ENERGY EFFICIENCY - Power plans helps save energy | |
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The national programme on electrical energy efficiency and conservation, enacted over the last five years, has recorded a 30 percent higher return than targeted.
Cities and provinces throughout the country have conserved more than 4 billion kWh, said deputy minister of Industry and Trade Hoang Quoc Vuong at a meeting to review the programme's implementation yesterday.
The ministry's programme covered the 2006-10 period following the prime minister's instruction on electric saving in production and consumption. More than 1.18 billion kWh was saved this year alone, equal to 1.4 percent of total consumption.
The energy saving was meaningful, said Vuong, as it has been facing challenges due to prolonged droughts and erratic weather conditions.
The last five years saw a remarkable increase in electric consumption with the demand for power growing by 13.7 percent yearly, double GDP growth. Average electric consumption per person almost doubled in the past five years, with each person consuming more than 980kWh per year.
The ministry has inspected more than 500 key enterprises and audited the accounts of electrical energy in 300 enterprises to develop a standard management system on efficient energy usage.
To achieve the programme's target, almost all provinces and cities issued their own instruction on promoting the implementation of efficient electrical energy usage and set up local steering committees for the project.
The directorate for Standards, Metrology and Quality in the last five years has completed 17 standard categories to be applied for the efficient energy usage.
The promotional work for the programme was through collaboration between the ministry and media throughout the country, according to Vuong.
The deputy minister, however, pointed to shortcomings in the programme's implementation. One of them was that large power consumers in the fields of industry, construction and small � and medium-enterprises are still using backward technology, which used large amounts of energy, as they could not afford to invest in more modern equipment. Moreover, a number of enterprises were not fully aware of the energy saving and that had resulted in an ineffective implementation of the programme in some places.
The programme was not effectively implemented in State-run offices and companies which lacked strict supervision, especially where leaders exhibited little responsibility.
To better save energy, said Vuong, relevant ministries and sectors needed to complete the legal framework for the practice of efficient energy usage during this year, prompting the issuance of documents to instruct the implementation of the Law on Energy Efficiency and Conservation which would be approved by the National Assembly earlier this year.
The deputy minister proposed the relevant ministries and sectors complete their requirement for energy efficiency standards and inform major energy consumers. Major provinces and cities should actively develop plans for energy efficiency and conservation, said Vuong, and insert the programme into their socio-economic development strategy. VNNEWS
| POWER - EVN improves power supply capacity | |
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Electricity of Vietnam (EVN) Group stated lately that within this month, the group planned to start operation additional three turbines including the first turbines of Son La Hydropower plant, Song Tranh 2 hydropower plant and Dong Nai 3 hydropower plant, raising the total designed capacity to be put into operation in 2010 to 1,895MW.
The group announced that from the beginning of the year up to now, EVN has already officially operated eight turbines under six power plant projects with total designed capacity of 1,310 MW such as Plei Krong hydropower plant, Se San 4 hydropower plant, Ban Ve hydropower plant, Quang Ninh 1 thermo power plant, Hai Phong 1 thermo power plant and Srepok 3 hydropower plant.
In the first eleven months of this year, EVN also started construction works in four projects with total designed capacity of 3,156MW. There are thermo power plants of Nghi Son 1, Vinh Tan 2 and Duyen Hai 1 as well as Song Bung 4 hydropower plant, as well as finished construction projects of 98 power station with the total length of 1,700 kilometres. VNNEWS
| INFRASTRUCTURE/BUILT OPERATE TRANSFER - Seven large projects wait for investment capital | |
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| Road Administration Department yesterday announced that there were seven large projects calling for investment capital under the BOT methods. | |
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INSURANCE - Insurance providers required to set up reserve funds | |
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| Vietnam's state president has lately approved the new regulations under the adjusted laws of insurance that will officially take effects from July 1, 2011, in which the insurance providers are required to set up reserve funds to ensure its payment capacity. A second hearing on US anti-dumping measures against Vietnamese shrimp ended Wednesday after two days of arguments at the headquarters of the World Trade Organisation (WTO) in Geneva, Switzerland. The session marked the end of the litigation phase of the case, with the parties now awaiting the panel's findings and final determination. The panel was slated to submit a final report in April 2011, said Tran Thi Thu Hang, Minister Counselor and Deputy Head of the Viet Nam Mission to the UN, WTO and other international organisations in Geneva. Viet Nam and the US submitted written rebuttals and presented oral arguments at the hearing. For Viet Nam, the central issue was the US method of calculating dumping in periodic reviews under US law, known as "zeroing". Viet Nam argued that zeroing was inconsistent with WTO rules as well as with Viet Nam's protocol of accession to the trade organisation. The case was heard by Mohammad Saeed, Counsellor of the Pakistan Mission to the WTO, Deborah Milstein from Israel's Ministry of Industry, Trade and Labour, and Ian Sandford, special counsel & director of the International Trade Group of Australia. Viet Nam filed the case with the WTO in February 2010. This marks the first time Viet Nam has filed a complaint with the global trade body's dispute settlement system since it formally joined the WTO in January 2007. WTO director general Pascal Lamy appointed the three-member panel on July 26 to rule on the complaint, and the first hearing was held on October 20. Last week, the US Department of Commerce imposed another punitive, five-year anti-dumping tariff on Vietnamese shrimp, following a sunset review of duties imposed in 2005 in which the US expressed concerns that "dumping" would resume if the tariffs ended. For the past five years, the US has levied duties ranging from 2.5 to 25.76 per cent on frozen shrimp imported from Viet Nam. Viet Nam Association of Seafood Exporters and Producers (VASEP) General Secretary Truong Dinh Hoe said last week that Viet Nam hoped the WTO panel would issue a fair decision. In the first 10 months of 2010, Viet Nam exported more than 200,000 tones of shrimp, worth US$1.7 billion. The amount represents a 12.9 per cent growth in volume and 22.5 per cent growth in value year-on-year, according VASEP. The organisation said that shrimp accounted for 41.7 per cent of the country's total seafood exports of $4 billion in the first 10 months of the year.VNNEWS
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FINANCING - Banks tighten lending, financial companies benefit
The closer it is to the Lunar New Year, the higher the needs of individuals' consumer lending; meanwhile, banks are tightening lending and boosting capital mobilisation. Tightened lending and unpredictable fluctuations of interest rates have forced borrowers without collateral to get loans from financial companies with very high lending rates.
Demand for consumer lending surges in the end of the year but borrowing is not easy
Not long ago, Techcombank pushed its deposit rate to 17 percent per annum, making some other banks to pull up their deposit rates accordingly, before the State Bank of Vietnam (SBV) and 12 commercial banks in Hanoi agreed to apply the maximum deposit rate of 14 percent per annum.
When banks race to mobilise capital at the end of the year, small customers who have demand for loans would face various difficulties, especially those who do not have collateral.
Ngoc Lan (My Dinh) wants to borrow some money to refurbish her house, of which the red book is still under her parents names, but she has problem in getting unsecured loan since she does not meet the "absolute credit point" for not having resident registration book in Hanoi. A bank staff said even she has good credit point, bank is often having difficulty in disbursing capital for personal unsecured loans in the end of the year.
Contacting some banks that offer unsecured loans such as Tienphongbank, Lan was told that the bank has halted personal loans in the recent two weeks. MB refuses her request since her company does not pay salary through this bank. Lien Viet Bank only offers loans to its employees and employees of some businesses that it has cooperation contracts. Some other banks gave her similar answer as it is very difficult since the fiscal year is about to end.
Many other individuals shared this is the time they want to borrow for personal spending most, and the procedures to apply for unsecured loans seem to be very attractive, but most of them complained they could hardly get the loan.
Be careful with lending rate of unsecured loans
Not mentioning how much the needs for personal loans have increased, D.Son, an employee of a financial company in Hanoi affirmed that December is the peak time customers applying for loans, due to rising consumer spending demand, while banks have applied strict lending terms.
His company offers unsecured loans at 1.3 percent to 1.8 percent per month, depending on borrowing time. This lending rate is based on the amount of loan and each borrowing time. Accordingly, customers have to bear interest rate of 21.6 percent per annum if borrowing at 1.8 percent per month.
The noteworthy point is at present, employees of the financial companies are offering loans with the so-called simple procedures. However, before signing the borrowing contract, customers should carefully look at the details of the contract, because there are many terms and appendices that they might have subjectively skipped. Those are actually the very strict and unfavourable ties if customers do not consider the details carefully.
For terms on the penalty if customer repays full amount of loan ahead of schedule, a customer said, it was stated in the contract she signed with the financial company that if she repays the loan ahead of schedule, penalty would be two percent on the remaining principle balance.
Banks and financial companies currently apply two methods to calculate interest, one is based on the original loan and one is based on the remaining principal of the loan. Effective rate in the first method is stated at much higher level than flat rate in the second method. However, customers actually have to pay less interest.
For example, for a loan of 60 million dong at 13.5 percent per annum, interest paid on original loan, customers would have to pay in total of 8,212,500 dong per annum interest, principle repayment and interest paid monthly until the debt is cleared (every month customers have to pay same amount of interest, although a part of the original loan is also paid on a monthly basis).
For the same amount of loan, at 20 percent per annum, interest paid on the remaining principal balance, customers only have to pay 6,696,844 per annum (since the principal repayment is paid monthly, therefore the remaining principle balance is decreasing, interest is also decreasing though interest rate is kept unchanged).
Additionally, customers should consider the lending rate of each bank before completing the unsecured loan contract. In the two methods to calculate interest, the second one would be favourable for customers who do not settle the contract ahead of schedule.
Currently, SHB, VPBank, Vietcombank, ACB are offering unsecured loans disbursed before the Lunar New Year, depending on the policy of each branch.
December monthly interest rate index on unsecured loans at ACB's branch on 30 Lieu Giai (Cong Vi ward, Ba Dinh district, Hanoi) includes 13.8 percent for loans under 40 million dong; 13.92 percent for loans from 40 to 70 million dong; 12.6 percent for loans above 100 million dong, based on the original debt.
Typically, an application for unsecured loan will be process within two to seven days. However, the credit counsellor of the above bank branch said the applications are strictly processed, since there is no collateral, the risk is very high.
N.D. Minh from BIDV said the annual lending rate for personal loans of many banks is currently 17 percent (business loans), 18 percent to 20 percent (consumer loans), interests for those loans are calculated based on the remaining principal balance.
If calculating based on original debt as applied by some financial companies, interest would be very high since the interest rate is unchanged but principal repayment is not deducted monthly while calculating interest.
Pham Quang Thai (Hai Ba Trung district) said applying for unsecured loans in the end of the year is very difficult; since he does not have collateral, he has to borrow from financial companies. He added that financial companies usually do not give detailed advice on the two methods to calculate interests, thus those who do not have experience in borrowing would be very easily mistaken.
Financial companies provide main services such as lending, investment, finance related services. Thus, when banks tighten lending, they are greatly benefiting because they are able to attract customers seeking for unsecured loans.VTA
SOUVEREIGN DEBT - Bankers upbeat downgraded rating of six Vietnamese banks
Moody’s move in downgrading the rating of six Vietnamese banks does not mean that other members have better finances, the state newspaper Thoi Bao Kinh Te Viet Nam reported on Dec 16.
One day earlier, the credit rating agency Moody’s Investors Service announced it downgraded the Vietnamese sovereign debt rating to B1 from Ba3.
In addition, the New York-based agency also cut the rating of foreign currency deposits from B1 to B2 for six Vietnamese lenders including Asia Commercial Joint Stock Bank (ACB), Bank for Investment and Development (BIDV), Military Bank (MB), Saigon-Hanoi Commercial JS Bank (SHB), Vietnam International Bank (VIB) and Vietnam Technological Commercial JS Bank (Techcombank).
The firm lowered two notches of Baseline Credit Assessments and Bank Financial Strength Ratings for the banks.
Regarding the rating results of Moody’s, the banks’ representatives declined a comment and a feedback and said that it is necessary to be aware of the rating as well as announced results. The announcement of the rating result does not mean that six members named in the downgraded list have a lower credit rating compared to others in the banking system.
Accordingly, the representatives explained that the targeted objectives of Moody’s were selected among prestigious credit institutions, or those institutions invited Moody’s for rating, not all subjected to the agency’s rating.
Where credit institutions invite Moody’s for rating as the global well-known and independent rating agency, they want to re-locate themselves objectively to be more active in outlining administration and operation measures.
In the explanation, a leader of ACB told VnEconomy that not all banks in Vietnam can meet initial requirements to become subjects for Moody’s to rate.
Not giving a comment on rating results, but the representative said, the rating downgrade of banks mainly stemmed from the notch cuts in rating of Vietnamese government bonds related to growing risks of balance of payments, accelerating inflation and debt burden in Vietnam Shipbuilding Industry Group (Vinashin).VIETBID
MONEY MARKET - SBV won’t succeed in regulating interest rates based on banks’ agreements
Experts have pointed out that the State Bank of Vietnam still has not found the proper monetary solution, therefore, interest rates are still escalating. They have also warned that the central bank will not succeed if it regulates interest rates based on banks’ agreements.
In the past, commercial banks sat together many times to discuss the interest rate policies and agreed to apply ceiling interest rates. However, right after leaving the meetings, they broke their promises and raised the deposit interest rates in order to attract more depositors. Meanwhile, banks explain that the agreements reached by commercial banks are not legal enforcements, therefore, they have the right to decide to follow or break the commitments.
On December 8, Techcombank stirred up the public when offering the highest interest rate on the market at 17 percent per annum for a one month term deposit. The move by Techcombank was described as an action to throw the market into chaos. Right after the new interest rate was announced by Techcombank, the monetary market immediately became feverish: Other commercial banks also raised their deposit interest rates, triggering a new interest rate war.
The State Bank of Vietnam then had to urgently intervene in the market by requesting Techcombank to reconsider its interest rate policy and asking commercial banks to sit together to discuss the interest rates.
After the latest meeting, the ceiling interest rate that banks agreed to apply increased from 12 percent to 15 percent. This means that commercial banks have pledged not to offer the deposit interest rates at higher than 15 percent per annum.
However, Le Xuan Nghia, Deputy Chair of the National Finance Supervision Council, commented that the State Bank still has not found the right monetary policy solution, and that interest rates cannot be stabilized simply by banks and administrative measures. That explains why, even after the agreement was reached, many commercial banks have still been quietly applying higher interest rates at 16-16.5 percent per annum.
Duong Thu Huong, Secretary General of the Vietnam Banking Association, admitted that it is impossible to force banks to obey the agreement because the agreement is not a legal document, and the association has no power to punish the banks which break the commitments.
Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM), said that every time when the central bank tightens the monetary policies, small banks regularly face liquidity problems. They always have to borrow money in the interbank market at high interest rates. However, the volume of money they can borrow in the interbank market is modest and must not be higher than 20 percent of the total capital they can mobilize. As the result, the banks have to raise deposit interest rates to attract more capital, triggering interest rate wars in the market. Once the interest rate war begins, no bank can stand outside the race, if they want to retain their depositors.
Nghia related that some days ago, he witnessed the branches of a big commercial bank scrambling for a 900 million deposit from a client. Citing the example, Nghia said that the pressure of mobilizing capital is very hard.
Nghia believes that the central bank has not chosen suitable monetary policies. In order to restrict credit, the central bank should have required higher compulsory reserves ratio. If so, money will be “imprisoned” at the state bank and the bank can use the money to help small banks improve their liquidity. In this case, small banks will not have to raise interest rates because they can get support from the central bank. However, the central bank did not use that solution, and therefore the monetary policies did not bring the desired effects.
Experts also say that the central bank is trying to restrict credit (Banks are allowed to lend 80 percent of their mobilized capital at maximum), therefore, money still rests in commercial banks. As banks cannot trade the money they have, they try to trade foreign currencies and gold.
Nghia emphasizes that for now the urgent solution is that the central bank needs to work with the banks with difficulties in liquidity to discuss solutions. In order to have money to settle the problems, it is necessary to raise the required compulsory reserve ratio. The ratio is now 10 percent in the US, while the figure is only 3 percent in Vietnam.DAUTU
PRIVATE BUSINESS - Private sector pays 29% of budget
Private companies contributed 29 per cent of the State budget in the form of taxes now compared to 18 per cent in 2006, Thoi Bao Tai Chinh Viet Nam (Vietnam Financial Times) newspaper reported.
They also created more jobs than State-owned companies.
Pham Viet Muon, deputy head of the Government Office and deputy head of the Committee for State-owned Enterprises Renewal and Development, said the devel-opment model in advanced countries had proved that the private sector was very important for economic growth.
The Government needed to provide opportunities for the private sector to invest more in infrastructure, education and other key sectors, he added.
Pham Thu Hang, head of the Viet Nam Chamber of Commerce and Industry’s Enterprises Development Foundation, said though the Government had been trying to tweak the legal system to ensure all companies were equal before the law, private companies still remained at a disadvantage when trying to obtain raw materials, markets, capital, and especially land.
Around 90 per cent of State-owned companies are allocated land for their business while 51 per cent of private businesses have to use their owners’ houses and another 31 per cent have to rent their premises, according to the Enterprises Development Foundation.
Phung Anh Tuan, deputy chairman of the HCM City Young Entrepreneurs Assoc-iation, said to create a level playing field for private and State-owned companies, the legal system had to be amended and new regulations issued.VNNEWS
Oliver Massmann
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