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