Business In Viet Nam

Online forum aims to boost exports

noreply@blogger.com (Business In Viet Nam) — Thu, 09 Jul 2009 05:32:00 +0000

VietNamNet Bridge – Industry and trade officials and enterprises met on July 8 in an online conference between Ha Noi, Da Nang and HCM City to discuss ways to boost exports and industrial values over the next five months.

Industry growth was expected to reach 10 per cent, while export growth was expected to hit 3 per cent.

The sector must try harder to gain better results, said Bui Xuan Khu, deputy minister of Industry and Trade.

Khu said that although the National Assembly had reduced targets for industrial products and exports, the sector still needed a push in the right direction.

Industry growth was expected to reach 10 per cent, while export growth was expected to hit 3 per cent. But according to ministry data, the industrial production values and exports of the country had fallen, including a decrease of 11.7 per cent against the same term last year for industrial value and a decrease of 10.13 percent for export turnover, which had reached only VND27.6 trillion (US$1.5 billion) in the first six months.

Khu asked relevant authorities to try to ease difficulties for enterprises so that they could boost production. He asked the Electricity of Viet Nam to boost their management and operate their grids effectively to better serve families and local demands. He also asked the Viet Nam Garment and Textile Group to boost its exports and expand the domestic market, giving priority to low-income clients.

The ministry would co-operate win relevant enterprises and localities to help increase exports of rice, fisheries and other agriculture products to give more jobs to farmers.

They would focus on the Japanese market, which had a lower import tax for farming products for Viet Nam, as well as find new markets for rice, coffee and mechanical products in Africa and the Middle East, said Khu.

Khu asked domestic enterprises to build their own projects to get support from national trade promotion and to take advantage of the stimulus package.

The Ministry of Industry and Trade would work with the Ministry of Finance to change import and export taxes to increase exports and build the export credit insurance project.

Khu asked for more market studies to strengthen the domestic market and to sell more products to rural areas.

Le Quoc An, chairman of the Viet Nam Garment and Textile Association, asked the Government to better reform administrative procedures, especially to speed up customs procedures and to reduce electricity prices during peak times for the sector.

An also asked for the restructuring of the industry, under which they would build more factories with lots of workers. He asked for land to accommodate garment workers.

Huynh Minh Hue, deputy chairman of the Viet Nam Food Association, asked for better and more transparent policies on rice exports.

VietNamNet/Viet Nam News

Outstanding loans rise 17.5 pct in Vietnam

noreply@blogger.com (Business In Viet Nam) — Thu, 09 Jul 2009 05:32:00 +0000

VietNamNet Bridge - Vietnamese banks’ total outstanding loans rose 17.53 percent in the six months ending June compared with a year earlier, the central bank said in a statement on its website Tuesday.

Credit in the banking system grew 17 percent during the period compared with the end of last year, the State Bank of Vietnam said. Total deposits gained 7.64 percent from a year earlier and rose 16.2 percent from the end of 2008, according to the statement.

State-owned commercial banks’ lending rates in Vietnamese dong ranged from 8.5 percent to 10.5 percent, while the borrowing costs of joint-stock commercial banks were between 10 percent and 10.5 percent, according to the statement. Interest rates on loans subsidized by the government were between 4.5 percent and 6 percent.

Interest rates of loans in US dollars ranged from 4 percent to 6 percent. The cost of credit card and consumer borrowings were between 12 percent and 16.5 percent, said the statement.

As of July 2, banks had lent VND372.3 trillion (US$21 billion) to businesses as part of the government’s loan-subsidy program, the central bank had said on its website late last week.

Banking figures

Saigon Thuong Tin Commercial Joint-Stock Bank, the third-largest company traded on the Ho Chi Minh Stock Exchange, had outstanding loans of VND47.6 trillion and total assets of around VND83 trillion by the end of June, it said in an e-mailed statement Tuesday. The lender did not mention comparable figures for the previous year.

Deposits at Sacombank, as the lender is known, reached VND70 trillion in the same period, and its bad debt ratio was 0.71 percent.

The Ho Chi Minh City-based bank reported pretax profits of VND905 billion ($51 million) for the first six months of the year.

Meanwhile, DongA Commercial Bank’s total outstanding loans reached VND27.4 trillion, up 23 percent from the same period last year, the lender said in an e-mailed statement Tuesday.

Total deposits at the HCMC-based lender were VND31.7 trillion, a yearon-year increase of 26.2 percent, according to the statement.

Its pretax profit totaled VND385 billion ($21.6 million) in the first six months, down 4.7 percent from a year earlier. Pretax profit in the January-to-June period made up 51 percent of the annual forecast, the statement said.

The bank had reported pretax profits of VND404 billion in the first six months last year.

An Binh Bank, an unlisted HCMCbased lender known as ABBank, said Tuesday credit grew to more than VND8.6 trillion ($483 million) in the first six months, 32 percent higher than six months ago.

Total deposits at the lender reached over VND11.6 trillion ($652 million), a 60 percent increase compared to December 31, 2008.

The bank reported first half pretax profits of more than VND172 billion ($9.6 million), 6 percent higher than its target.

With a 15 percent stake owned by Malaysia’s top lender Maybank, ABBank has forecast its pretax profits to rise to around VND400 billion ($22.4 million) in 2009.

The bank had reported a slump in gross profit last year to just VND70.2 billion ($3.9 million), well below the forecasted VND465 billion ($26 million), due to high operating costs and losses from trading foreign currencies and securities.

The lender plans to expand its network to nearly 100 branches across the country next year.

VietNamNet/TN

Banks’ big profits please banks but grieve businesses

noreply@blogger.com (Business In Viet Nam) — Thu, 09 Jul 2009 05:31:00 +0000

VietNamNet Bridge – Commercial banks have gladly announced high profits for the first six months of the year. However, the banks’ joy has made businesses feel touched, since businesses have been promised by banks that they can share profit and success with banks.

Techcombank has announced profits of 1,031 billion dong ($60 million) for the first six months of 2009, which make it one of the most profitable joint stock banks. Military Bank announced profits of 720 billion dong, leaving it only 100 billion dong short of its target for the year.

"Our profit has dropped so dramatically since May. Some of that was due to fluctuating exchange rates, but still I feel sad.

“Today (June 23), I need $30,000, and the bank told me that I must pay an additional 550 dong for each dollar, a so-called ‘foreign currency conversion fee.’

“This is the highest fee level so far. I can’t understand why I have to pay the 550 dong? Maybe my knowledge is not deep enough?

Excerpt from a businessman’s letter to VNExpress

Ten other banks have also reported that they were well ‘in the black’ for the first half of 2009. Analysts still await reports from two big names in joint stock banks, Sacombank and ACB. A source from ACB said the bank’s first-half profits are estimated to reach 1,200 billion dong. Meanwhile, Sacombank’s profits are estimated at 900 billion dong.

The high profit announced by banks in these difficult times has caused businesses to feel sorry for themselves. The director of a business commented bitterly to a VNExpress reporter that “the banks all say they will share difficulties, profit and success with businesses. Meanwhile, while businesses have been struggling with crisis and many of are reporting losses, some are on the verge of bankruptcy, but banks still reap fat profits.”

Commercial banks themselves well understand what businesses think. Many are thus wary of publishing details about their profit. A senior manager of a joint stock bank told a reporter that though he was happy with his bank’s successs, he did not want the local press to report about it. One bank is rumored to have deliberately lowered its announced profit in 2008.

The director of an import company in HCM City sent a letter to VNExpress, confiding that he was compelled to purchase dollars from banks at prices two or three percent higher than the officially quoted prices. He said a lot of his friends, also businessmen, have met difficulties in purchasing foreign currencies. If the businesses did not agree to purchase foreign currency at the high prices, they would not have money to make payment for the foreign partners.

Bank reports show that core banking services, including the money exchange trading and lending have brought the biggest profit to banks. Traditional services made up 70 percent of Techcombank’s total profit, while the rest came from investments like bond or gold trading.

Loans still make up 50 percent of Techcombank’s total turnover, and 60 percent at Military Bank.

Commented about the banks’ high profit, Banking Academy Deputy Director To Kim Ngoc, said that banks almost never post a loss. Lately they have been profiting from the Government’s demand stimulus package. Trading in the interbank monetary market has also brought considerable profit to banks. More profit flows in from loans with high interest rates under contracts signed some time ago, or from bond trading.

“If banks can make fat profits while businesses have difficulties, it’s a reflection of the injustice in sharing profit in the society,” Ngoc said. However, she said, it is impossible to force banks to ‘sacrifice’ profit for businesses. Besides, banks must not be allowed to go bankrupt, because this will badly affect the whole banking system and the national economy.

Ngoc is not as optimistic as other experts about the business results banks will report in the second half of 2009. She noted that Vietnamese businesses have not yet felt all the follow-on shocks from the global economic crisis. Also, Vietnamese businesses and banks have been enjoying big support from the Government. Once the support is reduced, businesses may face bigger difficulties. The big loans banks are providing now could become a burden on them later, if businesses, unable to sell their products in shrinking export markets, cannot pay their debts to banks.

VietNamNet/VNE

Expat living cost survey ranks HCMC with Sydney, Hanoi with Boston

noreply@blogger.com (Business In Viet Nam) — Thu, 09 Jul 2009 05:31:00 +0000

The annual Mercer survey of living costs for expats in 143 ‘world cities’ finds Hanoi and Ho Chi Minh City surprisingly expensive.

HCM City

Dethroning Moscow, Tokyo and Osaka, Japan reclaimed the top spots in the annual expat living costs survey conducted by Mercer, a multinational human resources firm. The company’s 2009 survey was released on July 7 and registers currency fluctuations and dollar strengthening impacts of the global economic crisis.

The Mercer survey compares the cost of over 200 items in each of 143 ‘world cities,’ including rental housing, transport, international schools, a Westerm diet, clothing, medical care, household goods and entertainment. Emphasis is on consumption of ‘international brands’ where they are available.

In Southeast Asia, Hong Kong is #5 in the 2009 report, Singapore #10, Shanghai #12, Guangzhou #23. Then, considerably down the list at #58, Mercer reports that it costs a generic expat as much to live in Hanoi as it does in Hamburg, Cairo, Taiwan or Boston. Just as in last year’s report, Mercer finds that it’s a little cheaper in HCMC, which at #69, ranks just behind Sydney, Washington and Mumbai. Then it is a long way down to other Southeast Asian capitals. KL’s at #96 and Bangkok at #98, bracketing Cleveland, Ohio, USA, #97. Jakarta’s at #106 and Manila is way down in 126^th position.

Expressing the cost data another way, Mercer calculates that an expat living in Hanoi will spend only 77% of what he’ll need to spend to live comfortably in New York City, #8. If the expat moves to Saigon, he’ll gain another two percent on NYC.

The Mercer ratings are used by governments and multinational companies not only to decide how much to pay expat staff stationed in these various cities but also (at least in the case of companies) whether to send the staff at all. So in that regard, it’s not good economic news for Hanoi and HCMC to learn that expat living here costs somewhat more than in Bangkok, Jakarta or KL.

VNN

Chinese household furnishings giving Vietnamese producers headache

noreply@blogger.com (Business In Viet Nam) — Thu, 09 Jul 2009 05:31:00 +0000

VietNamNet Bridge – Vietnamese producers of wooden household furnishings are determined to compete with the China-made products which have been flocking into Vietnam. However, this is shaping up to be a difficult task.

Customers prefer China-made products

Quoc Thong, who has many years of experience in importing and selling interior furniture, said that Vietnamese consumers still purchase China-made products even though they know that the products are sourced from China and are not high-quality and not durable.

“Vietnamese consumers’ habits have changed. Nowadays, they do not want to purchase furniture to use for their whole lives; they prefer fashionable products. Meanwhile, China-made products can meet the new tastes of customers at reasonable prices,” Thong said.

Vo Thi Phuong Mai, an executive from Nha Dep, an interior decoration company, said that the most important factor is reasonable price.

“China-made products have good designs which attract customers, while their prices are reasonable,” Mai said.

Minh, a customer, said that he does not care much about where products come from. He just wants products which look beautiful, are suitable for his house and have acceptable prices.

Customers like Minh abound.

Which way for Vietnamese enterprises?

“It is really hard to live next to a big arsenal which makes products for the whole world like China,” Thong said.

Vietnamese producers say that in order to effectively compete with China-made products, they have no other choice than trying to make high-quality products with diversified designs.

Mai from Nha Dep said that Nha Dep has to lower production costs in order to compete with China-made products.

“We have necessary materials and we can make the frames for salons. We have qualified designers and we well understand the tastes of customers which allow us to make products with colours and designs suitable to customers in different areas,” Mai said.

Truong The Phong, Marketing Director of Rossano, said that Rossano also imports China-made products (5 percent of products on sale) so it well understands these products. And the company has realised that it needs to make products with higher quality and durability than China-made products.

“Our advantages are qualified designers from Singapore and Malaysia who always offer new designs. Our customers can place orders and choose colours, materials and sizes they want,” he said.

According to Nguyen Quoc Khanh, Director of AA, Vietnam’s woodwork industry has a big advantage in its skilful labour force that is very good in doing details that need to be done half-manually. The cost of these workers is still 30 percent lower than in China.

Khanh does not think that the small scale of workshops in Vietnam is a disadvantage; on the contrary, he thinks that small scale is an advantage because a shop can receive orders in a flexible way.

“They key now is that enterprises need to make investment in diversifying designs and increasing the value of products,” he said.

Khanh said that Vietnamese enterprises need to know their advantages and disadvantages and choose suitable customers. Nha Xinh, for example, targets medium-class and high-class customers. “If you have products with high quality which fit customers’ tastes, you will be able to sell products, even if the prices are a bit higher than imports’ prices,” he said.

VietNamNet/SGTT

Money can’t buy me… retail premises in HCM City

noreply@blogger.com (Business In Viet Nam) — Thu, 09 Jul 2009 05:30:00 +0000

ietNamNet Bridge – High-class retail premises in HCM City are now so scarce that even those who have money cannot find satisfactory places to set up shop.

According to local newspaper Saigon tiep thi, HCM City now has 25 modern trade centres which have retail premises for lease to enterprises or individuals. Of these 25 centres, only 11 are considered high-class trade centres, including Diamond Plaza, Zen Plaza and Parkson and Saigon Paragon, which has been operational since June 2009.

The most important criterion which trade centres must have to be called ‘high-class’ is that the goods on sale are imported products of well-known brand names or high-class products made in Vietnam. For example, Opera View only has around 10 stalls, but it is still considered the ‘pinnacle of luxury shopping’, because Louis Vuitton brand name products are dominating in the stalls.

Tax and Zen Plaza trade centres, which are located in the centre of district 1 and have stalls selling valuable diamonds, shoes with the world’s well-known brand names are considered the number two, because they are selling Vietnamese brand-name products like Viet Thy, YF, Nino Maxx, Viet Tien, Dong Hai and Bita’s. Meanwhile, Diamond Plaza and Saigon Paragon are considered first-class trade centres because only products with the most famous brand names are selling here, namely CK, Baly, Clarins, Christian Dior, Lancome, Lancel or Omega.

As owners of the trade centres prove to be very fastidious about selecting retailers, not every retailer who has money can lease retail premises in high-class trade centres. Even those who are ready to pay leasing fees 3-5 times higher than in other places and sign long-term leasing contracts cannot set foot in the trade centre if their products are not ‘well-known brand name products’.

Dang Quynh Doan, Director of Viet Thy Fashion Company, has confirmed the information, saying that even Vietnamese companies which are well-known for high-quality products have been refused for premises in luxury trade centres.

Meanwhile, explaining why he said ‘no’ to Vietnamese companies, Le Van Canh Director of Artex Saigon, the owner of Opera View, said that he needed to choose retailers who sell high-class products, because the products fit the main clients the trade centre is targeting.

Louis Vuitton has become a long-term client at Opera View with Louis Vuitton’s stall in the most advantageous position at the centre. Therefore, Canh said that other stalls should also be reserved for well-known brand names, or they would be left idle.

Currently, all high-class trade centres are fully occupied. At Zen Plaza, Tax, Diamond or Parkson, clients have to register to lease premises and their names are put on waiting lists. And just to make it onto the list, ‘candidates’ have to meet a lot of requirements set by the trade centres.

Therefore, most clients say that they cannot negotiate leasing fees with trade centres. The premises for jewellery, watches and cosmetics stalls prove to be the most expensive, over $200 per square metre. The premises for footwear and clothes stalls prove to have ‘softer’ fees, $55-150 per square metre. Consumer product stalls on higher floors have lower leasing fees of $30-80 per square metre.

VietNamNet/SGTT

Former shipping chief urges Van Phong Port developers to ‘think big’

noreply@blogger.com (Business In Viet Nam) — Wed, 01 Jul 2009 00:54:00 +0000

VietNamNet Bridge – Construction of Van Phong Port is set to begin in northern Khanh Hoa province in the near future. Dr. Chu Quang Thu, former head of the Vietnam Maritime Bureau (Vinamarine), warned that the developers are aiming too low. He says the site has the potential to become another Singapore.

Known up until now principally as a scuba diving paradise, Van Phong Bay, some 100 kilometers to the north of Nhatrang City on Vietnam’s central coast, is slated for development as a deepwater port.

According to Nguyen Trong Hoa, Head of the Management Board of Van Phong Economic Zone, site clearance for Van Phong port project has been completed, a road to the port site has been built and electricity is ready to be provided.

Thu told Tuoi Tre newspaper that “the worldwide trend is toward bigger container ships. They are more economical. It would be a big waste if at Van Phong we only build a harbor to handle ships in the 6000 to 9000 TEU range. [A TEU is a ‘twenty foot equivalent unit,’ that is, a standard shipping container]. The natural water depth is 16.5 metres in the bay’s Dam Mon area. Vietnam will not see Van Phong develop into a big international transit port if it cannot receive the biggest ships, 15,000 to 18,000 TEU.”

People still don’t understand why we should build big harbors for big ships, while Vietnam’s ships are just in the 200... TEU range?

Dr. Chu Quang Thu, former head of the Vietnam Maritime Bureau (Vinamarine)

Singapore and Hong Kong have become rich partially because they have international transit ports. Countries like Vietnam, which export to the US and Europe, must carry containers to Singapore, where they are classified and put into larger ships in order to save on costs.

Up till 2009, Vietnamese could not receive 4,000 TEU and bigger container ships. Typically, 2000 TEU ships carry goods from HCM City and Hai Phong to Singapore and Hong Kong for consolidation and transshipment.

Transshipping costs Vietnamese exporters an additional cost of $400 per every TEU. My former office, Vinamarine, has found that Vietnam ‘loses’ nearly $1.5 billion every year because big container ships cannot enter Vietnam’s ports.

If we develop an international transit port at Van Phong Bay, it will be able to earn big sums of money. 80 billion dong will fall into the pocket of Khanh Hoa province every time an oil tanker docks at the port. World-scale ports serve dozens or even several hundred ships every day. Van Phong will help the surrounding region prosper. It is nearer to [several] shipping routes than Singapore.

If we only build a harbor for 6,000-9000 TEU ships, we’ll exclude the most popular class of ships, the 12,000 TEU size. Unlike Hai Phong and Saigon ports, Van Phong is far from industrial zones. Its natural advantage is as a transhipment point, but if big foreign ships do not dock the port to load transit commodities, the port will sit idle. We must learn a lesson from Cai Lan port [near Ha Long Bay, northeast of Haiphong], which has been receiving few ships.

Some say we should only build small harbors because our financial resources are limited . . . .

We should not think that way. I do not think that we will lack capital for investment. Investors are ready to provide money if they think that the Government is heading the right way. The competition among international ports is now very stiff. If we aim too low because we don’t have funds in hand, and so the ships don’t use Van Phong, it will be a real loss.

We should build one pier for 15,000 TEU ships instead of two piers for 6000-9000 TEU ships, even though the cost will double.

How do you imagine Van Phong port should operate?

Vietnam should follow international practice. I think that we should design Van Phong port area as a bonded transit area.

If Vietnam still insists on unloading commodities for inspection and ignores international practice, foreign ships will stay away. If we really want to get into the global ‘game,’ however, we should waive the docking fee for five to ten years in order to attract foreign ships. Vietnam will still be able to earn a billion dollars a year from charges for transit services.

Without a world-class transit port, we and our grandchildren will have to keep carrying our goods to Singapore. The people there will earn the money we should be earning. We need to take sensible actions to awaken the potential of Van Phong Port.

VietNamNet/TT

Formaldehyde in China-made clothes confirmed, but no decision made

noreply@blogger.com (Business In Viet Nam) — Wed, 01 Jul 2009 00:54:00 +0000

VietNamNet Bridge – The Hanoi Market Control Sub-agency has affirmed that China-made clothes contain formaldehyde, a substance which is harmful to human skin, with the content ratio of less than 2 percent. No official conclusion has been released because no regulation covers this issue.

Trinh Ba Quang, Senior Official from the Hanoi Market Control Sub-agency, said that the sub-agency joined forces with the Standard Measurement and Quality Department (STAMEQ) to take clothes samples from markets for testing and found that all the samples contained formaldehyde.

Quang said that all the samples were taken from Hoan Kiem street, a wholesale centre from which clothes are sent to many places.

However, no official conclusion has been issued.

“There are no concrete regulations about the safety level of products and the allowed levels of substances, including formaldehyde, which has created difficulties for government management agencies,” Quang said.

“We are still awaiting instructions from a higher level. If there were clearly stipulated standards for product quality, clothes that did not meet the required standards would be seized and demolished,” Quang added.

Meanwhile, when talking to local newspaper VnExpress, Tran Van Vinh, Deputy General Director of STAMEQ, said that as Vietnam is now a member of the World Trade Organisation (WTO), Vietnam will consider the quality standards set by the countries from which it imports products.

In this case, the clothes are imported from China, so Vietnam will refer to Chinese standards to reach a conclusion about the safety line for consumers.

The information about the toxic China-made clothes was spread in Vietnam on May 28 after Chinese press agencies reported that 1/3 of the products for children’s use made in Guangdong, China contained substances harmful to human skin. The information immediately shocked Vietnamese consumers because the majority of clothes available in Vietnam’s market are from China.

VietNamNet/VNE

Hanoians like products with well-known brand names

noreply@blogger.com (Business In Viet Nam) — Wed, 01 Jul 2009 00:53:00 +0000

VietNamNet Bridge – An interesting absurdity has been revealed: Though Hanoians are thought to be thrifty, they are easily attracted to products like mobile phones and cosmetics with famous brand names.

According to a survey conducted by A.C. Nielsen in Hanoi and HCM City in April and May 2009, Hanoians are more influenced by others in making their consumption decisions than Saigonese.

The Personal Finance Monitor survey conducted by A.C. Nielsen in 2008 showed that consumers in HCM City borrow money from banks and financial institutions for their consumption needs, while 57 percent of Hanoians said they will not borrow money from any banks or financial institutions. This proves to coincide with the stereotype of Hanoians: They always care about how they appear in other people’s eyes. Financial reliance on others is looked down upon.

However, though commonly considered thrifty, Hanoians very much like high-grade products. 71 percent of polled people said they like products with well-known brand names. 52 percent of polled people said that they were ready to pay for high-grade products, while 79 percent said that purchasing high-quality products helped them save money.

On the contrary, consumers in HCM City pursue a ‘quick consumption’ tendency. They buy things they need and immediately when they need them. Saigonese still love high-grade products, but 48 percent of polled people said that luxury items are just suitable for those who like to show off and get other people’s attention. The city’s consumers say that they will only spend money on those things they need rather than on things to show off.

The survey by A.C. Nielsen also showed that Vietnamese consumers have good understanding about the economic downturn. Northern consumers, though they are more optimistic than southern consumers, still think that they have been significantly affected by economic crisis.

The omnibus survey by A.C. Nielsen conducted in May 2009 showed that Hanoians are interested more in food price increases, stable jobs, bills they have to pay, petroleum prices and their children’s futures. Meanwhile, in HCM City, people are interested in health, bills they have to pay, stable jobs and a balance between job and life and debts.

Both Hanoians and Saigonese are becoming increasingly concerned about the future. They all said they have cut spending on luxurious items, eating out.

Consumers in Hanoi said they will cut spending, but they will still use products of the same brand names, while consumers in HCM City said they will keep the same level of spending, but will purchase cheaper products with less well-known brand names.

Nielsen has advised Vietnamese enterprises to diversify business strategies and products for consumers in the two cities, because a single strategy will not be enough to attract all Vietnamese consumers.

VietNamNet/VNE

43 provinces register information to export fruit to China

noreply@blogger.com (Business In Viet Nam) — Wed, 01 Jul 2009 00:52:00 +0000

VietNamNet Bridge – The National Agro-forestry and Fisheries Quality Assurance Department (Nafiqad) has sent an official letter to the Chinese side, providing a list of fruit-growing areas, fruit-packaging establishments and exporters of five types of fruit to China.

The official letter was sent on June 29 by Nafiqad to the General Administration of Quality Supervision, Inspection and Quarantine of China.

According to Nafiqad Deputy Director Nguyen Nhu Tiep, there are two ways of collecting and exporting fruit (litchis, longan, bananas, dragon fruit and watermelon) to China.

Merchants either collect fruit per order of Chinese clients and then export it in bulk to be packaged later, or collect fruit and then package it for direct export or sale to establishments that export to China.

Therefore, the lists the Vietnamese side sent to China include 1/ a list of fruit-growing areas 2/ list of establishments that collect fruit and export fruit in bulk and 3/ list of establishments that package fruit for direct export or sale to establishments that export to China.

The lists will be updated and sent to Chinese concerned agencies whenever there are changes or new information comes up.

Watermelon proves to be the type of fruit that has been registered the most, by 43 provinces. Fourteen provinces have registered to export litchis, including big litchi-growing areas in Hai Duong, Bac Giang, Quang Ninh, Thai Nguyen and Vinh Phuc. Twenty eight provinces have registered as longan-growing areas, 30 provinces have registered to export bananas and three to export dragon fruit.

The list of the establishments that collect and export fruit in bulk includes one enterprise and 56 establishments for litchi export, nine enterprises and 137 establishments for longan, one enterprise and five establishments for banana export, one enterprise and 19 establishments for watermelon export. There are also 44 enterprises and 14 establishments that have registered to export dragon fruit in bulk.

Currently, there are five establishments that package fruit for sale to establishments specialising in exporting fruit to China. All of them are in Binh Thuan province.

In the official letter, Nafiqad asked Chinese concerned agencies to create favourable conditions for Vietnamese establishments to maintain the existing ways of collecting and exporting fruit.

The agency has asked the Chinese side to provide a list of orchards and fruit-packaging workshops in China which export fruit to Vietnam prior to July 1 as agreed upon by the two sides at a meeting on January 9, 2009.

Ha Yen

Is petrol price in Vietnam high or low?

noreply@blogger.com (Business In Viet Nam) — Wed, 01 Jul 2009 00:51:00 +0000

VietNamNet Bridge – One year ago, when the world’s oil price peaked at $147 per barrel, the domestic petrol price was 19,000 dong per litre. Nowadays, the world’s oil price has fallen by 50 percent to around $70 per barrel, but the domestic petrol price is 13,500 dong per litre.

Importers claim losses

Since the beginning of April, the domestic petrol price has increased four times by 2,500 dong per litre in total, or 22 percent. At the same time, the petrol import tax has been slashed from 40 percent to 20 percent currently. The Ministry of Finance has been trying to help ease the burden on petrol importers by allowing importers not to make contributions to the petrol stabilisation fund and not to pay debts to the state budget now.

However, petroleum importers still complain they are incurring losses.

Vuong Thai Dung, Deputy General Director of Petrolimex, which holds 60 percent of the market share, said that though the petrol price has been raised by 1,000 dong per litre since June 10, his company is still incurring heavy losses of 1,800-1,900 dong per litre of petrol sold, 1,500 dong per litre of diesel and 1,000 dong per litre of FO.

The same is said by other petroleum importers. Representative from Military Petroleum Company said that it is incurring the loss of 1,000 dong per litre of petrol, while Dong Thap Petroleum Company has reported the loss of 1,500 dong per litre of petrol.

“In fact, the previous petrol price increases just helped enterprises break even for several days. After that several days, the world’s oil price moved up again and the companies began losing money again,” said a representative from Petec.

Petrol distributors all say that the domestic petrol price was curbed at a low level for a long period. Therefore, the modest price increase of 1,000 dong per litre each time has done nothing to offset their losses.

They believe that the petrol price should be 15,500 dong per litre, which they say would allow them to break even.

Domestic price under pressure

If following the formula that the world’s oil price has dropped by 50 percent from the peak and the domestic price ought to drop by 50 percent as well, the domestic petrol price should be some 9,000 dong per litre only, or 4,500 dong per litre lower than the current price level.

Vuong Thai Dung of Petrolimex acknowledged that the domestic petrol price has not decreased in accordance with the world’s oil price decrease.

Dung has attributed this to the changed petrol pricing scheme. He said that at the time when the petrol price reached its peak, the State subsidised the petrol price, while the mechanism has stopped and now in Vietnam, the petrol pricing is following the market rules.

Petrol importers now have to pay higher taxes and fees than they did at the time of the world’s peak price. In July 2008, when the world’s crude oil price climbed to $147 per barrel, the import tax was 0 percent, while the petrol fee was just 500 dong per litre.

Dung said that the 19,000 dong per litre of petrol at that time was just a ‘virtual’ price, which did not reflect the actual production cost. The retail petrol price should have been 24-25,000 dong per litre at that moment. At that time, the 19,000 dong per litre was set because the state compensated importers for losses and accepted losses from petrol import taxes.

Meanwhile, Dung said, 30 percent of the production cost of every litre of petrol is being paid to the state budget, including the 20 percent import tax and the petrol fee which has been doubled to 1,000 dong per litre. Meanwhile, the VND/US$ exchange rate has increased by 200-300 dong per dollar.

In December 2008, when the crude oil price fell to the record low at $42 per barrel, down by 3.5 times from the peak price, the domestic petrol price decreased by 42 percent only to 11,000 dong per litre from the highest peak level of 19,000 dong per litre.

The modest petrol price decrease has been explained by the fact that the petrol import tax at that time was at a record high of 40 percent.

In the last two months, the crude oil price has increased by 71 percent from $42 per barrel to $72, while the price once hit the $79 per barrel threshold. If the crude oil price continues moving up, petrol importers may seek permission for another price increase.

Pham Huyen

BUSINESS IN BRIEF 30/6

noreply@blogger.com (Business In Viet Nam) — Wed, 01 Jul 2009 00:51:00 +0000

Largest commercial complex under construction

The Hanoi Savico Joint-stock Company expects its plaza project covering 60,000 sq.m. would be put into operation by late 2011, becoming the largest of its kind so far in Vietnam.

The Savico Plaza Hanoi, construction of which started on June 26 in Hanoi ’s Long Bien district, has been designed to consist of a hypermarket, European and Asian food restaurants, fast food courts, cafes, entertainment spaces and cinemas.

More eight projects in Ninh Binh province licensed

Eight projects with a total capital of VND 700 billion have been licensed to invest in the industrial zones in Ninh Binh province in the past six months, announced Ninh Binh’s Department of Planning and Investment.

Out of these investments, the foreign direct investment (FDI) accounts for US$30 million. The amount is invested in such fields as: technology, cement, metal, footwears, textiles and others. These projects are being deployed so as to have them put into operation soon.

Contract for providing gas compressor module signed

The signing ceremony on providing gas compressor module to the project of collecting gas from the Mo Rong and Doi Moi oil fields was opened at the headquarters of Vietsovpetro in Vung Tau city, Ba Ria-Vung Tau province on June 29.

The project, with a total investment capital of US$42.4 million, is under the contract between the Vietnam-Russia Oil and Gas Joint Venture (Vietsovpetro) and Global Process Systems Company (Singarpore).

The gas collection project is one of the most important projects of Vietsovpetro and scheduled to be executed in 14 months. The project will help to collect gas during the oil exploitation process as well as avoid letting gas flare away in order to protect the ecological environment.

Gas worth thousands of US dollars has flared away. So, the urgent deployment on the gas collection project is a matter of great importance especially when the volume of exploited gas has been declining.

Bumper crop of winter-spring rice

The country has finished harvesting the 2009 winter-spring rice with an output of 18.6 million tonnes, up 312,000 tonnes compared to the last crop, according to the Ministry of Agriculture and Rural Development.

The average yield was also increased by 0.1 quintal a hectare to 60.9 quintals a hectare.

In the northern provinces, thanks to the favourable weather conditions, the natural water source is enough for the cultivation of 1.15 million hectares of winter-spring rice. The output is estimated to reach 6.8 million hectares, up 120,000 tonnes over the previous crop.

In the southern provinces, farmers also has a bumper rice crop due to the favourable climatic conditions along with many effective measures on controlling diseases and expanding cultivated areas. Because of the increasing cultivated area, the output of the Cuu Long river delta also went up by 23,000 tonnes to 9.8 million tonnes against the previous crop.

The Ministry of Agriculture and Rural Development also asked the southern provinces to sow rice seeds for the summer and autumn-winter rice crop in combination with encouraging farmers to expand cultivated area and increase the number of crops per year.

Japan-Vietnam alliance to advise high-speed railway project

An alliance between a Japanese and a Vietnamese consultancy firm has been chosen to study the feasibility of a high-speed railway project to link Hanoi and Ho Chi Minh City.

State-run Vietnam Railways, the investor, has tasked Japan’s Tonichi Engineering Consultants Inc. and Hanoi-based Railway Construction and Investment Consultant JSC consulting firms to assess the US$33 billion railway plan in one month.

The 1,630-kilometer high-speed railway will be built with aid from Japan.

A section of the route between Hanoi and Vinh, a town in the central province of Nghe An, as well as a section between HCMC and Nha Trang in the south-central province of Khanh Hoa, are expected to become operational in 2020. The whole line is scheduled for completion in 2035.

After analyzing three of the world’s most advanced high-speed railways – Japan’s Shinkansen, France’s TGV and Germany’s ICE – the project manager Vietnam-Japan Consulting Joint Venture suggested the use of the Shinkansen “bullet-train” model.

The track, with a wider gauge of 1.45 meters, will reduce the train journey between Hanoi and HCMC to less than 10 hours from more than 30 hours now with speeds of up to 360 kilometers per hour.

The country's north-south trains now travel 1,726 kilometers between the two cities on a single track with a narrow 1m gauge.

VietNamNet/VNA, TN, ND

Japan endorses historic Vietnam trade deal

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 08:45:00 +0000

Vietnam Government Website

Japan has endorsed a historic trade deal with Vietnam to reduce import taxes on the majority of goods traded between the two nations.

The Japanese parliament approved the Vietnam Japan Economic Partnership Agreement (VJEPA) on June 24, allowing the pact to take immediate effect.

The agreement sets a schedule for import tariff reductions over the next 10 years that will apply to a range of sectors, including as agriculture, industry, trade, investment, human resource development, tourism, environment and transport.

Vietnam’s National Assembly endorsed the agreement in May, after officials from the two nations concluded their negotiations on the terms of the trade deal last year.

Under VJPEPA, 92 percent of goods traded between Japan and Vietnam will not attract any import taxes.

Tariffs on as much as 86 percent of aquatic, agricultural and forest products and 97 percent of industrial items Vietnam exports to Japan will also fall.

Japan will slash the tax on cuttlefish and shrimp imported from Vietnam to 1 to 3 percent, while Vietnam’s mineral exports will be levied at zero percent tax.

The trade pact with Vietnam contains the biggest tariff reductions Japan has ever committed to with an Association of Southeast Asian Nations (ASEAN) country.

In return, Vietnam agreed to reduce import tariffs on nearly 88 percent of goods imported from Japan within 10 years.

Import taxes on spare parts for flat screen TVs and DVDs will fall to 3 percent, while the import taxes on digital cameras, color TVs and automobile spare parts will drop to between 10 and 20 percent.

VJEPA is the first bilateral trade deal Vietnam has committed to with another nation since being admitted to the World Trade Organization (WTO) in 2007.

Vietnam-Japan trade turnover reached more than US$15.5 billion last year, with Vietnam’s exports to Japan reaching $8 billion and Vietnam importing $7.5 billion of goods and services from Japan.

The two nations have agreed to lift two-way trade to US$17 billion by 2010.

Vietcombank shares jump on debut, index down

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 08:42:00 +0000

Reuters

Shares in Vietcombank, Vietnam's largest partly private lender, jumped by the maximum 20 percent allowed on their domestic debut on Tuesday, but the small size of its listing limited the impact on the main index, which ended lower.

The stock closed at VND60,000 in a partial listing of the Hanoi-based bank on the Ho Chi Minh City Stock Exchange, at the top of a range of investors' bids that started at VND59,000, Reuters data showed.

"Vietcombank's listing had no influence on the market at all because the bank only listed part of the IPO shares so its market capitalisation is very small," said Bui Hai Nguyen, a trader at Hanoi-based Bao Viet Securities.

The exchange's VN Index closed down 2.63 percent at 448.29 points as domestic investors took profits. The market has risen 42 percent this year.

Vietcombank, the first state-run bank in Vietnam to have an initial public offering, raised US$652 million from its IPO in December 2007.

The lender, also known as the Commercial Joint Stock Bank for Foreign Trade of Vietnam, is now valued at around $4 billion, based on its share close.

Stock market regulators have said foreign investors could buy all 112.3 million shares now listed, which represent 9.2 percent of the total shares of the lender, below the government's foreign ownership cap of 30 percent of a Vietnamese bank.

Vietcombank's listing after the June 25 debut by Vietnam's top insurer, Bao Viet Holdings, and ahead of VietInbank scheduled for July 16 could give the market a fillip after a slump last year.

But dealers said Vietcombank shares, along with those in Bao Viet Holdings, could face selling pressure.

"Vietcombank's starting price is high and after the first few 'market welcoming' sessions, it will pull down the index in the longer term," Nguyen said.

Most financial shares lost ground on Tuesday after the central bank announced it would keep its base rate steady in July at 7 percent.

Bao Viet Holdings closed up 4.95 percent at VND53,000, but Saigon Securities dropped 4.47 percent to VND64,000 and Sacombank fell 2.78 percent to VND34,900.

On the Hanoi Stock Exchange, Asia Commercial Bank, Vietnam's largest listed firm by capitalisation, eased 1.2 percent to close at VND49,000.

Fitch Ratings downgraded Vietnam's local currency sovereign rating to BB-minus from BB on Tuesday, citing sustained fiscal decline and structural economic weaknesses.

Finance Ministry expert says price increases are ‘no surprise’

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 08:40:00 +0000

VietNamNet Bridge – Three straight months of consumer price increases (0.35%, 0.44% and 0.55%) have raised public apprehension that another inflationary period is beginning. However, Dr. Vu Dinh Anh, Deputy Head of the Market and Price Research Institute at the Ministry of Finance is not worried. “The CPI increases are not a surprise at all,” he says, and predicts that they will not exceed 10 percent for all of 2009.

Vu Dinh Anh: “The CPI increases are not a surprise at all”

Anh told the online journal VnEconomy that “we can say for sure that the consumer price performance in the first six months of the year was according to economic laws. It followed exactly the same path that prices did in the first six months of 2007. The price went up in the first two months of the year (the Tet holiday – ed.), went down in March and then went up again for the next three months at an increasing rate.

However, the price increase every month so far this year was lower than that of 2007. For example, in May, the CPI increased by 0.44 percent, compared to 0.77 percent in May 2007. This month (June), the CPI will rise by 0.55 percent, while it was 0.85 percent in June 2007.

The CPI increases are not a surprise at all. We should be glad because the increases are relatively low.

Why is the CPI performance in the first six months of the year is similar to that in 2007?

Let’s recall the economic situation of 2007. That year, we strived to obtain a high economic growth rate of 8.5 percent. We loosened monetary policy, and finished the year with 8.48% growth.

The situation seems to be similar in 2009. We are striving to obtain a “not too low growth rate” instead of striving to obtain a “high growth rate.” I mean we still strive for economic growth, and similar policies have been applied.

The Ministry of Planning and Investment has announced that the total money supply (M2) has increased by 16 percent and the outstanding loans have increased by 17 percent compared to the end of 2008. How have these factors affected prices in the first half of the year?

The four percent interest rate subsidy program has caused a large amount of cash to be put into circulation. But that was a one time stimulus. If the increase in the money supply is held to 25 percent from now to the end of the year, there will be no possibility of inflation.

In general, an increase in the money supply will push up prices six months later. Thus the money supply increase of 2007 led to considerable inflation in 2008.

Do you mean that we will face high inflation in 2010 if we put a lot of money into circulation in 2009?

Money supply is just one factor that can cause high inflation. We still have to consider the spending of the state. The state budget deficit has been set at eight percent. If the state’s investments are effective, this will not cause high inflation.

Let’s me explain this. If the State spends money on building a road, it seems at first that this will cause inflation because the state puts money into circulation. However, if the state’s investment brings an economic benefit that stimulates additional production, this will not cause inflation.

In the first three months of the year, some 70 tons of gold were exported, which brought in $2.3 billion in cash. Do you think that the influx of cash will affect the CPI?

As far as I know, the $2.3 billion has gone to gold trading companies and banks and has been staying there.

Bank interest rates have been going up. Will this lead to interest rate increases by making capital costs higher and goods prices higher?

Think this way. When the interest rates go up, this will help reduce inflation because it will help lessen the supply of money in circulation.

Businesses will think twice before deciding whether to borrow money, and, if they borrow less, their production is likely to be less too.

Some experts have warned that high inflation is going to return. Do you agree?

It’s not worth worrying about, in my opinion.

We have implemented demand stimulus packages and we have hit our target for increased consumption (the total retail turnover of goods and services in the first six months of the year increased by 20 percent over the same period of the last year). This is a good thing. If we were to think that prices go up because of higher consumption and try to reduce consumption, of course that would undercut the objective of stimulating demand.

How high will be the inflation for 2009, then?

I think that the inflation will be held to below 10 percent.

VietNamNet/TBKTVN

Fertiliser industry needs strategy

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 08:39:00 +0000

VietNamNet Bridge – Viet Nam was importing up to 100 per cent of its fertiliser requirements, the Information Centre for Agriculture and Rural Development (Agroinfo) said.

Domestic fertiliser prices depend on fluctuations in world price, which often sit at high levels.

About 90 per cent of the urea used, 70 per cent of the potassium diammonium phosphate (DAP) and all the sulphate ammonia (SA), as well as potassium fertiliser, is imported to satisfy domestic demand.

The Ministry of Industry and Trade has estimated the demand for fertilisers for the coming summer-autumn rice crop of about 1.84 million tonnes will include 400,000 tonnes of urea, 170,000 tonnes of SA, 200,000 tonnes of potassium, 160,000 tonnes of DAP and 910,000 tonnes of NPK.

Domestic fertiliser prices depend on fluctuations in world price, which often sit at high levels. Fertilisers often accounts for 30 to 40 per cent of agricultural product prices.

Retail fertiliser prices in some regions have risen VND100-500 per kilogram. Urea price in the Southern provinces of Kien Giang and Dong Thap rose VND240 to VND6,540 (US$0.37) while that of potassium is between VND12,800-13,000 after rising VND200-500.

Demand for the summer-autumn rice crop is increasing sharply, which will have a negative influence on farmers' incomes.

Agroinfo manager Pham Quang Dieu said the industry would continue to operate without long-term growth strategies and management while policies remained passive.

Agroinfo's database on fertiliser industry shows Viet Nam has since 1999 had about 60 legal documents regulating the industry. All are continuously replaced and have limited use.

"To minimise dependence on imports, the ministry is boosting research on advanced fertiliser production technologies while encouraging farmers to use bio-fertilisers to reduce production costs," said the head of MARD's Cultivation Department, Nguyen Tri Ngoc.

Demand for fertiliser is expected to increase throughout the world and especially in many developing countries during the coming decades.

"Prominent fertiliser corporations worldwide will pour significant capital into developing countries and Viet Nam needs a long-term growth strategy for the industry," Ngoc said.

VietNamNet/Viet Nam News

Beer sales surge as mercury rises

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 08:39:00 +0000

VietNamNet Bridge – Vietnamese have been spending up large on beer and soft drinks during the summer, much to the delight of distributors.

Since the end of last month, sales of beverages and beer have increased sharply, as have prices in many areas.

"I could sell 25 to 35 cases of soft drinks a day," said a store owner from the central city of Da Nang. A retailer in Hai Chau district said his shop had its orders trebled compared to previous summers.

"Every summer, we ordered beer and soft drink delivers once a week. Now, we have to order every two days," he said.

Demand for beer also surged in Ha Noi; to meet demand, alcohol and beer companies have increased capacity, said Nguyen Van Hung, general secretary of the Viet Nam Alcohol Beer and Beverage Association.

The Ha Noi Alcohol, Beer and Beverage Company increased daily capacity from 160,000 litre of draught beer to 180,000. Some days, productivity was more than 200,000, Hung said.

Along with beer, demand for soft drinks and fresh beverage like sugar cane juice and coconut juice increased significantly.

"It is the season for soft drink sales, but this year the demand has strongly increased," said Le Duc Truong, an official of Sen Le Company, a soft drink distributor in Da Nang city.

"Every day, we supply about 1,200 cases to Hai Chau district. All of us had to run to meet demand," he said. Despite the efforts to hold prices, beer and soft drink prices have increased nationwide.

At a Ha Noi market, the cost of a case of 24 Ha Noi beer bottles has risen from VND125,000 (US$7) to VND240,000 ($13), while in central regions bottle prices are up about VND14,000 ($0.70).

Sugar cane juice

Nguyen Duc Phu, deputy director of the Ha Noi Alcohol, Beer and Beverage Company, said distributors increased prices, which affected the company's prestige and trademark.

Like beer, bottle prices for soft drinks have increased about VND2,000.

During some sweltering days in Ha Noi, the price of some cups of ice tea trebled to VND3,000 while cups of sugar cane juice doubled.

Ice producers can't match demand, so prices increased. That's why we have to increase the price of sugar cane juice, said Hoa, a seller in Ha Noi.

The association has demanded companies stabilise prices and has asked them to manage their systems so distributors can't raise prices by themselves.

VietNamNet/Viet Nam News

Time-share vacation apartments and villas multiply on central coast

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 08:38:00 +0000

VietNamNet Bridge – Wealthy Vietnamese are buying villas and apartments in coastal resort projects and using them to serve both their vacation and investment needs.

Purchasing apartments and villas both to stay in and to earn money

In years past, rich people in big cities would buy land in the countryside or at the beach and build villas where they would stay just a few days a year on holiday. However, these days, they choose to purchase apartments and villas at tourism complexes and then assign management to the project developers who arrange to rent the properties to other vacationers for short periods. With these investments, the owners can have a a place to stay during holidays, while their property still can earn money when they are in the cities.

Doan Duc Hoa, Deputy General Director of Thu Thiem Investment Company said that investment in resort real estate is taking shape in Vietnam and it will flourish in time to come.

Hoa said that having realized the high demand, his company is building a 21 hectare eco-tourism resort in Mo Cay district of Ben Tre province. The project is capitalized at 250 billion dong. The company will build apartments and villas for sale and lease. If the clients purchase villas and apartments but only plan to stay for just a few days a year, the company can manage the apartments and villas on the owners’ behalf. The profit from the leasing will be divided equally.

Indochina Land recently offered 150 apartments and 30 two story villas at the Hyatt Regency Da Nang Resort & Spa at $180,000 for each apartment and $1.3 million for each seaside villa. Within a month, more than half of the apartments and villas in the ‘time-share’ project have been sold.

Micheal Piro, an Indochina Land executive, says the buyers of the apartments and villas can stay in them at no cost for one to three months a year. The apartments and villas will be managed by the company in the remaining time and leased to visitors. In this case, investors act as ‘shareholders’ of the resort projects, while they do not have to spend tens of millions of dollars to build the whole resort.

Developers promise high profits

Also according to Indochina Land, the apartments will rent for $300-400 per night, and a villa will rent for $500. If an apartment is rented for 70 days a year, the apartment buyer will be able to recover his capital within seven years. And during that time, the buyers will be able to use the apartment for up to three months each year.

Thien Thai Hotel and Tourism Company is developing another Danang beach project, Ariyana. It has committed to rent the villas on behalf of buyers at some $1,000 per month.

Real estate developers said that if the resorts have good business and can attract a lot of vacationers, the owners of the apartments and villas will have high profits at the same time the value of the apartments and villas will increase. If so, they can easily resell the apartments and villas to other wealthy people who also like beach vacations.

Another real estate developer, CBRE, judges that investors can profit from time-share developments in Nha Trang, Mui Ne, Da Nang and Hoi An, well known vacation destinations with ideal natural conditions. However, CBRE doubts that beaches like Do Son (near Hai Phong City) will support the same sort of investments, because Do Son mostly serves middle class vacationers who can’t afford luxury rental charges.

VietNamNet/DV

Stocks tread water as trading volumes slow

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 08:37:00 +0000

VietNamNet Bridge – The VN-Index closed off a hair yesterday, June 29, to 460.02, a loss of just 0.21 per cent, as trading volumes on the HCM City Stock Exchange slowed to 27 million shares, worth a combined VND1.1 trillion (US$61.8 million).

Last week, capital began flowing away from real estate shares, and there were signs that it was being poured into the banking and finance areas.

Foreign investors finished the day as net buyers of 532,000 shares, with a net value of VND52 billion ($2.9 million) and an overall volume of 8 million trades.

On the Ha Noi Stock Exchange, the HNX-Index also dropped by 1.25 per cent to end the day at 153.80. The value of the day's trades on the northern bourse was VND505.5 billion ($28.4 million) on a volume of 14.3 million shares. Foreign investors there accounted for more than 3 million of this total, worth a combined VND140.3 billion ($7.9 million).

Banking shares continued to lead both markets, with Sacombank (STB) generating orders for 4.7 million shares, or 17 per cent of the total volume on the southern exchange, and Asia Commercial Bank (ACB) a volume of 2.1 million shares, 15 per cent of the trades on the northern bourse.

Last week, capital began flowing away from real estate shares, and there were signs that it was being poured into the banking and finance areas, said Sai Gon-Ha Noi Fund Management Co analyst Ngo Van Minh.

Meanwhile, domestic stock indices were still in a downward cycle of adjustments that began in mid-June, Minh said. Market moves were now "complicated and hard to predict [as] market psychology is a mix of hesitation, caution and hope".

All eyes have turned to the listing of shares by Vietcombank. Many investors expected the listing would support market growth, but "there are many opinions expressing concern that market increases will be opportunities for major organisations and funds to unload their holdings," Minh said.

He noted that Dragon Capital and PetroVietnam Finance had dumped large quantities of shares from their portfolios recently.

The spike in the price of Bao Viet Holdings (BVH) immediately after the shares were listed - with Vietcombank likely to turn in a similar performance - was "not very likely to be good for the market at this time," he added. Immediately before and after the BVH listing, he noticed, shares were gradually withdrawn from other insurance shares including Bao Minh Insurance (BMI), PetroVietnam Insurance (PVI) and Viet Nam National Reinsurance (VNR).

Minh predicted the market would play out the week with mixed developments and on overall downward trend. "Weakened demand during last week is truly hindering market increases," he said.

But Viet Capital Securities Co analysts wrote in a report that if capital flows remained stable this week with an average trading value of VND1.5 trillion per day, they could sustain the market. Below that level, he said, "the market would likely experience a phase of adjustments before second-quarter business results are announced."

The fledgling unlisted public companies market (UPCoM) continued to struggle, following another 6.89 per cent yesterday to 81.83. Only Phong Phu Pharmaceuticals (PPP), up 1.2 per cent, and cable producer Truong Phu Co (TGP), up 1.2 per cent, managed gains on the day.

Market value on UPCoM fell 20 per cent from the previous trading session to VND4 billion ($224,700) on a volume of nearly 278,000 shares. Market leader SME Securities (SME) accounted for 60 per cent of the volume, but with only about 170,800 shares traded.

VietNamNet/Viet Nam News

Positive signs for VN’s textile, garment sector

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 08:35:00 +0000

Wokers have jobs when textile and garment companies have orders. (Photo: SGGP)

VietNamNet Bridge - Due to the world economic downturn, businesses in the textile and garment sector faced a decline in exports and a lack of orders in the first few months of the year. However, there are clear signs of recovery, with the number of orders improving.

Increasing orders

At the end of this year’s second quarter, the number of orders at textile and garment businesses in Ho Chi Minh City have increased by 15-20 percent compared to the first few months of the year.

Most businesses have orders from foreign partners, which will keep them busy until the third of quarter.

According to Phung Dinh Ngo, director of Binh Hoa Garment Company, the company has had recent orders, with exports to the EU showing satisfactory results in the second half of the year.

Pham Xuan Hong, chairman of Sai Gon 3 Garment Joint Stock Company, said his company has earned US$25 million from garment exports this year. Exports to Japan accounted for 65 percent, with orders from America and the EU stabilizing.

Vietnam has achieved remarkable growth in garment and textile exports to Japan at a time when exports to its major markets, like the US and the EU, plunged.

According to textile and garment companies, many importers stopped orders or hastily cut orders during the economic downturn. When the world market began to improve, traders did not have enough goods to sell, leading to the recent increase in orders.

The quick recovery of Vietnam’s textile and garment industry has shown its particular advantages compared to other countries.

Chairman of The Vietnam Textile and Apparel Association (Vitas) Le Quoc An said Japanese importers are switching their orders from other countries to Vietnam, as they appreciate the consistency in the quality of Vietnamese made clothes and the skill of its workers.

Vietnam’s textile and garment exports in the first six months of this year totaled more than $4 billion, a decrease of 1.3 percent compared to the same period last year.

The decrease is much lower than the forecast of 15 percent and was relatively lower than other countries.

Textile and Garment exports still achieved growth rates in Japan, Korea, Taiwan and Norway.

The highest growth was for Japan at 25 percent.

The recent signing of the Vietnam-Japan Economic Partnership Agreement is expected to help further increase Vietnamese clothing exports to Japan.

Under the treaty, from July 1 Japan will eliminate import tariffs on Vietnamese textiles and garments that use raw materials of Vietnamese, Japanese or ASEAN origin.

Taxes are currently five to ten percent.

Pham Xuan Hong, deputy chairman of Vietnam Textile and Garment Association, said exports increased to Japan due to Vietnam’s quality orders and reasonable prices.

Increasing orders, decreasing workforce

Orders and workers are two the most difficult aspects at the current time for the textile and garment sector.

With the positive signs from the market and stable long term contracts, businesses do not have enough workers.

Many companies have had to outsource to fulfill contracts.

The serious shortage of workers has forced many garment companies to recruit untrained workers and offer attractive salaries. This compares to the number of job losses in the clothing industry worldwide.

At some businesses, there has been a 50 percent drop in the work force since the end of 2008.

Pham Xuan Hong, a member of the association, said some companies laid-off workers when they had no orders, but when they have orders they face difficulties in recruiting workers.

In the first few months of the year, many companies cut down on workers when they had no orders. This resulted in many of the trained workforce returning to their hometowns. Companies do not know where to find them in order to resume normal production.

Ho Chi Minh City based textile and garment companies, on average, are 10 -15 percent short in employees.

Many companies have offered more than VND2 million per month and ensured rewards for Tet, but are still struggling to recruit enough workers.

With the problems in hiring enough staff, the industry expects to make $9.1 billion compared with the initial target of $9.5 billion this year.

VietNamNet/SGGP

Car importers accused of bringing used cars by air

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 00:20:00 +0000

VietNamNet Bridge – More and more luxury cars are coming to Vietnam by air instead of by sea. However, automobile dealers believe that many car importers are ‘dodging the law’ as used cars are not allowed to be brought to Vietnam by air.

The Vantage Roadster, which arrived in Noi Bai airport on June 24

A lot of luxury cars of different brand names, including Porsche, Cadillac, Rolls Royce Phantom and Bentley, have been flown to Vietnam. Analysts say that it costs some $4000 to 10,000 to bring a car to Vietnam by air, a ‘reasonable level’ compared to the cost of being brought by sea, while it is faster and safer.

However, in fact, car importers and owners do not have a choice on whether they can bring cars to Vietnam by air or by sea. Current laws stipulate that only brand new cars can be brought to Vietnam by air, while used cars must be shipped by sea.

A car with the mileage of 10,000 kilometres is considered a used car.

Meanwhile, a well-known car importer in HCM City is claiming that many luxury cars which have been imported recently by air are used cars. “I’m afraid that if this is not stopped, it will create a bad precedent,” he said.

Deputy General Director of Department of Customs Nguyen Van Can said that he had not heard about shipments of used cars by air. However, he has promised to check and clarify the issue.

According to Can, used cars only can enter Vietnam through Hai Phong port, Cai Lan port in Quang Ninh province, HCM City and Da Nang.

Customs procedures must be followed by importers right at the local border gates where importers register for customs clearance. Used imports only get cleared after their quality is assessed by the Vietnam Registration Administration (VRA) and importers pay tax.

VietNamNet, VNE, TT

Dollar price to climb to $18,500/US$ this year?

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 00:19:00 +0000

VietNamNet Bridge – While US$ interbank interest rates have been decreasing, the VND/US$ exchange rate keeps rising.

US$ interest rates decreasing slightly

According to the State Bank of Vietnam, VND lending interest rates last week were more stable than the previous week. The lending rates applied by state-owned banks last week were between 8.5-10 percent per annum for short-term loans and 10-10.5 percent for medium- and long-term loans.

Meanwhile, the VND lending interest rates offered by joint-stock banks hovered around 10-10.5 percent per annum. Those clients who can borrow money under the 4 percent interest rate subsidy programme only had to pay 4.5-6 percent per annum.

The average VND overnight interest rate was 5.44 percent per annum, a decrease of 0.1 percent over the previous week, while the rates of other terms of loans were between 6.3-8.6 percent.

Meanwhile, the US$ lending interest rate decreased by another 0.3-0.5 percent last week to 4-6 percent per annum. The interbank US$ interest rates also decreased last week from previous weeks.

Deputy Director of a joint-stock bank said that commercial banks had to slash US$ interest rates further in order to push up loans in the context of profuse US$ capital. However, he said that the interbank’s US$ slight decreases would not have big impacts on US$ loans. He said that this is a factor for which commercial banks may consider slashing deposit interest rates further in the time to come, though the current US$ deposit interest rates are considered relatively low.

The expected exchange rate at VND18,500/US$1

Commenting about the VND/US$ exchange rate’s performance recently, Dr Nguyen Dai Lai, senior analyst from the State Bank of Vietnam, said that the exchange rate was stable in the first six months of the year.

Considering import and export turnover decreased sharply in the last few months, one would think that the exchange rate would go down. However, in fact, the VND/US$ exchange rate was stable and sometimes heated up in early May and late June.

In the market, commercial banks have quoted exchange rates at the ceiling allowed, even since the exchange rate trading band was raised from +/-3 percent to +/-5 percent. The fact that commercial banks quote a single level for both purchasing and selling prices and quote at the ceiling levels show that the market is expecting the VND to devaluate more than 5 percent, the ‘quota’ which the State Bank granted for the exchange rate in 2009.

Currently, the VND/US$ exchange rate applied by commercial banks is always at the ceiling level round 17,800-17,802 dong per dollar. The cautious and hesitant exchange rate loosening by the State Bank in the last two weeks brings hopes that the exchange rate may be loosened more towards the year’s end.

According to Dr Vo Tri Thanh, Deputy Director of the Central Institute of Economic Management (CIEM), people expect the VND/US$ exchange rate to climb to 18,500 dong per dollar.

VietNamNet/VnMedia, LD

Securities companies to raise profit targets on recovered market

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 00:19:00 +0000

VietNamNet Bridge – Many securities companies are considering adjusting their profit targets for 2009, expecting this year’s profit to be higher than the goals they made earlier this year.

The recent ‘strong waves’ in the market have made securities companies more self-confident

The stock market has witnessed ‘strong waves’ in the second quarter. In the last three months, the VN Index and HNX Index have increased by over 100 percent with many records in trading volume and value set. Though indexes have been decreasing for a few trading sessions, analysts still believe that these are just momentary decreases and that the market will prosper in the time to come.

Securities companies, emboldened by the warming of the stock market, have decided to increase profit targets.

When setting business targets, a lot of securities companies were in bad condition due to the continued decline of stock indexes. Many of them just set moderate targets for this year, while others just dreamed of breaking even.

However, the recent ‘strong waves’ in the market have made securities companies more self-confident.

Trang An Securities Company, for example, earlier this year said it would just strive to balance the accounts in 2009, a year that economists warned would be very difficult for all businesses. However, General Director of Trang An Le Ho Khoi has said that if the VN Index returns to around 400-450 points, the company will earn 7-9 billion dong in profit this year. He has even predicted a higher profit level if the stock market prospers even further.

Nguyen Tho Phung, Deputy Director of Vietinbank Securities Company, has predicted that the company will have obtained 50 billion dong in profit by the end of June, or 83 percent of its yearly profit plan, while profit in the second half of the year will be the same at least.

Nguyen Van Dung, General Director of Tan Viet Securities Company, said that if the market keeps rising, the company’s profit will be double the planned level.

“The brokerage service of Tan Viet has been doing very well. We foresee that the yearly plan will be fulfilled in the first six months of the year,” he said.

Not only securities companies, enterprises in other business fields have also obtained impressive profit figures. The Da Nang Rubber Company, for example, earned 122 billion dong in profit in the first five months of the year, fulfilling 305 percent of its yearly plan. Bao Viet insurance group earned 842 billion dong in profit during the same period, fulfilling 108.6 percent of its yearly plan.

As such, it is expected that enterprises in different business fields will heighten their profit targets after considering the better signs of the national economy.

Le Thi Mai Linh, Deputy Chairwoman of SeaBank Securities Company, said that as securities companies greatly depend on the market’s performance, they always have to set business strategies suitable to different moments. Linh said that it is now the right time for companies to reconsider their business plans as they have the business results for the first half of the year.

VietNamNet/DTCK

The bond ‘test’ finishes

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 00:18:00 +0000

VietNamNet Bridge – There has been a sudden shift in the bond market: After a series of unsuccessful bond bids, the latest bond issuance succeeded thanks to reasonable interest rates.

On June 24, 1,500 billion dong out of 2,000 billion dong worth of two-year bonds issued by the Bank of Social Policies were sold in the bond bidding. The two institutions which joined the bids purchased the bonds at the rate of interest at 9 percent per annum.

In the last four months, 13 Government bond bids in VND failed or were not as successful as expected with limited volumes of bonds sold. The interest rates of the bonds being lower than the interest rates on the secondary market made institutions turn their backs.

“The last four months tested the patience of issuing institutions. The test has finished with the fact that issuance institutions have accepted raising the bidding rates of interest,” said director of a state-owned commercial bank.

This was the first time in many months that the rate of interest on 2-year bonds was raised to the 9 percent per annum threshold (it was 8.7 percent per annum at maximum previously). The 9 percent per annum level is now equal to the rates at which Government bonds are being traded on the secondary market. A question has been raised about why the institutions joined the bids if they could purchase the same bonds on the secondary market at the same price.

The answer is that on the secondary market, where investors trade issued bonds, it is not easy to purchase big lots of bonds worth several hundred billion dong. If institutions want to purchase bonds in big quantity, this may have big impacts on the market and push bond prices up, which means that bond yield will decrease. Meanwhile, by joining bids, institutions can purchase bonds in big lots while they do not bear the risks of price fluctuations.

It is clear that raising the interest rates of bonds is the only way to attract institutions to Government bonds. It seems that the task of issuing 55 trillion dong worth of bonds in 2009 has caused pressure, forcing issuers to accept higher rates of interest.

The Vietnam Development Bank (VDB) is expected to issue 500 billion dong worth of 2-year bonds and 500 billion dong worth of 10-year bonds in some days. Sources say that VDB will offer reasonable rates of interest to ensure the success of the issuance.

With 1,500 billion dong worth of bonds sold on June 24, the total volume of issued bonds has reached 7,500 billion dong so far. However, the volume proves to be small compared to the targeted volume of 55 trillion dong.

However, analysts believe that if issuers set reasonable interest rates, the Government will still be able to fulfill the bond issuance target. The Hong Kong and Shanghai Banking Corporation (HSBC) earlier this year predicted that the Government of Vietnam would issue bonds on the international market this year.

Prior to that, the Ministry of Finance announced that it will have to reconsider the plan on bond issuance after a series of failed bond bids recently.

Deputy Minister of Finance Tran Van Hieu said that the ministry will take necessary measures to fulfill the bond issuance plan set for 2009.

VietNamNet/DTCK

Ministries anticipate price increases of some kinds of goods

noreply@blogger.com (Business In Viet Nam) — Tue, 30 Jun 2009 00:17:00 +0000

VietNamNet Bridge – The Ministries of Finance and Industry and Trade have forecast that the prices of dairy products, petroleum, rice and animal feed will increase towards the year’s end, but affirm that they will be controllable.

An official from the Price Control Agency under the Ministry of Finance said that the agency believes dairy products will increase by another 6-8 percent by the end of the third quarter or early fourth quarter in comparison with the first quarter of the year. Meanwhile, the price of fresh milk, which is an input material for dairy products, is expected to increase by 3-4 percent.

Dairy product prices are expected to increase because of the higher animal feed prices and the dollar price increases, which may push imported dairy product prices up. The Ministry of Finance is now proposing putting dairy products onto the list of products the prices of which can be stablised by the state.

According to the Ministries of Agriculture and Rural Development and Finance, the rice price is also expected to increase because of higher demand from rice-importing countries.

Director of Tien Giang Food Company Nguyen Ngoc Nam said on June 28 that the paddy price in the Mekong Delta has been increasing sharply these days, especially scented rice. The rice price has increased by 200-300 dong per kilogramme over the last one week on average, while the scented rice price has increased by 800 dong per kilogramme in comparison with early June 2009. The price of low-quality IR50404 has also increased, having exceeded the threshold of 4,000 dong per kilogramme, though sales have been going slowly.

Experts say scented rice prices have increased because exporters have signed contracts to export big volumes of rice to Africa, Hong Kong and Singapore.

A lot of economic institutions in the world have raised the forecast crude oil price to $85 a barrel by the end of the year. If the world’s oil price increases, this will lead to the sharp price increases of many other products including ingot steel and materials for industrial production. The petroleum price increases will lead to the increases of transport service fees.

According to the Ministry of Finance’s Price Control, the LPG price in July in the world may increase by $20-30 per tonne. The retail domestic LPG price will increase accordingly by 5,000-7,500 dong 12kg tank.

Market research agencies under the ministries still keep cautious when analysing the price tendency of many products, including cement, steel fertiliser and sugar.

According to the agencies, though the demand for cement, steel and construction materials is high, the profuse supply (some big factories plan to become operational in the time to come) will stabilise these products’ prices. Meanwhile, rains and storms in the upcoming months are believed will limit the demand for these products.

Food prices are not expected to see big changes in the time to come. Regarding medicine, state management agencies have forecast the price increases of some kinds of products, but have affirmed there will not be any sharp price hikes.

VietNamNet/VnMedia