Weather

Saturday 19 June 2010

Vietnam - News and Regulations

REGIONAL TRADE - Vietnam is Asian trade's 'RISING TIGER'

While China continues to rule the US import trade, Vietnam's apparel industry is becoming a key component in an economic rebound that's gaining strength, according to the latest trade data from the PIERS Global Intelligence Solutions.

That's good news for the Port of Savannah, which in 2008 already had a nearly 30-percent market share of total US East Coast trade with Vietnam.

Now, a recently modified Suez service covering Southeastern Asia, Vietnam and South China will begin calling on Savannah this month, further strengthening the ties between Savannah and Vietnam.

Kawasaki Kisen Kaisha Ltd - more commonly known as "K" Line - will deploy nine 5,500-TEU container ships in cooperation with Mitsui O.S.K. Lines on a loop from Ho Chi Minh, Shekou, Hong Kong, Yantian, Singapore, Halifax, New York, Norfolk, Jacksonville, Savannah, Singapore and back to Ho Chi Minh.

"Savannah has become the port of choice for Suez services," said Ports Authority executive director Curtis Foltz.

"With this service we will participate in eight of the 10 services transiting the Suez Canal to the United States East Coast and in both of the direct services to the important growth market of Vietnam."

Until recently, container cargo between Vietnam and the US was transshipped via other Asian ports such as Singapore and Hong Kong because Vietnam's ports were shallow and limited to small feeder vessels. However, there has been significant port development in southern Vietnam near HCM City.

The first phases of the Saigon Container Port and the Saigon Newport-managed Tan Cang Cai Mep Terminal have been receiving vessels for the last year, with another five new deepwater terminals expected to be operational by the end of 2011.

These deepwater terminals are capable of handling Panamax and post-Panamax vessels and have opened the door for direct container services between Vietnam and the US

Massive growth

Trade between the Port of Savannah and Vietnam has grown considerably during the last five years, with Savannah's imports from Vietnam growing 148 percent and Savannah's exports to the nation increasing 294 percent. Savannah's main imports during 2009 were furniture, apparel, and food, specifically coffee, while key exports were food, namely poultry, cotton and lumber.

US cotton and hardwood lumber exports have helped support Vietnam's rising textile, apparel, footwear and furniture industries.

PIERS Global Intelligence statistics reveal Vietnam swiftly growing in US imports of women's apparel and infant wear.

During a five-year period from 2005 to 2009, Vietnam emerged as the leading country in these two categories, with imports nearly doubling on a compound annual growth rate of 17.4 percent.

This strong performance has allowed Vietnam to match Hong Kong's market share at 11 percent.

"Rapidly rising wages in China are forcing manufacturers to reconsider production facilities. Vietnam is becoming the clear alternative for low-cost producers," said Mario Moreno, an economist at PIERS.

Vietnam's prime minister reported at last week's World Economic Forum on East Asia that its economy will grow 6.5 to 7 percent this year after expanding 5.3 percent in 2009.

In the first four months of 2010, exports of computer and electronics jumped 40.8 percent, compared to the same period last year, said IMA Asia. Technology giant Intel will fuel that surge with a new packaging and testing plant in HCM City opening this year.

"In effect, we are seeing a very fast transformation of Vietnam's light industrial base," Richard Martin, managing director of IMA Asia, told the Journal of Commerce.SSVNEWS

ECONOMIC GROWTH - Vietnam targets 7.5 pct GDP growth in 2011

Vietnam economy is expected to return to fast growth momentum from 2011 onwards, the government said. GDP growth rate could reach 7-7.5 percent in the next year, it said.

This target has recently been given in government directive on the projection of socio-economic development plan and state budget estimate for the coming year. Under this directive, the state budget revenues needs to ensure mobilisation rate of more than 23 percent of GDP, of that, tax and fees rate is more than 21 percent of GDP.

The government expects the total domestic revenue (excluding revenue from crude oil and land-use fees) to be up by 17 to 19 percent from the estimate of 2010, revenue from exports and imports to increase by 7 to 9 percent.

Prime minister requested ministries and central agencies to cancel, modify or amend the ineffective and outdated regulations and policies that are no longer relevant to the actual situation; or submit to the competent authorities to do so. At the same time, those bodies need to propose additional regulations and policies that are essential for 2011-2015 period. That will make a foundation for restructuring and enhancing the efficiency of budget expenditure relevant to the management fields.

Prime minister assigned the Ministry of Planning and Investment to report the 2010 socio-economic development plan and state budget estimate this September to the government for comments, then complete and submit to the Congress.

According to the government's assessment, there may be some complicated and unpredictable changes in the world economy next year. The global economic recession has been in control, but the world economy has not yet regained growth momentum of the previous years. Hence, to achieve the target set, three major things are needed to be done, including improving the socialist market oriented economy, quickly developing the human resources and maintaining infrastructure constructions in harmony with a number of modern large scale works.

Vietnam expects to achieve a growth rate of 6.5 percent this year.SGTD

INFRASTRUCTURE/

TRANSPORTATION –

Government confident in high-speed railway project

Despite intense criticism over the costly express railway project, the government's determination to press on with it remains unshaken.

Deputy prime minister Nguyen Sinh Hung, speaking at the ongoing National Assembly session in Hanoi on Saturday after two and a half days of Assembly deputies grilling some ministers over pressing issues, said he was confident in the $56 billion project.

"I'm feeling secure about this express railway project. It must be done and I will be on the government's side to ask the National Assembly for clearance to carry out the project. We cannot do nothing," he said.

If approval from the legislature is forthcoming, the government will proceed with the project on a phase-by-phase basis, not the whole of it at once, he said, adding the government would balance resources in the implementation process.

To ease worries over how to secure huge finances for the project as expressed by National Assembly deputies, Hung reckoned that with the current pace of growth, gross domestic product (GDP) would amount to $300 billion by 2020, $700 billion by 2030, $1,200-1,400 billion by 2040 and $2,400-2,800 billion by 2050.

The respective GDP per capita will be $3,000, $6,000, $12,000 and $20,000, so it will still be safe if Vietnam borrows up to $150 billion, he said. "With such debt, we can still get the job done."

Outspoken National Assembly deputies earlier questioned the feasibility of the high-speed rail line that would be running in parallel with the existing aging system.

Nguyen Minh Thuyet, a deputy of Lang Son Province, said he suspected the objectivity in the project formation process. Only a limited number of Vietnamese and Japanese firms are involved in the formulation, evaluation, consulting processes, he said.

A deputy of Hai Duong Province, Le Dinh Khanh, proposed the project be delayed until GDP per capita had reached $3,000. This is because the country's current GDP totals over $100 billion.

Meanwhile, some other deputies threw support behind the project, saying it would create an impetus for economic development. "If we don't do it, the current railway network will become outdated, thus causing a bottleneck for economic development," said Nguyen Ba Thanh, Party secretary of Danang City.

Deputies of the National Assembly also asked government ministers tough questions about increasingly severe power shortages and forest land leasing to foreign firms.

Deputy Le Van Cuong of Thanh Hoa Province said lack of power supply was a big issue in the previous National Assembly session but it had not been resolved to date.

Deputy prime minister Nguyen Sinh Hung said the government took responsibility for this problem but to solve it, more investments should be made to build more power stations, and modernise power generation equipment.

As for the leasing of forest land in areas of importance to national defense, deputy Duong Trung Quoc said those who had leased out vast areas of forest land should be held responsible.

Hung said in response that this was a lesson from decentralising power to local authorities without supervision from the relevant ministries and that this issue would be reviewed and measures would be taken to deal with those responsible.SGTD

ECONOMY - Business sentiment runs high in Vietnam

Chief executives of domestic and foreign companies in Vietnam exuded an air of optimism last week when they discussed Vietnam's future economic outlook.

At a business luncheon organised in HCM City last Friday by the British Business Group Vietnam (BBGV) and the European Chamber of Commerce in Vietnam (EuroCham), guest speakers conceded there remained woes but said growth momentum had emerged again.

Speaking to more than 150 business executives, Tom Tobin, CEO of HSBC Bank (Vietnam) Ltd, said growth drivers were in place now as reform and stimulus measures taken by the government were starting to take effect.

Tobin said HSBC was expecting the country's gross domestic product (GDP) to grow 7.2 percent this year, higher than projected by the Vietnamese government. "So, we are quite optimistic."

Prime minister Nguyen Tan Dung told the 19th World Economic Forum on East Asia 2010 in HCM City earlier this month that the nation was looking to an economic expansion of 6.5 percent or above this year and an average of 7-8 percent in 2011-2020.

Ian Lydall, senior partner and general director of PricewaterhouseCoopers, said the narrow difference of GDP growth forecasts by the government and HSBC indicated more confidence in the country's steady growth.

The Economic Intelligence Unit (EIU) in March 2009 put Vietnam's economic growth for last year at a mere 0.3 percent while others had more positive projections. In the end, the country posted growth of over 5.3 percent last year though the global economy was still reeling from the crisis.

Projections for Vietnam's GDP growth have changed this year. "The difference has been down in a range of from 0.5 percent to 1 percent. So, I think we got more confidence," Lydall told the Daily after the luncheon.

Despite caution about forecasts given the remaining challenges, particularly in the Eurozone, Lydall said there were high hopes for Vietnam. "There are reasons to believe that something slightly above 7 percent is possible."

On the same side, Tobin of HSBC said notwithstanding tough global conditions, Vietnam was now a middle-income country and continued growth was backed by the construction and stable services sectors, growing productivity and strong consumption demand.

"We're looking at a kind of almost full recovering to where it was before… The Vietnam story I think is picking up again," Tobin said. He added foreign direct investment (FDI) was still flowing into the country and new investors were arriving.

Lydall, who is also board member of BBGV, showed positive factors. "You can see this in terms of investment, additional investment made by the companies already here and new investments come again plus the attitude of business leaders."

Lydall said many British firms were interested in the Vietnamese market and looking to expand their business. Retail is one of the sectors attractive to British companies and a number of retailers want to have their presence here.

Lydall, Tobin and other guest speakers named inflation and trade deficit as the major concerns for Vietnam. But, Chairperson and CEO of REE Corp. Nguyen Thi Mai Thanh said the government had made serious efforts to control inflation while maintaining the momentum for economic growth.

Dominic Scriven, CEO of Dragon Capital, sent out a positive message about Vietnam in a statement released before he presented his view on the economic events, outlook and the stock market in Vietnam at the luncheon.

"Vietnam's macro-economic concerns have eased so far this year; yet again pointing out the merits of non-correlation. Clearly this won't be the case for ever, but for now, policymakers should be encouraged, and businesses motivated," Scriven said.

Lydall noted many Vietnamese companies had been resilient through the economic downturn, turning in sound financial performances. "Whilst this varies between industry sectors there is every reason to believe that the outlook for the rest of 2010 is good."SGTD

CORPORATE CAPITALIZATION - Banks face tighter listing rules

Credit institutions would not be allowed to list shares on the nation's stock exchanges if they did not meet charter capital requirements at the time of applying for the listing, under the latest draft regulation from the State Bank of Vietnam currently being circulated for public comment.

While most enterprises must simply comply with requirements in the Law Securities Law in order to list shares, commercial banks must also receive approval from the central bank.

Current regulations state that all commercial banks will be required to have at least 3 trillion dong ($158.7 million) in charter capital by the end of 2010. If the proposed regulation is issued, this would also become the threshold requirement for banks to apply for a listing on one of the nation's two stock exchanges.

Some market watchers commented that the circular, if issued, would block a valuable avenue for banks to raise capital. The draft regulation is certainly not good news for smaller banks that have been considering selling shares on the stock exchange as a measure to raise funds in order to meet this year's stricter charter capital requirements.

"Well, we are getting some bad luck!" the deputy director of a HCM City-based bank told Vietnam News on condition of anonymity. "Listing is considered the best way to raise capital for small banks at this time, but that plan now seems out the window. It's not easy at all because the deadline is now very near."

The central bank has already asked commercial banks and other credit institutions to submit plans no later than June 30 outlining how they expect to meet higher charter capital requirements by the end of this year. Those banks unable to submit plans would be subject to closure or required to merge with another institution. Those institutions would be required to submit plans for closure or merger to the State Bank by September 30.

In addition to the capital requirement for listing shares, the draft circular would also requires applicants to be profitable for two consecutive years prior to applying for a listing, to demonstrate a capital adequacy ratio and to maintain a bad debt ratio of no more than 3 percent of outstanding loans.

Just six out of nearly 39 commercial banks have listed on the HCM City or Hanoi stock exchanges. They are Asia Commercial Bank, Sacombank, Saigon-Hanoi Bank, Eximbank, Vietcombank and Vietinbank.

State Bank of Vietnam Governor Nguyen Van Giau has told reporters in the past that he would not overindulge banks which failed to increase charter capital in accordance with regulations.vnnews

Economic zones boost central region

The rapid development of economic zones (EZs) in the central provinces is significantly contributing to the regional economy.

By early June, Dung Quat EZ in Quang Ngai Province had attracted 167 investment projects with a combined registered capital of $10.7 billion.

Deputy head of the EZ management board Le Van Dung said 51 projects were now operational, employing about 12,000 workers.

The zone's development has increased the contribution made by the industrial sector to the province's GDP, he added. From 2006-2008, the zone accounted for half of the local budget.

From now until 2020, businesses and investors operating in the EZ will employ approximately 67,600 workers, Dung said.

Of that number, FDI projects will employ an estimated 11,200 workers (17 percent of the total); while domestic investment projects in oil refining, shipbuilding, seaports, will employ about 13,000 workers.

Meanwhile, Ho Sy Nguyen, head of Chan May – Lang Co EZ management board, said licences had been granted to 33 projects with a combined registered capital of 31 trillion dong (over $1.6 billion).

Of the total, 10 are foreign-invested, worth $1.4 billion, and accounting for 70 percent of the total FDI registered in Thua Thien – Hue Province.

In the period of 2010-2015, the province plans to give top priority to improving the zone's infrastructure while speeding up the implementation of key projects such as the Chan May seaport and the Chan May new urban area, Nguyen said.

Meanwhile, the Chu Lai EZ in Quang Nam Province, which was established by the government in 2003, is also planning to improve its infrastructure to attract more investment, according to the zone's management board.

Recently, the board licensed three new projects, valued at 615 billion dong ($32.3 million). There are now eight licensed projects in the zone, capitalised at $274 million.

Meanwhile, plans to turn Chu Lai into the region's biggest goods transit airport by 2015 is expected to spur the EZ's development.

Not wanting to lag behind, the Nhon Hoi EZ, which was established in June 2005, now has a non-tariff area, industrial parks, a sea port and port services, a tourism area and a new residential area, all operating under a special incentive scheme.

To date, the EZ had attracted 58 projects, capitalised at $3.3 billion. Of those, 19, worth $951 million, have been licensed, Man Ngoc Ly from the EZ authority, said.

Khang Thong Trade and Construction Co announced that it would soon start construction of a $224 million non-tariff complex in the zone. The 600ha complex will comprize a non-tariff area, an industrial zone and a deep sea port.sgtd

Resources - PetroVietnam may seek Australia LNG pacts, financial review says

Vietnam Oil & Gas Group, the state- owned company known as PetroVietnam, may seek to buy liquefied natural gas from Australian energy companies after visiting several firms this year, the Australian Financial Review reported, citing an interview with Austrade's Kuala Lumpur-based trade commissioner Paul Martin. Vietnam is targeting more than A$1 billion of energy exports from Australia to Vietnam by 2015, the newspaper cited Martin as saying.

POWER - Power failures decrease coal-mining output

The alternate power failure situation has made serious impacts on coal mining and consumption, said Vietnam National Coal-Mineral Industries Group (TKV).

In May alone, there were total of 314 power cuts in 19 coal firms, equivalent to 649 hours of production suspension. The series of rotating power cuts has caused number of coal firms to be unable to complete mining and consumption plans. In addition, the current difficulty of coal industry is that the low-calorie coal is in slow consumption with high inventory volumes.

Since copper refineries are heavily dependent on imported power, whenever the power is cut, voltage increases and decreases abnormally, leading to low productivity and high incomplete products volume. In the first 6 months, TKV estimates that it produces 25.814 million tonnes of crude coal, accounting for 54.4 percent of the full-year target; consumption reaches 21.715 million tonnes, accounting for 50.5 percent, of which coal export volume is 10.168 million tonnes and domestic consumption is 11.547 million tonnes.

Oliver Massmann

Monday 14 June 2010

Vietnam - News and Regulations

FINANCE – PetroVietnam to issue international bonds

National oil and gas group PetroVietnam announced it would complete the preparation for international bond issue in the last half of 2010 to arrange enough capital for building the projects like Ca Mau urea fertiliser, Vung Ang 1 thermo power plant, Nhon Trach 2 power plant, and oil mining at Block 05-2 and 05-3.

PetroVietnam will change operation into the one member limited company from July 1, 2010, transform PVGas into the joint stock firm and Petec into a corporation.

In Jan-June, the group earned total revenue of 205.820 trillion dong. Its members produced 394,000 tonnes of urea, 6.5 billion kWh and 2.360 million tonnes of kinds of petroleum.VNNEWS

INFRASTRUCTURE AIRPORT - $10b to build Long Thanh airport

Deputy prime minister Hoang Trung Hai ordered Ministry of Traffic and Transportation to soon set up the council of appraising the Long Thanh airport project with total cost of $10 billion in Dong Nai province, and prepare the comparative draft to select a consultant for building feasibility study.

According to the plan sent to Dong Nai provincial People's Committee by Southern Airport Corp (SAC), Long Thanh international airport is levelled at 4F built on 5,000 hectares with the transportation capacity of 100 million passengers and five million tonnes of goods a year. As designed by the Australian consultant Hensen Partnership, the airport can receive big planes A380-800.

Long Thanh airport comprizes eight functional areas: offices, parking area, museum, transit centre and preservation warehouses, processing area, hotels, non-tariff area and golf course.NLD

FINANCE - Vietnam inflation may have peaked, slow to 6 pct, JPMorgan says

Vietnam's inflation may have peaked and could slow to 6 percent by the end of the year as global commodity prices ease, JPMorgan Chase & Co. said.

Consumer prices rose 9.05 percent in May from a year earlier, down from 9.23 percent in April and 9.46 percent in March. They increased 0.27 percent in May from April.

Evidence that inflation may slow further would give the government room to renew appeals for banks to revive lending by cutting interest rates. State Bank of Vietnam deputy Governor Nguyen Van Binh told a World Economic Forum conference in HCM City on June 6 that the central bank will try to ease rates at the government's request.

"We're probably already past the worst," David Fernandez, Singapore-based head of research for emerging Asia at JPMorgan Chase Bank, said at a conference in HCM City Tuesday. "The headline numbers will probably continue to come down."

International food and energy prices are likely to be stable for the rest of the year, Fernandez said. Overall Vietnamese food prices rose 9.23 percent in May from a year earlier, while dropping 0.12 percent from April. Prices in Vietnam's transportation category rose 0.12 percent from April.

"This didn't happen only by the magic of global commodity prices," Fernandez said. "We have seen a tightening of credit, though that is starting to loosen up."

Credit growth

Credit expanded 8 percent in the first five months of the year, Thoi Bao Kinh Te Vietnam newspaper reported May 31, citing State Bank of Vietnam Governor Nguyen Van Giau. Last year, Vietnamese lending jumped 38 percent. The State Bank of Vietnam has set a 25 percent full-year target for 2010.

With inflation "looking more benign than everyone had expected," Vietnam's central bank may not adjust its benchmark interest rate all year, Fernandez said. The State Bank of Vietnam's so-called base rate has been held at 8 percent since December.

"People came into this year worried again about the same two issues that always plague Vietnam: the balance of payments and inflation," Fernandez said. "Many people have gone too far in expecting these to be macro challenges that require very strong measures."

Nicholas Kwan, the Hong Kong-based regional head of research at Standard Chartered Plc, told journalists Monday at the World Economic Forum conference in HCM City that the bank didn't expect "any significant moves" in the benchmark rate, and that Vietnam should focus on finding more effective monetary policy tools instead of changing the base rate.BLOOMMBERG

Vietnam's public debts still at safe threshold, NA officials say

Replying to questions of National Assembly delegates on public debts yesterday, minister of Finance Vu Van Ninh confirmed that Vietnam's government debt touched 41.9 percent of GDP, including debts of state firms and government guaranteed debts for enterprises. Of government debts, the foreign debts accounted for 58.8 percent and domestic debts 41.2 percent.

In the foreign debt structure, 86.5 percent was long term loans (30-40 years along with 10 years of grace period), ODA and loans sourced from World Bank, International Monetary Fund, loans of Asian Development Bank and Japan. The loan rates range between 0.75-1 percent depending on each credit agreement. Actually, these loans are used for big projects like My Thuan Bridge, Can Tho Bridge and some seaports, important irrigation works.

Foreign short term loans carry ordinary interest rates equalling or lower a bit than the market's levels.

Domestic debts include 9.9 percent of government guaranteed debts, the local governments' debts totalling at 26 trillion dong or 1.6 percent of GDP.

The country's foreign debts makes up 38.9 percent of GDP at this time, of which 86.5 percent is medium and long term loans and remainder is short term loans. The foreign debt of the government is 64 percent and those of enterprises 36 percent.

Minister remarked "we [Vietnamese government] do not hide the government debts because afterwards, if Vietnam goes under bankruptcy, I will have to take responsibility first. So we have to report all statistics".

Last year the government's debt payout accounted for 15.8 percent of total state budgetary collection, which still is less than the allowable limit of 30 percent.NA

CAR INDUSTRY - Auto seminar ponders ways to develop Vietnam's stagnant car industry

Infrastructure development and tax policies are vital to boosting Vietnam's stagnant car manufacturing industry. The issues were much debated by automobile specialists and policymakers yesterday in Hanoi. '

Speaking at a seminar titled "Automobile Market, Supporting Industries, Transport Infrastructure and Development Platform for a Stable Automobile Industry", deputy director of the Ministry of Industry and Trade's Heavy Industry Department Ngo Van Tru said if the country wanted to develop the car manufacturing industry, it could not rely on truck and bus development only as this segment would become saturated in 2018.

Tru commented that between 2008 and 2009, as import and special consumption tax and registration fee dropped, local consumers took the opportunity to buy cars, resulting in scarce supplies.

Elaborating on why domestic manufacturers could not meet rising domestic demand, Tru said manufacturers already had their production plans for the whole year; that was why they could not meet the sudden spike in demand from consumers at that time.

He also said: "Many local manufacturers are quite small in terms of their scale of production. We have to develop strategic measures to promote the domestic automobile industry so that we can attract supporting industries."

Tru also cited the sluggish rate of localisation, saying that Vietnam was now home to 54 car manufacturers, each on average capable of manufacturing and assembling 2,800 units per year.

There were now 400 kinds of automobiles in the country; however, the volume of each model was quite small, resulting in greater difficulty in further localising production and component manufacturing.

As a result, investment in producing car spare-parts for the local car manufacturers was less attractive to foreign investors due to low cost efficiencies.

Domestic manufacturers were at a disadvantage in exporting spare parts to other countries as local manufacturers largely relied on imported materials for production.

The country's economic development had been dramatic while infrastructure development could not keep pace with growth and that had resulted in a conflict between production, consumption and infrastructure capabilities.

He also mentioned changing tax policies that had caused difficulties in car manufacturing and assembly plants, discouraging both producers and investors.

Nguyen Van Phung from the Ministry of Finance's Taxation Policy said tax always contained a conflict of interest, citing that importers always wanted the ministry to reduce import tax while local producers wanted the ministry to raise import prices to protect local production.

In an attempt to develop the car manufacturing industry in line with its international commitments, Vie t Nam needed to protect local producers in a better way, creating advantages for imports and enhancing the supply of input materials without negatively affecting the trade deficit and spurring local production in an attempt to raise product quality.

Phung said the ministry would use taxes and charges in a holistic way, based on the reality of the situation, in a fair, public and transparent manner.

Vietnam is compelled by the World Trade Organisation to cut taxes on various kinds of cars to 70 percent within the seven years since joining.

By 2019, 2.5-litre cars will enjoy export tax reductions from 90 percent to 52 percent. To avoid trade fraud, all kinds of passenger cars will enjoy a 47-per-cent tax rate by 2017.

In the process of the Asean free trade area tariffs reduction framework (CeptI Afta), from January 1, 2006, 10-seat passenger cars and trucks have enjoyed a tax reduction to 5 percent since 2006. The nine-seat cars will enjoy a zero tax rate by 2018, according to Phung.

According to the Ministry of Industry and Trade, after 2020, the coach and bus fleet will develop in line with Vietnamese economic development and the generalised spreading of mass motorised transport.

Apart from giving priority to the development of trucks and buses, the Vietnamese car industry needs to outline a clear orientation for the development of tour buses and coaches. Vietnam will also need to have a focused policy to develop a specific car segment by mobilising finance and human resources so as to avoid haphazard investment.vnnews

INFRASTRUCTURE - Six banks fund National Highway 51 expansion project

Bien Hoa-Vung Tau Expressway Development Joint Stock Co (BVEC) inked a deal with six commercial banks to fund the 3.3 trillion dong project expanding the National Highway 51 yesterday.

Under the credit agreement signed yesterday, the six banks offer close to 2.4 trillion dong, or $125 million, equivalent to 72.16 percent of the total invested capital. The six banks are Bank for Investment and Development of Vietnam (BIDV), Vietnam Export Import Commercial Bank, Asia Commercial Bank, Vietnam Bank of Agriculture and Rural Development, Vietnam Bank for Industry and Trade, and DaiA Commercial Bank.

The expansion of the 72.7-kilometer road running through Dong Nai and Ba Ria-Vung Tau provinces will take three years from August 2. It will be widened from 32.9 meters to 39.3 meters to have eight lanes and allow for a design speed of 80 kilometers an hour.

The project also includes expanding 10 existing bridges and building 12 new bridges.

The consortium of investors, comprising Vietnam Urban and Industrial Zone Development Investment Corporation (IDICO), Song Da Corp and BIDV, accounts for around 27.8 percent of the total investment capital. The project will be developed under BOT (build, operate, transfer) form.

IDICO general director Nguyen Van Dat said the project would meet cargo transport demands of major ports in Cai Mep- Thi Vai area and industrial parks along the highway.

Along with the Long Thanh-Dau Giay Expressway to be developed, the highway will help boost economic development of the southern key economic zone including the two provinces.VNNEWS

Techcombank, BCEC cooperate in developing coffee trading floor

Vietnam Technological Commercial JS Bank (Techcombank) and Buonmathuot Coffee Exchange centre (BCEC) have signed a cooperation deal in developing deadline coffee products on the exchange.

Under it, Techcombank will play as the key consultant for BCEC in organising, building products and managing operation of the exchange floor. Also it will arrange finance and provide other financial services to the customers who join transactions at BCEC.

In return, BCEC will manage and supervise the operation of floor, members, and customers and administrate risks.VNN

INSURANCE - Bidv insurance firm reports achieving sharp increase in Bancassurance revenue

After the first five months of this year, Bidv Insurance Co (BIC) reported earning total revenue of 222.192 billion dong, increasing by 14 percent against the same period of 2009, in which the insurance premium surged by 63 percent to 156.264 billion dong and revenue from Bancassurance channel recorded the impressive growth of 19.08 billion dong, counting for 12.21 percent of the total insurance premiums. Last year, the revenue gained from Bancassurance channel only counted for 9.6 percent of the total premium.

The company also announced to reach total pre-tax profit in Jan-May of 29.475 billion dong.

BIC has launched new insurance products such as insurance for apartments and individual houses. The company has also launched online sales channel via ATM and transaction points of PayNet, VNPay, ViettelPost and CoopMart.

The company's distribution network was expanded with the establishment of new nine transaction offices in Dong Anh, Ca Mau, Bac Giang, Buon Ma Thuot, Dak Nong, northern Dak Lak, east Dong Nai and two new offices in Hanoi.DTCHK

AVIATION - Vietnam Airlines aims to have 7 new international routes in 2010

Vietnam Airlines said Thursday that it aims to serve seven new international routes this year, raising its total international routes to 40.

The new routes will include those from Hanoi to Osaka, Yangon, Shanghai and Kuala Lumpur, and those from HCM City to Shanghai, Nagoya and Yangon, the country's flag carrier said in a statement.

It said it will start flying the HCM City-Nagoya route in August and the HCM City-Yangon route in October. Services on the Hanoi-Kuala Lumpur route will start in winter.

Vietnam Airlines said services on the other routes already started in the first quarter this year.

The airline said it expects pre-tax profit of VND161 billion ($8.5 million) this year, up from VND154 billion in 2009.

Vietnam Airlines' revenue may rise 31pct this year

Vietnam Airlines Corp.'s revenue may rise 31 percent this year as the state owned carrier expands its fleet of aircraft and network of destinations.

Sales may increase to 32.24 trillion dong ($1.7 billion) in 2010 from 24.62 trillion dong last year, Hanoi-based Vietnam Airlines said in a press release Thursday.

The carrier on Thursday joined the Skyteam Alliance, whose members include OAO Aeroflot, Air France-KLM Group, China Southern Airlines Co., to enlarge its network of destinations and cut operating costs. Vietnam Airlines expects to carry 12 million passengers this year, up 28 percent from 9.35 million in 2009, according to the press release.

The airline plans to expand its fleet of aircraft to 115 by 2015 and to 165 by 2020, compared with 70 by the year end, Chief Executive Pham Ngoc Minh said at a media briefing in Hanoi Thursday.

Vietnam Airlines expects to take delivery of 10 aircraft this year, including ATR-72s and Airbus SAS A321s and A330s, Minh said on June 7.

The carrier is still in the process of preparing its initial public offering and finding foreign partners, the chief executive told reporters Thursday, without stating when the company may sell shares or the names of prospective partners.

The global financial crisis has delayed the plans of state owned companies, including Vietnam Bank for Investment and Development and Vietnam Mobile Telecommunication Services Co., to sell shares.

The government may revive plans to sell stakes in companies, including Vietnam Airlines, in 2010, minister of Planning and Investment Vo Hong Phuc said on December 3.

The government said in 2008 that it planned to sell a holding of as much as 20 percent in Vietnam Airlines.BLOOMBERG

PetroVietnam subsidiary joins setting-up of packing facility

PetroVietnam general Service Joint Stock Co (STC listed PET) announced it has contributed capital to set up PetroVietnam Packing Joint Stock Co capitalised at 25 billion dong.

Of which, PET contributes 51 percent, Phu My fertiliser and chemical JSC 19 percent and Trang Hoang My Co Ltd 30 percent.

The new firm will build the packing production factory in Bac Lieu province in the near future.

On June 14, PET will move its headquarter from 12AB Thanh Da St, Ward 27, Binh Thanh Dist to Floor 5, PetroVietnam Building, No 1-5 Le Duan St, Ben Nghe Ward, Dist 1, HCM City.VIETSTOCK

Shipbuilding - Bach Dang shipbuilder launches 17,500dwt cargo ship for export to Korea

Hai Phong City's Bach Dang Shipbuilding Industry Corp yesterday launched the 17,500dwt cargo ship named that will be exported to Korean buyer Shinsung Marine Transportation Co.

The ship, named Shinsung Accord, has the capacity of 6,060 horse-power, speed of 13.2 knots an hour.

The ship will be handed over to the Korean firm by this August end.

After launching Shinsung Accord, two parties signed a deal to build the second 17,50dwt cargo ship of four ordered by Korea.

Previously, Bach Dang shipyard had built four 4,500m3 gas vessels for an Italian investor.dtchk

TELECOM - EVN Telecom signs contract for value-added services with VTC Intecom

EVN Telecom has recently signed a deal for providing value-added services on 3G background with VTC Digital Telecommunication (VTC Intecom) on the occasion of its official launch of 3G network.

Accordingly, the two parties will cooperate with each other in developing the content services for the 3G subscribers of EVN Telecom.

Relating to developing 3G network, EVN Telecom also inked the deal for 3G special agents with ECPAY, Electricity and Telecommunication Payment Solutions Joint Stock Co.DT

-------------------------------------------

Oliver Massmann

Rechtsanwalt

Saturday 5 June 2010

Vietnam - News and Regulations

WORLD BANK ON VIETNAM - NA's inflation target may not be reached, WB forecasts

World Bank in its report on Vietnam's economic development yesterday forecast that National Assembly's inflation target at below 8 percent for 2010 cannot be reached but it still will stand at one-digit.

Martin Rama, chief economist of WB also assessed that Vietnam's economy is going on growth impetus with May trade deficit falling to below the $1 billion threshold. The country has come through the global crisis more successfully than others thanks to the economic policies of the government.

However, statistics on GDP from Q1 of 2007 to Q1 of 2010 showed that Vietnam's economic growth is driven in line with each break-in period. The shortage of clear information for the market forced Vietnamese government to pursue their policies fiercely. If reaching the better information announcement and exchange, the country will gradually escape from the "groping" growth steps, he said.

Concerning budgetary deficit issue, WB reported that Vietnam's budgetary deficit last year included the expenses outside the budget estimation and accounted for 8.4 percent that was the fairly high figure. The economist said that Vietnam's inflation calculation method was different from WB's so this turned out to show lower result. Additionally, WB predicted that Vietnam's 2010 inflation could be still one digit.

Martin Rama said that the devaluation of the dong in late 2009 and early 2010 caused strong impacts on prices and inflation.

High interest rates are considered to be the hidden danger threatening the country's economic recovery. "Interest rates will likely reduce if the government continues pursuing current directives", the economist said.

Forex rate between dong and US dollar saw beneficial changes so selling US dollar is better than keeping, which will help increase the US dollar supply on the market. Domestic subjects [including institutions, funds, and individuals] can restructure the investment portfolio by reducing the keeping of assets in foreign currencies. But the process is dominated by the accumulative portfolio restructure of these locals. Meanwhile State Bank of Vietnam (SBV) should buy US dollar from domestic sources to reinforce the foreign exchange market, he proposed.

On other hand, if SBV provides money more than demand, this will create a pressure on the dong.

WB said that Vietnam could not take advantages of the restored international money flows that other countries enjoy right now. Other countries' currencies are appreciating against US dollar whereas Vietnam has to manage with the depreciation of dong.

Yet, 2010 will still be a banner year for Vietnam when its GDP could reach 7 percent and inflation may be 9 percent, higher than the targeted 8 percent, WB said.

Consultative Group (CG) meeting will be held between June 9 and 10 in Rach Gia, Vietnam's Kien Giang province. In the last year conference, international donors pledged total $8 billion for Vietnam's poverty reduction and development programme.CAFEF

BANKING INVESTMENT - Local banks active in looking for foreign strategic partners

While foreign wholly invested banks are active in looking for foreign strategic partners, the banks with foreign capital contribution are trying to promote procedures to seek government's approval on increasing the foreign ownership ratio. Factually, foreign strategic partnership is the necessary factor to upgrade the competitive strength as well as capital increase plan of banks, especially for the undercapitalised banks [with a chartered capital of below three trillion dong] according to the government's Decree No 141/2006/ND-CP.

Talking with Dau Tu Chung Khoan newspaper, Tran Van Vinh, director of Orient Commercial JS Bank (OCB) said that his firm plans to raise its chartered capital from the current two trillion dong to 3.1 trillion dong before the 2010 fiscal year ends. Accordingly, OCB will lift the ownership ratio of French foreign partner BNP Paribas (BNPP) group from 15 percent to 20 percent. According to Vinh, the plan will be carried out in this year because both parties signed memorandum of understanding (MoU) in late 2009 already within the frame of Vietnam-France Business Forum.

"We believe that with Vietnamese state's permission, OCB's capital increase plan will reach the minimum level of three trillion dong in last half of 2010 and BNPP could increase its holding in OCB as well", said the foreign bank's representative Michel Chavalier. Now BNPP has stood firm before the crisis. Last month BNPP reached total revenue of over $54 billion and profit of $8 billion, he reported.

On May 31, general director of Southern Bank, Phan Huy Khang reported at a meeting with SBV governor that his bank will finish the procedures of chartered capital increase from 2.568 trillion dong to 3.029 trillion dong in June through allocating shares from capital surplus and issuing new shares. A representative of Singapore's UOB Bank, as the foreign strategic shareholder of Southern Bank, said in a statement that they are proposing Vietnamese government's nod to hike ownership capital in the local bank.

In April, Vietnam International Bank (VIB Bank) and Commonwealth of Australia (CBA) co-announced the strategic cooperation deal. Under it, CBA will buy 15 percent into VIB. Also if permission is obtained then CBA will raise its holding ratio in VIB to 20 percent as soon as possible, scheduled before December 31, 2011.

VIB's chair Han Ngoc Vu said, the cooperation with CBA--top financial institution in Australia's retail banking field--will help VIB push up the competitive strength in financial operations and become one of top three commercial banks in Vietnam in future.

Earlier, the strategic partner of Vietnam Bank for Private Enterprises (VPBank), namely OCBC also desired to increase its ownership capital in VPBank from current 15 percent to 20 percent. Similarly, Deutsche Bank had a similar plan from 10 percent to 20 percent of ownership ratio in Hanoi Building Commercial Joint Stock Bank (Habubank).

Till now, three banks namely Techcombank, ABBank and SeABank have the foreign strategic ownership ratio of 20 percent, particularly HSBC, MayBank and SGVF-member Company of Societe generale correspondingly.

Thanks to the advantages in finding out foreign strategic partners, many local banks have been undergoing the last renegotiations on stake sales to foreigners.

On June 2, SBV governor officially approved TrustBank to hike capital from two trillion dong to three trillion dong with the institutional shareholders of Agribank, Long An Food Co and Phu My Investment Development JSC. director board of TrustBank revealed they are looking for foreign strategic partner.

Meanwhile, some domestic strategic partners plan to withdraw or reduce contributed capital from local small banks that are trying to meet the capital increase roadmap ordered by the government. Now Navibank is waiting for investment expansion decision from one of its two big shareholders Vinatex (11 percent) and Saigon Investment Group (SGI) with 9 percent to submit the capital increase plan to SBV before the deadline of June 30. The bank expects to earn 350 billion dong in 2010 pre-tax profit.DTCHK

LAND LAW - REAL ESTATE - Real estate sector seeks new rules

Real estate services and construction companies in HCM City have asked the government to review and amend land use fee regulations.

They say the current regulations are complicated, impractical and the land use fees are too high.

According to supplemental regulations issued last year, real estate companies have to pay land use fees according to area they use, based on land prices at the time of payment.

The regulations say companies will receive a deduction in the land use fees based on the compensation they paid for land clearance earlier.

However, the deduction they receive is based on annual prices of land fixed by local administrations. These factors lead to high land use fees that make it difficult for real estate companies to pay them, Le Hoang Chau, chair of HCM City Real Estate Association (HoREA), said at a workshop held in HCM City yesterday.

According to the city's Department of Natural Resources and Environment, no real estate company has paid the land use fee since the supplemental regulations came into force last October.

Nguyen Viet Tao, chair of the N.V.T Joint Stock Co, said the regulations are not practical and are causing difficulties for real estate companies in carrying out their projects, both ongoing and new.

The government should collect opinions from real estate companies so that the regulations are more effective, he said.

Many representatives pointed out that the current regulations would mean loss of revenues for them. They complain that the land use fee real estate companies have to pay currently is an unknown quantity, so they cannot accurately calculate their investment in a project in order to take a decision on its implementation.

The land use fee is now dependent on property assessment consultants and open market prices, which means there is no reliable, regular benchmark based on which the calculations can be made.

Luong Tri Thin, general director of Dat Xanh Real Estate Service & Construction Co, said that the complicated procedure in assessing land prices also make it difficult to pay the land-use fee.

Le Ngoc Tu, head of Binh Dan Housing Development Co, said that the city People's Committee allowed the company to change the land use purpose (from agricultural to residential, for instance) for 14,000sq.m to build a residential apartment project at the end of last six hundred frats for low-income people year. After completing work on the project's infrastructure, the company met with city's Department of Finance to pay the land-use fee.

The department asked the company to hire a company specialising in assessing land prices at the time they wanted to pay, he said.

It took the company a long time to know how much it would have to pay, and it turned out to be too high at more than 54 billion dong (US$2.8 million) for the 14,000sq.m area.

Thin also wondered whether the price assessed by the consultant was accurate. In such situations, disagreements over land prices would occur sooner than later, he felt.

Do Thi Loan, Secretary general of HoREA, said relevant authorities should quickly report on the difficulties real estate companies are facing and review regulations concerning zoning; land prices, land recovery, compensation and resettlement.

Chau also asked the government to effect changes in the deductibles that would accrue to the companies based on the compensation paid for land clearance.

The deductible should be based on the actual money paid by the real estate company and not the agricultural land value, he said.

The government should also allow companies to pay land-use fees based on the actual built-up area and not the total project area. This would encourage companies to allot more area for public works, he said.

Provincial People's Committee should issue a common framework of prices valid for three to five years, making it easier to calculate costs, compensation and land-use fees, he added.

Many representatives said at the meeting that the new method of calculating land use fees had prevented them from carrying out low-income housing projects.

Chau suggested that the government exempts companies investing in low-income housing projects from having to pay land use fees.

Representatives of State agencies said they would submit the information and suggestions made by the companies to the government.vns

WORLD ECONOMIC FORUM IN VIETNAM - Vietnam to host WEF on East Asia 2010

The 19th World Economic Forum (WEF) on East Asia 2010, slated for June 6-7 in HCM City, Vietnam, will be the most significant event in the history of the organisation.

Following the annual meeting held in Davos (Switzerland) early this year, Vietnam is selected to host WEF on East Asia 2010 with theme "emerging role of Asia in global development".

Being considered biggest event ever, it will see be the presence of Vietnamese prime minister Nguyen Tan Dung and five other heads of state, World Trade Organisation (WTO)'s general director, Pascal Lamy, Asean's Secretary general, Surin Pitsuwan, deputy secretary general of Organisation of Economic Cooperation and Development (OECD).

Additionally, at least 450 delegates from 50 economies such as AT&T, Cisco, Credit Suisse, HSBC and NASDAQ, including leaders from the regional countries, leading business executives, and scholars have confirmed to attend this year's forum.

According to Sushant Palakurthi Rao, director of the WEF Asia, apart from joining the forums, most of these enterprises are seeking opportunities for cooperation and investment in Vietnam.

Vietnam has about 12 groups and corporations joining the WEF namely Vietnam National Oil and Gas Group (PetroVietnam), VinaCapital, Vietnam Post and Telecommunication Group (VNPT), Vietnam Construction Export Import Corp (Vinaconex), Vietnam Airline Corp (Vietnam Airlines), Vietnam Commercial Joint Stock Bank for Foreign Trade (Vietcombank) and Bao Viet Group.VNEXPRESS

Bond Issuance- Government expects to 1.4tr dong from bonds

Hanoi Stock Exchange has announced that the State Treasury on June 3 called for two trillion dong from the tender for 3-year and 10-year bonds.

As for the three-year bonds worth one trillion dong, there were 11 members who joined with total lawful bidding volume of 4.7 trillion dong, the highest bidding coupon rate of 11.3 percent and lowest at 10.50 percent pa. After the tender ended, 900 billion dong was raised with the winning rate of 10.95 percent pa.

Four members registered to take part in the tender for one trillion dong of 10-year bonds with the lawful bidding of 1.4 trillion dong, highest bidding rate of 15 percent and lowest 11.30 percent pa. Finally, the state successfully raised 500 billion dong from these bonds at winning coupon rate of 11.30 percent pa.

Total money amount that winners will have to pay to take shares is 1.4 trillion dong.

These bonds will be issued on June 7, 2010.DTCHK

INSURANCE - Dai-ichi Life introduces new insurance products

Dai-ichi Vietnam Life Insurance Co (Dai-ichi Life VN) yesterday officially introduced to public the new product of "An Thinh Chu Toan-Ke hoach Tan Khoa". It's the first joint product in education sector in Vietnamese markets at present, bringing in the convenience and simplicity for the customers in working out the financial plans to serve for their children's studying progress and to start their careers.

When using this product, the customers can use one out of three suggested financial plans on the basic of their demands and studying plan to be worked out for their children. The customers can receive annual insurance amount in cash when the insurance beneficiaries turn out to be 18-21 years old and the remaining value of the insurance contracts when the beneficiaries are 22.

TBKT

AVIATION - Vietnam Airlines opens Hanoi-Chu Lai route

The national flag carrier of Vietnam Airlines coordinated with two provincial people's committees of Quang Nam and Quang Ngai to open the new direct air route from Hanoi to Chu Lai on June 2, 2010.

It's scheduled to run four flights per week on Monday, Wednesday, Friday and Sunday, using Fokker 70 aircrafts. Nguyen Sy Hung, Vietnam Airlines' chair of management board said the newly-launched air route would help strengthen the links between provinces of Quang Nam, Quang Ngai and the country's two largest socioeconomic and cultural centres of Hanoi and HCM City.TBKT

CONSTRUCTION - Secoin to build three light concrete factories in 2010

Secoin Vietnam Construction Material Joint Stock Co has announced that the company was preparing necessary legal procedures to build some new light concrete factories in HCM City, Hanoi and Ba Ria-Vung Tau province in 2010.

Each light concrete factory has total investment capital of about 100 billion dong, with designed capacity of 80,000 cubic metres per year, with main products of light concrete bricks, super light roof tiles to meet the market demands for construction materials.

The construction process for these three new factories will be divided in various phases, depending on specific demands of the market.VNNEWS

Vinaconex 1 invests 147.8b dong for residential building in Hanoi

The Construction Joint Stock Co No 1 (Vinaconex 1 – coded VC1) under Vietnam Construction Export-Import Joint Stock Corp (Vinaconex) announced that Phi Thai Binh, vice chair of Hanoi City People's Committee has lately issued a decision to approve for construction project of Residential Building C1 under general plan of Vinaconex 1 high-class complex of office buildings and apartments in Trung Hoa Ward, Cau Giay Dist, Hanoi.

The city's governance had assigned VC1 as the main investor for this project and required the company to finish necessary procedures to start the construction work in Q2. The project has total investment capital of 147.8 billion dong, including a 22-storey building with total construction area of 10,319 square metres.DTCHK

TELECOM - EVN Telecom officially launches 3G network

EVN Telecom has launched the new 3G network on June 9, 2010. It's the fourth telecommunication companies among five mobile network providers to be licensed for launching 3G network that will open and put into operation the new network.

At the time of launching the new service, EVN Telecom has installed about 2,500 base transceiver stations (BTS) in 63 provinces and cities nationwide, covering 20 percent of the country's territory and 40 percent of population in accordance with its commitments to Ministry of Information and Communication.

Previously, EVN Telecom and Hanoi Telecom had committed to invest about 600 billion dong to build up 3G network in the first phase, in which each party spent 300 billion dong to set up their own 3G network.DT