, Deputy PM Vũ Đức Đam said while delivering the opening speech titled “Promoting National Entrepreneurship” during a National Start-up Initiative workshop took place in Hà Nội yesterday. Đam said suitable policies played an important role in creating a favourable environment and conditions for enterprises, including the start-up business community. However, just untying and removing obstacles to create a favourable environment and ecosystem was not enough. One needed to accelerate the implementation of these policies for everyone and all businesses to have opportunities to develop their start-up movement and strong growth. The leader said that the strong growth of ICT today was making the world smaller. “We must change our thought process to grasp and bring into full play our advantages in science and technology.” The Deputy PM said that the Vietnamese government was willing to invest and join hands with private investors to support the national start-up initiative from inventors. Đam made a promise that he would always support start-up businesses and the government would address problems facing start-up businesses as soon as possible. “The Vietnamese government would continue to work with you to develop policies to create the most favourable conditions for the start-up community and incubators,” Đam said. Dean of Hà Nội University of Technology Hoàng Minh Sơn told participants that to make a success of the national start-up one needed to have excellent innovative ideas and a firm base of knowledge. Sơn said businesses should assist young people in R&D and make them a driving force in joining the national start-up initiative programme. At the seminar, participants also discussed such topics as the role of each component in the start-up ecosystem, how to build a start-up ecosystem from the perspective of science and technology, spotting the key problem which needs solving in order to promote entrepreneurship in Việt Nam, as well as proposing initiatives to make Việt Nam a start-up nation. Also in the framework of the programme, FPT and Dragon Capital Group, signed a co-operation agreement for the establishment of the Vietnam Innovative Start-up Accelerator (VIISA for short). VIISA will be an open-ended fund with the participation of many large enterprises and investment funds. FPT and Dragon Capital Group are the founders. The fund aims to train, invest and support start-up groups in the fields of information technology, mobile, Internet and finance so that they would become successful businesses. The first start-up accelerator training course of VIISA is expected to officially open in the second quarter of 2016. The establishment of VIISA was in response to the national programme to build Viet Nam’s start-up ecosystem launched by the Ministry of Science and Technology. VIISA will create a new start-up ecosystem to help ensure that Viet Nam will have 5,000 technology companies by 2020. The founders affirmed that they would try their best to make VIISA a centre to connect Viet Nam’s start-ups with businesses and investors around the world. Currently, FPT and Dragon Capital Group, are calling for more names among Top 500 enterprises in Viet Nam as well as funds and start-up incubators worldwide to build and develop VIISA. Executive Chairman of Dragon Capital Group, Dominic Scriven OBE, said, “We believe in the information technology and mobile revolution. We think the growth engine of the economy in the next decade will lie with innovative start-ups that we see today. By starting to work on this programme, we do hope to accelerate the commercialisation and the application of innovative technologies in Viet Nam.” After the declaration of the establishment of VIISA, the founding members signed a memorandum of agreement on the development of start-up activities at universities and high schools including VNU University of Engineering and Technology, Hanoi University of Science and Technology, FPT University and Hanoi-Amsterdam High School. The seminar was attended by around 50 guests from the Ministry of Science and Technology, Ministry of Education and Training, VINASA and representatives from other important components in the start-up ecosystem such as investment funds, enterprises, associations, and educational institutes. Sale of Tuan Chau Marina shophouses launched Tuan Chau Marina Company Ltd and Gami Land on Saturday launched the sale of Viet Nam's first seaside shophouse project in the northern Quang Ninh Province's Ha Long City. The project has the advantage of being located in Tuan Chau Port, the largest artificial seaport in Asia that can receive 2,000 vessels, even large ones. The seaport welcomes 8,000 to 10,000 tourists per day. Spread over about 3.1ha, the 296 shophouses have either 3.5 or 4.5 floors, with a building area of 504sq.m to 650sq.m. The construction of about 40 shophouses is nearly over and is expected to be completed by April. The investors would get the remaining 260 shophouses completed in 2016 and 2017. The 8km-long and 20m-deep sea port is 5.5km away from Bai Chay Tourism Area, 3km from Thien Cung Cave and has good transport links with Hai Phong City and Mong Cai City. The project has benefited from restaurants, cafe shops, clubs and tour agents, as well as hotels and shops. It also has high-end facilities such as a 27-hole golf course and a five-star hotel. The National Commercial Bank (NCB) has made several preferential offers to buyers of the project, such as zero per cent interest rate in the first six months or six per cent interest rate in the first year. Customers can borrow up to 70 per cent of the total asset value for 20 years. VPBank plans share listing by end of year The Viet Nam Prosperity Bank, or VPBank, is dealing with procedures to list shares on the stock market, a shareholders' meeting heard on Monday. VPBank Chairman Ngo Chi Dung said the listing scheme was in accordance with regulations of the State Bank of Viet Nam, which asked all domestic banks to list shares on regular exchanges or the unlisted public company market by the end of this year. The bank was waiting for guidance from the State Securities Commission, he said. This year, the bank plans to increase its charter capital from VND9.2 trillion to VND11 trillion (from $408.9 million to $488.9 million) by paying dividend in shares. It projects a pre-tax profit of VND3.2 trillion and a total asset value of VND246.2 trillion in 2016. Last year, the bank reported a pre-tax profit of VND3.1 trillion and a total asset value of VND193.9 trillion. VNT issues convertible bonds to SCIC  VNT Logistics JSC issued 720,000 two-year convertible bonds to Japanese Mitsui Wharf and State Capital Investment Corporation (SCIC) on Monday. Among the total bonds worth VND100,000 (US$4.5) each, the Japanese logistics company took 420,000 and SCIC took 300,000. At the date of maturity, one bond will be converted to 4.08 shares. VNT, based in Ha Noi, said the total VND72 billion from the bonds would be invested in its subsidiaries and affiliate companies in Hai Phong. VNT reported a revenue of VND779 billion, an increase of 11 per cent from 2014. On March 30, VNT shares ended at VND34,000 each on the Ha Noi Stock Exchange. State-owned film studio to launch IPO Vietnam Feature Film Studio (VFS) will offer more than 500,000 shares or 10.5 per cent stake in an initial public offering on April 4 at a price of VND10,200 (US$0.43) each. Established in 1953 in Ha Noi, VFS was the largest state-owned film studio but due to the outdated technology used in the film industry, it has accumulated a VND39.6 billion loss to date. Under the equitisation plan, VFS will have a charter capital of VND50 billion ($2.2 million), equivalent to 5 million shares. Of this, the State will retain 20 per cent of the stake, employees will hold 4.5 per cent of stake, public investors will hold 10.5 per cent of stake, and strategic investor Water Transport Corporation will hold the last 65 per cent. Currently, VFS has been using 6,400 square metres of land in Thuy Khue Street and Hoang Hoa Tham Street, in Tay Ho District, one of busiest shopping areas in the inner city and another 6,500sq.m of land in Dong Anh District in the suburbs of Ha Noi. Besides making films, VFS planned to work in the restaurant industry after the equitisation. Local firms seek suitable system in derivatives market  Vietnamese securities companies are in a hurry to seek a suitable system to work with when the first-ever derivatives market is launched by this year-end, according to local media. In the middle of this month, the Ha Noi Stock Exchange (HNX) and the Viet Nam Securities Depository (VSD) announced that members could test the market in September and October with HNX and VSD, which played the role of market operator and clearing house, before the official launch of the market. While the market aims to help investors identify and mitigate risks, and diversify into other investment channels, most of the companies are concerned about the difficulties that could arise during operations. Nguyễn Thanh Thảo, CEO of Thiên Việt Securities Company, said a derivative market could include products such as stocks, cash-settled index futures, warrants, and bonds, in addition to commodities, cash and physically-settled equity futures, cash- and physically-settled bond futures. It also includes cash-settled commodity futures, cash-settled interest rate futures and contracts. Without the experience of such a market, the operations could be either new or too complicated for local investors, who account for 80 per cent of investors in Việt Nam. So, her company took Hong Kong AFE Solution to develop a special module for Thiên Việt's future derivative products known as an open fund for mid-cap shares and a set of securities loans. She aimed to make simple and friendly products that could attract investors. Trịnh Hoi Giang, deputy director of HCM City Securities Company (HSC), said a clearing system in the derivative market was quite complicated. Even then, as a beginner, Việt Nam could learn from others markets that there was still a gap, and added that HSC was considering buying an entire package from a foreign developer. Vũ Thùy Hương, director of capital and business section, in Sài Gin Securities Inc. (SSI), said that the derivatives market was born to help investors mitigate their risks, but without know-how of the market, investors may take incorrect decisions and instead create more risks. Huong said SSI was also on the lookout for an international developer for its system, and added currently there were not too many local firms that could provide a suitable system. Hương said the SSI was selecting a good developer with experience of the derivative market in Thailand, Malaysia, Hong Kong, and Japan. To cope with the problems, HSC Deputy Director Giang has asked HNX and VCD for an earlier training and practice sessions for securities companies, so that they could prepare a technology for a secure future in the market. Hương also said that as the market was very new to some members, HNX should issue detailed regulations as soon as possible, and added that HNX should consider incentives to support companies which have actively joined the market in the very beginning as founders. Binh Dinh to host tourism conference A tourism promotion conference will be held in the central Binh Dinh Province's Quy Nhon City on April 3, the provincial People's Committee announced yesterday in Ha Noi. At the upcoming event, Binh Dinh will introduce the province's tourism development scheme from now to 2020 with a focus on effectively utilising its potential and developing high-quality tourism products, the committee chairman Ho Quoc Dung said. The province has set a goal of attracting 5.5 million tourists and earning a tourism revenue of VND10 trillion (US$445 million) by 2020, Dung said. With that in mind, the province vows to offer domestic and foreign businesses with incentives such as reduction in land rental and corporate tax, besides assistance in infrastructure development and human resource training for projects, if they pump investment into tourism projects. Deputy General Director of Bank for Investment and Development of Viet Nam Tran Xuan Hoang said his bank will provide enterprises who invest in the province's prioritised tourism projects with loans up to VND15 trillion. VPBank plans share listing  The Viet Nam Prosperity Bank, or VPBank, is dealing with procedures to list shares on the stock market, a shareholders' meeting heard on Monday. VPBank Chairman Ngo Chi Dung said the listing scheme was in accordance with regulations of the State Bank of Viet Nam, which asked all domestic banks to list shares on regular exchanges or the unlisted public company market by the end of this year. The bank was waiting for guidance from the State Securities Commission, he said. This year, the bank plans to increase its charter capital from VND9.2 trillion to VND11 trillion (from US$408.9 million to $488.9 million) by paying dividend in shares. It projects a pre-tax profit of VND3.2 trillion and a total asset value of VND246.2 trillion in 2016. Last year, the bank reported a pre-tax profit of VND3.1 trillion and a total asset value of VND193.9 trillion. NCB to loan Phuong Trang Co US$3.1m The National Citizen Bank (NCB) will finance Phuong Trang Company a credit worth VND70 billion (more than US$3.1 million), that will help the company improve its passenger transport capacity. The four-year term credit followed an agreement inked between the two sides on Tuesday. Phuong Trang Co will use the loan to purchase 200 new Mitsubisshi Attrage cars. Phuong Trang is one of the country's leading passenger transport enterprises. The company transports more than 20 million passengers each year. Banks race to keep dollar borrowers as tightened lending conditions near With the effective date of a tightened policy on foreign currency lending drawing near, banks in Vietnam are taking measures to keep borrowers from turning their backs on them. Starting April 1, commercial banks in Vietnam are banned from offering corporate loans in currencies other than the dong, according to Circular No.24 the State Bank of Vietnam (SBV) announced in December last year. The ban targets businesses that exchange foreign currency loans into dong to pay for equipment and machinery, according to Bui Quoc Dung, head of monetary policy at the SBV. “Those businesses in need of foreign currencies for goods and service payments and fuel imports are still allowed to borrow the money,” Dung told Tuoi Tre (Youth) newspaper. Even so, many credit institutions say the tightened conditions would drive a lot of their customers away, prompting them to find new ways to keep borrowers. Some banks have allowed their customers to ‘register’ loans in foreign currencies they want to borrow by the end of this month to dodge the new policy. This means banks have guaranteed to lend foreign currencies to businesses before the Circular No.24 takes effect, so they will not violate the rule, according to analysts. “Another solution is to offer loans in VND at very low interest rates, even at a loss,” the director of a bank said on condition of anonymity. Banks try to keep borrowers in the hope that these customers will use their other services to make up for the loss caused by the cheap interest rates, according to the banker. Credit institutions in Vietnam have also struggled to attract deposits in foreign currencies, especially US dollar, after the SBV set the interest rate to zero in December 2015. Banks have had to offer promotions and gifts to lure dollar deposits from customers, otherwise “they withdraw their deposits in both US dollar and VND,” a director of one bank said. The tightened rule on lending in foreign currencies, as well as the scrapping of the ceiling on individual dollar deposits, is amongst measures consistently taken by the SBV in the last few years to de-dollarize the economy. Businesses used to be able to borrow loans in foreign currencies and exchange the credits for the dong to buy machinery or materials to serve their production, the SBV monetary policy head, said. “These borrowers would export their products and use foreign currencies to repay their loans,” he explained. It is seen as a supporting move by the SBV to businesses, as it was much cheaper to borrow in foreign currencies than in the dong, according to Nguyen Hoang Minh, deputy director of the Ho Chi Minh City branch of the SBV. “There were times when the interest rates for loans in US dollar were only a third of those for lending in dong,” he elaborated. However, as the economy has improved and Vietnam’s credit rating becomes healthier, the SBV decided that it was time to tighten lending in foreign currencies, Minh said. “The interest rates for loans in VND have significantly reduced,” he said. “As part of its de-dollarization roadmap, the SBV wants to keep people from hoarding US dollars by imposing a zero interest rate for dollar deposits and tightening up dollar loans. “Businesses will surely be affected by the tightened condition, but we have to accept it as we must move with the trend.” Curtain call for $85.1 million bio-ethanol factory in Quang Ngai Bio-ethanol Dung Quat factory in the central province of Quang Ngai has temporarily stopped operations after four years due to continuing losses. The factory was invested by Central Petroleum Bio-ethanol Joint Stock Company (Central Petroleum Bioethanol JSC), a subsidiary of Vietnam’s state-run oil and gas group PetroVietnam with the total capital of $85.1 million. Starting operations in February 2012, following 33 months of construction, the factory was expected to produce 100 million litres of ethanol per year, which was then mixed with A92 gasoline to generate bio-fuel E5. After one year of non-profit operation, PetroVietnam handed the factory over to Binh Son Refining and Petrochemical Company Limited (BSR). According to Pham Van Vuong, director of Central Petroleum Bio-ethanol JSC, the factory must suspend its operations due to unstable material supplies and high production expenditure. Vuong added that the oversupply forced the factory stop its operation. Notably, the total consumption of E5 fuel is 2,000 cubic metres per month, equalling 24 per cent of Bio-ethanol Dung Quat’s capacity, while the total capacity of an ethanol factory in the southern province of Dong Nai is 75,000 cubic metres annually. He shared that as of now, 128 of the more than 200 engineers and workers at the factory have temporarily retired from working without salary, while 38 engineers were relocated to other tasks at Dung Quat oil refinery of PetroVietnam in the province. With the exception of Bio-ethanol Dung Quat, Petro Vietnam invested $90 million into building two other bio-ethanol factories in the northern province of Phu Tho and the southern province of  Binh Phuoc. However, the construction of Phu Tho ethanol factory stopped in mid-2012 due to financial problems and Binh Phuoc ethanol factory, which started operation in 2009, only had a trial run, after which it stopped due to a shortage of raw materials, despite being located near a cassava cultivation area. Four other investors poured capital into bio-ethanol factories. These include Dong Xanh Joint Stock Co.’s Dai Tan ethanol factory in the central province of Quang Nam, Tung Lam Company Limited’s Tung Lam ethanol factory in the southern province of Dong Nai, Dai Viet Company's ethanol facility in the Central Highlands province of Dak Nong, and Quang Ngai Agricultural Products and Foodstuff JSC’s Bioethanol Dak To in the Central Highlands province of Kon Tum. As of now, only Tung Lam has continued to operate. Insurance revenue equal to 2% of GDP Vietnam’s insurance market grew 16 per cent each year in the 2011-2015 period, rising from VND46.958 trillion ($2.1 billion) in 2011 to VND84.375 trillion ($3.78 billion) in 2015, according to Mr. Phung Ngoc Khanh, Director of the Insurance Commission at the Ministry of Finance. Life insurance grew 24.6 per cent and non-life 11.7 per cent. Total property insurance in the period was $524.5 billion, with property insurance for enterprises being $479.68 billion. The value of life insurance policies was $44.83 billion and health insurance $31.38 billion. Mr. Khanh said that the insurance market has reached the targets in its development strategy for the 2011-2020 period. Revenue from insurance in 2011-2015 was targeted at 2 to 3 per cent of GDP and 3 to 4 per cent by 2020. Revenue in 2015 of $3.78 billion represented 2 per cent of GDP. Total stand-by funding reserved for claim payouts was $5.86 billion as at the end of 2015; 2.36 times higher than in 2010. Total mobilized funds for the economy was targeted to increase 1.7 times by 2015 and by 3.5 times by 2020. Reinvestment in the economy was $7.05 billion by 2015; 1.99 times higher than in 2010. Insurance also contributed $223 million to the State budget. Cement consumption booms in March Cement consumption in March increased 107 per cent against February, according to the Building Materials Department at the Ministry of Construction. Total consumption stood at 6.27 million tonnes in the month, a 17 per cent increase year-on-year. In the first three months consumption was estimated at 15.71 million tonnes, equal to 109.8 per cent of the figure in the first quarter of 2015 and reaching 20.67 per cent of the 2016 target. Cement exports in March also surged, at an estimated 1.35 million tonnes, for an 88 per cent increase compared to February and 115 per cent year-on-year. Exported cement in the first three months totaled 3.5 million tonnes, equal to 102 per cent of the same period last year. Industry analysts said that the strong increase in consumption comes after a number of construction projects kicked off after the Tet holiday and the real estate sector continues to experience a solid recovery. If consumption remains at these levels the target of 75 to 77 million tonnes of cement being consumed in 2016 will more than likely be exceeded. Retail conference hears of growth potential The “Vietnam’s Retail Flat World - Opportunities or Challenges” conference was held at the Ho Chi Minh City Stock Exchange (HoSE) on March 28 with sponsorship from HoSE and the Vietinbank Securities JSC,  market researchers GfK, and Mobile World (MWG). The conference heard assessments of Vietnam’s retail market from experts at HoSE, Vietinbank Securities, GfK, and MWG, and on Vietnamese enterprises’ preparations for globalization. A Q&A session was included for investors to learn more about Vietnam’s retail market. Experts from GfK, MWG, and Vietinbank Securities also shared their knowledge of and experience in Vietnam’s retail market to assist investors in make investment decisions in the right sectors. “Electronics retail has always been an attractive investment environment, especially mobile phones,” said Mr. Huynh Phuoc Cuong, Director of the Retail Department at GfK Retail and Technology Market Research Vietnam Limited. The telecoms sector, including mobile phones, accounts for 40 per cent of the electronics and electrical appliances market and records the highest growth, of 30 per cent. Mr. Tran Hai Dang, Deputy Director of Vietinbank Securities’ Analysis Research Center, pointed to the BMI Index, which shows that Vietnam’s retail market earned $102 billion in 2015 and may reach $179 billion annually within the next five years, growing 7.3 per cent and 11.9 per cent in 2015 and 2020, respectively. The Ministry of Planning and Investment has set a target for modern retail to grow 45 per cent by 2020 from the current 25 per cent, which will create huge potential for the market. Along with the opportunities Vietnamese retailers must also face the risk of being acquired by foreign partners, the conference was told. The conference was the first of a series of seminars to be hosted by HoSE and Vietinbank Securites this year, following on from previous successes. BVS: Issues remain from end of housing support package Bao Viet Securities Company (BVS) has said it is necessary to retain the preferential interest rate from the housing credit support package until the total VND30 trillion ($1.34 billion) has been disbursed. The comments were made in a report BVS penned after the State Bank of Vietnam, in a March 28 document, directed banks to cease granting new credit from the package because all capital has been exhausted. In a report, BVS said that social housing was not going to cause a real estate bubble so the preferential interest rates should continue. The report noted that the SBV’s document failed to mention whether the preferential interest rate is to be applied for credit already signed and set for disbursement after June 1. This is also a major matter of concern for commercial banks. BVS also said that management units were too passive in applying the package, resulting in unnecessary confusion among borrowers. HCM City sees fuel import tax revenue down The HCMC Department of Customs estimates the city has seen fuel import tax revenue declining by VND2 trillion (US$89.6 million) this quarter. The contraction is attributable to lower prices of fuel products in the period and the fact that domestic fuel trading firms have shifted to importing fuels from the markets where they can enjoy special tax incentives. A representative of the HCMC Department of Customs told the Daily that all fuels imported into HCMC have come from those markets offering special tariffs as provided in the free trade agreements in the year to date. Therefore, the Ministry of Finance’s recent decision to lower import tariffs for diesel, kerosene and jet fuel will not affect the city’s budget collection from fuel imports as firms can no longer import fuels subject to Most Favored Nation (MFN) duties, he said. Due to lower prices, the turnover of fuel imports has dipped by 50% though imports have risen in the January-March period. Besides fuel products, the city’s quarterly budget collections have plummeted by an additional VND3 trillion as duties on multiple products imported from South Korea and ASEAN countries have been cut to almost 0%. Certain fertilizer products, machines and equipment for agricultural production, offshore fishing boats, animal and poultry feed are exempt from value-added tax. In all, HCMC encounters a budget shortfall of some VND5 trillion from imports and exports each quarter. However, the city had collected export-import taxes of VND17.5 trillion by March 22, accounting for 17% of the full-year target. The representative of the customs department said the result was not bad owing to higher fee and tax revenues from many products. He took completely built-up (CBU) autos as an example. Car imports into HCMC in the first three months have surged nearly 42% year-on-year to US$44 million. The HCMC Department of Customs is assigned to collect VND102.5 trillion for the city’s budget this year compared to last year’s VND93.93 trillion. With the target of VND102.5 trillion for this year, HCMC will contribute 37.96% of total tax and fee collections registered by the customs sector. The ratio was 35.7% last year. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR