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Saturday 19 February 2011

Vietnam - News and Regulations

ECONOMIC OUTLOOK - Foreign banks are optimistic about Vietnam's economy

General Director of Standard Chartered Bank (SCB) Vietnam Louis Taylor said challenges for Vietnam this year include inflation, loss of confidence in value of currency and trade deficit. However, SCB is still optimistic about Vietnam's economy and sees many growth opportunities in the country.
Sharing his viewpoint on Vietnam's economy in general and its financial and currency markets in particular this year, Taylor said SCB has listed a group of countries called the "seven-percent group", of which members are the countries expecting to obtain economic growth of seven percent or more in the next 10 years. This is an impressive growth rate and Vietnam is a member of that club.
That also means SCB has seen opportunities to develop in Vietnam, of course, along with issues such as inflation, the loss of confidence in value of currency and trade deficit. However, SBC believes that Vietnam would be one of the three Asian economies achieving higher economic growth in 2011.
Regarding the opportunities for banking operations, Taylor said the number of bank accounts in HCM City grew by 400 percent from 2006 to 2010. The growth rate of 400 percent in bank account number, with nearly 20 millions bank accounts in 2010 compared to over five million bank accounts in 2006, has shown the huge potential for the development of the sector.
Foreign banks operating in Vietnam started receiving completely equal treatment since early this year. Talking about advantages of SCB Vietnam in developing banking and financial products, Taylor said in Vietnam, domestic banks hold more than 90 percent of market shares in several market segments. SCB would not develop its system of branches nationwide with over 200 branches as domestic banks do in order to serve customers. It is because customers are being well served by domestic banks. Nevertheless, SCB would expand services and improve service quality to better serve its existing and future customers.
The financial market of Vietnam has just developed for over 20 years. Although there has been fast and efficient growth, the market has not yet been mature as markets of other countries. SCB Vietnam is working actively with the State Bank of Vietnam (SBV) to ensure that the policies would not only better promote the growth of foreign banks, but also contribute to the overall development of Vietnam's financial market.
Assessing the route to raise charter capital as stipulated in Decree 141/2006/ND-CP, which is applied for domestic banks, as well as the requirement to increase capital of foreign banks operating in Vietnam, Taylor shared that the requirement on having charter capital of three trillion dong is to ensure the banking system's development and safety, and is also enough to help Vietnam capture the opportunities for development. In addition, SBV also intended to encourage smaller banks to merge and form a larger entity. However, this aspect of the above decree has not achieved great success, because most banks want to raise capital and develop independently.
Not all banks have been able to meet the deadline of the charter capital increase requirement; therefore, there has been an extension of one year for implementing this.
According to Taylor, it is very good and important if a bank is strong and having good capital, but if capital is larger than the management capacity, it could lead to unpredictable problems in the future. In fact, the number of good lending opportunities does not grow along with the increase of charter capital. When bank is in excess of capital, their credit quality would become lower, because they must find every ways to use their capital, in order to ensure profitability at an appropriate level for shareholders and that reduces the safety and health of the banking system.
He added that therefore, state management agencies need to balance reasonable level of capital for the banking system and the capital beyond banks' capacity; but the minimum level of three trillion dong seems to have achieved this balance.DTCHK


FOREIGN DIRECT INVESTMENT- Japan's second biggest bank wants to pour more capital into Vietnam


Vietnam is considered one of three most attractive investment destinations for Japan's second biggest bank, Mizuho, in 2011.

Facing the increasing competitive pressure in Japan, leader board of Mizuho Financial Group plans to promote their operations more in foreign countries, especially in emerging markets in Asia.

Answering the reporter of Reuters recently, Mizuho's CEO, Yasuhiro Sato, said that his bank is building a detailed plan to expand the operations in Vietnam, Burma and Bangladesh. The expansion may be carried out in April this year.

Marking its presence in Vietnam since 1996, Mizuho now has two branches in Hanoi and HCM City. By the end of 2010, both two branches got approval from the State Bank of Vietnam (SBV) to hike chartered capital from $15 million to $133.5 million. This was considered the starting step for the wave to scale up chartered capital of a series of branches of foreign banks (Deutsche Bank AG, OCBC, Chinatrust, and Huanan) in Vietnam recently.

Apart from Vietnam, Mizuho's leader also said that Mizuho will soon open some offices in China and India. According to Bloomberg, Mizuho together with BlackRock, the world's biggest fund management firm, are seeking to buy stake into some large financial institutions in Asia.

Last year, Mizuho also bought 2 percent stake into BlackRock.DTCHK




POWER - Vietnam government calls for fairness in rolling power blackouts


Vietnam's government told regional authorities to handle rolling power blackouts in an "equitable" fashion as it said the Thua Thien Hue province will experience electricity cuts starting next month.

"Politically or socially important" events should be given priority in receiving power during the current dry season, the government said in a statement on its website today, without providing clarification of what events meet those criteria. Provincial authorities should approve a list of users that can be exempt from power cuts, according to the statement.

Thua Thien Hue Power Co. plans to cut power in the central province by 9.3 percent in March and April, by 21.1 percent in May and 13.7 percent in June, the government said. Priority will be given to industrial production and agricultural irrigation, according to the statement.

Blackouts were set to affect some of the country's 91 million people from February 15, Vietnam News reported February 10. Record-low levels at water reservoirs are cutting hydropower production, state-run Electricity of Vietnam, known as EVN, said yesterday. The utility said last month it faces a shortfall of 3 billion kilowatt-hours in this year's dry season.

Vietnam may increase the cost of average household electricity by a record 15 percent next month, Vietnam News reported February 14. EVN sells electricity at 30 percent to 40 percent below production cost, it said in a statement today.

Rolling outages may inconvenience overseas manufacturers using Vietnam as an export base. Severe power cuts "would make it very difficult for me to explain to the board that we want to stay here and want to develop the company here," Boy Schallert, managing director of Aalborg Industries A/S in the northern city of Hai Phong, said by telephone this week. The company has no imminent plans to leave the country, he said.

Vietnam depends on hydropower for about 37 percent of its electricity, followed by gas at 36 percent and coal at 16 percent, according to statistics from the Association of the Electricity Supply Industry of East Asia and the Western Pacific. bloomberg



FINANCE - Vietnam raises refinance rate 200 bps to 11 pct
Vietnam's central bank raised a key interest rate on Thursday in an attempt to answer growing calls for concrete steps to curb double-digit inflation after the bank devalued the currency last week. The State Bank of Vietnam (SBV) increased the refinance rate by 200 basis points to 11 percent while keeping the base rate, which served as the benchmark until recently, unchanged at 9 percent and the discount rate at 7 percent. Analysts said the move may help support the currency, which had been slipping after Friday's 8.5 percent devaluation, as well as curb inflation. But further steps would be necessary with the consumer price index expected to keep rising after soaring to a near-two year high of 12.2 percent in January.
"The hike is essential, especially after the devaluation of the dong last week that will add to inflation pressures," Australia and New Zealand Banking Group Ltd (ANZ) said in a note after the move. "However, our analysis shows that today's move alone will still be insufficient for the SBV to achieve its 7 percent inflation target by the end of 2011. Therefore, we expect the authorities will have to raise rates again this year."
The central bank offered no explanation for the change. The last policy rate increase was in November when the SBV boosted all three key rates -- the base rate, the refinance rate and the discount rate -- by 100 basis points.
Analysts said the move was expected to close a tap of relatively cheap money that larger banks had been using to buy government bonds and re-lend to smaller, less powerful banks at higher rates. Some observers expected the big banks to redirect some of the funds into commercial lending, but others said the move was more likely to push up lending rates, which are already as high as 20 percent.
The State Bank on Friday devalued the beleaguered dong by 8.5 percent, its biggest move since the 1997-8 Asian Financial Crisis, and narrowed the band in which the currency is allowed to trade against the dollar to 1 percent from 3 percent on either side of the mid-point..
Since then, the interbank exchange rate has slipped outside the band and unofficial, or black market, rates dropped about 3 percent to around 22,000 dong per dollar from about 21,350 on the day of the devaluation. Economists welcomed the devaluation after a four-month mismatch between official and unofficial exchange rates, but a chorus of observers, including the International Monetary Fund, said further steps were needed to curb inflation and make the devaluation stick.
"They are trying to drive interest rates up in the hope that deposit rates go up to the point that people start holding dong," said one economist in Vietnam who declined to be identified. "They should have done this about eight months ago." The currency has been devalued by more than 20 percent since mid-2008 in the face of high inflation, wide trade and fiscal deficits and low confidence in the local unit.
The State Bank of Vietnam on Thursday also increased the overnight rate for electronic interbank transfers and a rate for specific types of clearing loans from the central bank to commercial banks, it said on its website, www.sbv.gov.vn.
In a move that is likely to exacerbate inflation, the cabinet was meeting on Thursday to discuss increasing the price of electricity by an average of up to 18 percent and also a hike in the price of petrol. All three major ratings agencies -- Fitch, Standard & Poor's and Moody's -- downgraded Vietnam last year citing macroeconomic imbalances.
"The key question driving the outlook for Vietnam's 'B+' rating is whether the authorities will re-orient monetary and fiscal policy towards lower inflation and medium-term sustainable public finances," said Andrew Colquhoun, Head of Asia-Pacific Sovereigns at Fitch.
He said the authorities should take steps to "meaningfully" control inflation and may need to abandon their credit growth target for the year, which is 23 percent.
"Accommodation of higher inflation associated with renewed downwards pressure on the dong would see negative pressures build," he said.VNS

VINASHIN – STORY CONTINUED - Vietnam widens indebted shipbuilder probe: report Authorities in Vietnam have widened their investigation into state-owned shipbuilder Vinashin, reports said Thursday, after the firm's debts threatened the country's global financial reputation.
Trinh Thi Hau, 47, former finance director at a Vinashin-affiliated company, has been arrested for allegedly having "intentionally violated state regulations on economic management, resulting in severe consequences", Tuoi Tre newspaper reported.
Vinashin's former director general of finance, Ho Ngoc Tung, faces the same charge but is undergoing medical treatment in Australia and has not been arrested, the report said, adding he is one of 10 people being investigated.
Seven of the 10 have been detained, Tuoi Tre said.
The first to be arrested last August was Pham Thanh Binh, former chair of the Vietnam Shipbuilding Industry Group (Vinashin). Binh, 57, faces the same accusation of violating state economic management regulations.
In December Vinashin, whose $4.4 billion debt pushed it to the brink of bankruptcy, reportedly defaulted on the first $60 million instalment of a $600 million loan arranged by Credit Suisse in 2007.
Tuoi Tre, citing investigators, said that Hau and Tung allegedly approved spending of 60 billion dong (now about $2.7 million), some of it on non-approved projects including a steel purchase that turned out not to exist.
Investors and analysts fear the scandal at Vinashin is symptomatic of wider problems at state-owned firms. Ratings agencies cited the firm's troubles in downgrading Vietnam's sovereign ratings.TT

RESOURCES - Idemitsu-led firms find oil, gas offshore Vietnam
Three Japanese firms led by project operator Idemitsu Kosan Co (5019.T) said on Thursday they have found oil and gas in an offshore exploration well in southern Vietnam, as Japan's energy sector steps up exploration activity in Southeast Asia.
The companies did not give detailed figures on reserves, saying they would make evaluations later. The discovery was in the Dai Nga structure in Blocks 05-1b and 05-1c, about 300 km (188 miles) southeast of HCM City. A wholly owned Idemitsu unit and JX Nippon Oil & Gas Exploration, part of JX Holdings (5020.T), each holds a 35 percent stake in the blocks, while an Inpex Corp (1605.T) unit has the rest. The three firms entered into a production sharing contract with PetroVietnam in 2004.VNS

INFORMATION TECHNOLOGY - Vietnam moves to enhance Internet development
The Internet is developing strongly in Vietnam and the country always creates favourable conditions for Internet activities, said Foreign Ministry spokesperson Nguyen Phuong Nga. Nga made this statement while answering reporters' questions on Vietnam 's response to US Secretary of State Hillary Clinton's speech at the George Washington University on February 15 on Internet freedom, mentioning Vietnam, at the ministry's regular meeting in Hanoi on February 17. According to Nga, by December 2010, the number of Internet users in Vietnam had reached nearly 26.8 million, accounting for 31.11 percent of the country's population. More than 1.5 million had their own blogs. However, like other countries, all information on the Internet must abide by the law so that it does not affect the country's customs, social morality, public order and national security, said the spokesperson. "In Vietnam, the freedom and democratic rights of all people, including freedom of information and speech, are clearly written in the constitution and law, and are assured to be carried out," Nga affirmed.
In Vietnam, all citizens are protected by the law but at the same time they must respect the law, she said, adding that any person who violates the law would be treated justly under the legal regulations.
"We believe that in relations among countries, every difference should be exchanged in a constructive spirit of mutual respect and understanding, with no intervention in each other's internal affairs," Nga stressed.REUTERS



ENVIRONMENT - Prime minister curbs emission-generating technologies


Prime minister Nguyen Tan Dung has ordered that investment in technologies that release high levels of emissions must be halted, considering the fight against climate change and sea level rise a matter of life and death.
The government leader made the request at the second meeting of the National Steering Committee on the National Climate Change Response Target Programme in Hanoi on February 16.
Acting as Head of the Steering Committee, Dung reminded the committee members of the need for perfection of the general strategy on climate change and sea level rise, followed by the creation of competent action plans for prompt, drastic, uniform and long-term implementation.
He required the Steering Committee to promptly present a meticulous scenario on climate change for all sectors and localities to design their own action plans for specific fields.
To build works to deal with climate change and sea level rise, the sectors and localities should rely mainly on their own resources, PM Dung noted.

The Steering Committee's members recommended the increased leadership and instruction of the implementation of the National Climate Change Response Target Programme, policies and scientific research on climate change in 2011.
They also suggested international donors participate in activities of the directors Board of the Target Programme and agreed to focus on making climate change-related documents.
They agreed to deploy a national scientific and technological programme on climate change nationwide and make the best use of internal and external resources for the work.

According to scientists, Vietnam is one of the developing countries in the world that are most likely to be seriously affected by climate change, especially sea-level rise.
To proactively respond to these threats, Vietnam ratified the UN Framework Convention on Climate Change, the Kyoto Protocol and the National Climate Change Response Target Programme in 2008.
In 2010, the National Climate Change Response Target Programme focused on building related institutions, policies and action plans, organising communication campaigns, screening development plans and scientific and technological research, and mobilising international funding.

Vietnam has so far mobilised over 1.2 billion USD from international sources for activities in response to climate change after the first meeting of the Steering Board.
It has received pledges and is negotiating for a sum totalling 1.3 billion USD to fight climate change. vns




Oliver Massmann
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Friday 18 February 2011

Hai Phong cancels Valentine’s kissing contest

LIFESTYLE
Sunday ,Feb 13,2011, Posted at: 13:40(GMT+7)
Hai Phong cancels Valentine’s kissing contest


The romantic kissing contest for 100 couples supposed take place in northern city of Hai Phong Sunday to celebrate Valentine’s Day has been canceled.

Le Tat Vinh of Provincial Department of Culture, Sports and Tourism said the agency decided not to authorize the kissing contest set to take place at Hai Phong’s Viet-Czech Cultural Center at 14 pm February 13.

Director of the center, Trinh Phuc Tue said a contract to lease the venue for the event was also canceled.

Operated under the motto “there is no everlasting love, just everlasting moments of love”, the contest, named “The party of kisses”, is meant to create a unique opportunity for the city’s youth to demonstrate the depth and length of their love for their significant others.

100 couples, all over 18 years old, had signed up for the knockout competition.

According to the contest’s rules, couples would have to compete in an assigned compulsory position which allowed only one of the two to stand while kissing.

20 would be selected from the audience to serve as judges evaluating couples’ performance.

The couple exchanging the most impressive kiss in the longest time would be awarded a special prize, a VND 15million (US$ 769) laptop.

The event, if authorized, would be hosted by joint-stock media company Golden Brand in collaboration with Doublemint Vietnam and PNJ Jewelry Company.
From Tuoi Tre


http://www.saigon-gpdaily.com.vn/Lifestyle/2011/2/89605/

Vietnam - News and Regulations

WORLDBANK - WB to lend Vietnam $350m to reform government policy
The World Bank (WB) will lend Vietnam $350 million in a second phase of a project aimed to help the country's government develop its public investment policy.
The loan comes from two of the World Bank affiliates: $250 million from the International Bank of Reconstruction and Development (IBRD) and $100 from the International Development Association (IDA) fund. French Development Agency (AFD), a development fund of the French government, will also provide €35 million (US$48 million) as part of a co-financing scheme with the World Bank for the project.
The Public Investment Reform Project seeks to support modern governance in such areas as better planning processes, more transparent procurement and stronger public financial management. It is designed to assist the government of Vietnam to strengthen the selection, preparation, implementation and supervision of public investment projects.
The first phase of the project, from December 2009 to Sep 2010, received $500 million of funding from the World Bank and €100 million (US$134.5 million) from the French Development Agency (AFD).TUOI TRE



POWER - Research and Markets: Vietnam power report Q4 2010


Research and Markets (http://www.researchandmarkets.com/research/92b742/vietnam_power_repo) has announced the addition of the "Vietnam Power Report Q4 2010" report to their offering.

Business Monitor International's Vietnam Power Report provides industry professionals and strategists, corporate analysts, power associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's power industry.

The new Vietnam Power Report from BMI forecasts that the country will account for 1.51% of Asia Pacific regional power generation by 2014, with the risk of power shortages if generation expansion falls below the required level. BMI's Asia Pacific power generation assumption for 2010 is 7,698 terawatt hours (TWh), representing an increase of 4.2% over the previous year. BMI are forecasting an increase in regional generation to 9,234TWh by 2014, representing a rise of 20.0% between 2010 and 2014.

In 2010, Asia Pacific thermal power generation will have totalled an estimated 6,133TWh, accounting for 79.7% of the total electricity supplied in the region. BMI's forecast for 2014 is 7,216TWh, implying a 17.7% growth that reduces the market share of thermal generation to 78.1%. This is thanks largely to environmental concerns promoting renewable sources, hydro-electricity and nuclear generation. Vietnams thermal generation in 2010 is an estimated 54.5TWh, or 0.89% of the regional total. By 2014, the country is expected to account for 1.17% of regional thermal generation.

For Vietnam, oil will have accounted for an estimated 22% of 2010 primary energy demand (PED), followed by gas at 9%, coal at 16% and hydro-power with 4%. Direct burning of wood and waste materials contributes a further 50% to overall energy consumption. Regional energy demand is forecast to reach 5,236mn toe by 2014, representing 20.6% growth from the estimated 2010 level. Vietnams estimated 2010 energy market share of 1.79% is set to rise to 2.21% by 2014. An estimated 40TWh of hydro-electric demand in 2010 is forecast to reach 55TWh by 2014, with its share of the Asia Pacific hydro market rising from 4.07% to 4.49% over the period.

Vietnam now shares fourth place with India in BMI's updated Power Business Environment Ratings, thanks largely to the growth potential of power consumption and energy demand, plus healthy scores in several other categories. It should be able to pull further away from Indonesia and Pakistan below, and has longer-term potential to challenge Japan above it.

BMI is now forecasting Vietnamese real GDP growth averaging 6.26% per annum (pa) between 2010 and 2014, with a 2010 assumption of 6.00%. The population is expected to expand from 88.4mn to 92.0mn by 2014, with per capita GDP and electricity consumption set to increase by 47% and 53% respectively. Power consumption is expected to increase from an estimated 72TWh in 2010 to 114TWh in 2014, providing a slight theoretical supply surplus if generation grows at no less than the publisher's assumed average annual rate of 10.2% (2010-2014). There is, however, a real risk of electricity shortages if the power industry cannot deliver adequate new capacity as demand soars.

Between 2010 and 2019, BMI are forecasting an increase in Vietnamese electricity generation of 110.1%, which is at the top of the range for the Asia Pacific region. This equates to 42.2% in 2014-2019, down from 47.7% between 2010 and 2014. PED growth is set to decrease from 49.1% between 2010 and 2014 to 40.9%, representing 110.1% for the entire forecast period. Hydro generation is expected to rise by 105% between 2010 and 2019, with thermal power generation forecast to increase by 113% over the same period. More detailed long-term BMI power forecasts can be found later in this report.

Key Topics Covered:

* Executive Summary
* SWOT Analysis
* Industry Overview
* Market Overview
* Business Environment
* Industry Forecast Scenario
* Country Snapshot: Vietnam Demographic Data
* BMI Methodology

Companies Mentioned:

* Electricity Of Vietnam (EVN)

For more information visit http://www.researchandmarkets.com/research/92b742/vietnam_power_repo

Contact:

Research and Markets
Laura Wood, Senior Manager,
press@researchandmarkets.com
U.S. Fax: 646-607-1907
Fax (outside U.S.): +353-1-481-1716

http://finance.yahoo.com/news/Research-and-Markets-Vietnam-bw-3484472992.html?x=0&.v=1




INFRASTRUCTURE - Action plan for Hanoi's socio-economic development in 2011
Chair of Hanoi People's Committee Nguyen The Thao has signed document No.26/CTr-UBND announcing the action plan to carry out government's resolution on key measures to direct the implementation of the socio-economic development plan in 2011.
One of the main tasks of the city in 2011 is to promote higher economic growth along with sustainable development. Specifically, Hanoi targets GDP growth of 12 percent, export growth of 14 percent, 19 to 20 percent total social investment growth, and budget revenue growth of five percent compared to estimates assigned by the government, etc. In order to perform this task, the city requested Department of Planning and Investment to coordinate with the Department of Finance and other related departments, districts, and agencies to focus on building and implementing projects to improve investment environment, enhance Provincial Competitiveness Index (PCI), and on implementing effectively investment promotion programmes, etc. Department of Industry and Trade should actively track and give forecasts on domestic and foreign markets in order to have timely guidance; boost trade promotion and development of commercial infrastructure towards civilisation and modernity; strengthen ma
nagement and control on the market and price, actively balance supply and demand of essential commodities, etc.
Another emphasized task is to strengthen planning and construction of essential infrastructure in urban and rural areas; improve the efficiency of urban management and improve environmental quality. Accordingly, Department of Planning and Architecture should expeditiously carry out research, set up city district planning and planning for urban zones and main roads; continue reviewing and joining planning. Department of Planning and Investment should gather synchronous capital investment for major constructions and projects, especially important transportation infrastructure projects, main axes, highways, ring roads, urban axes, etc. to ensure efficiency.
Department of Natural Resources and Environment should urgently relocate production bases that cause pollution or are inconsistent with planning from the inner city and residential areas; guide and supervise the strict implementation of waste treatment in new urban areas, industrial parks, hospitals, and trade villages, etc. The department should also conduct research and propose incentive mechanisms, to encourage all economic ownerships to participate in wastewater treatment and environmental services.
RESOURCES - $25m invested in gold mines in Vietnam
Canada's Olympus Pacific said it would continue investing more $25 million in gold mining projects in Vietnam, much lower than the previous $100 million the company had commenced by the last year end.
Olympus Pacific now is the only foreign-invested company licensed to exploit and export gold in Vietnam with two operational projects in Bong Mieu mine, Phuoc Son Dist, Quang Nam province and another exploration project in Tien Thuan, Binh Dinh province.
The firm has invested about $80 million in the projects so far and said in late 2011 that it would pour additional $100 million to develop its operations in Vietnam. However, However, the expansion plan narrowly was abolished because of the difficulties that the firm had to face the regulation of taxing 10 percent on mining physical gold for exports from January 1, 2011. As a result, the investment line was reduced from $100 million to $25 million.
Before changes in taxes, we have to revive before making investment decision. Instead of going quickly, we now have to go towards step by step, Olympus Pacific's CEO David Seton was quoted as saying by Bloomberg.
According to Seton, the new capital Olympus Pacific will pour into Vietnam this year will be used to develop mines, upgrading factories as well as improving waste treatment system. The changes will help Olympus Pacific increase its mining output from 45,000 ounce of material gold in 2010 to 75,000 ounce this year.
Regarding import tariff, he said his Olympus Pacific would continue proposing Ministry of Finance a reduction in the near future with a view to create more conditions for its investment. But, for the time being, Olympus Pacific is seeking partners to refine materials, limit exports of unprocessed gold and avoid high tariff.
Meanwhile, Taxation Policy Department of the finance minister said in an interview with the local newswire VnExpress on February 2 that they just worked with enterprises to seek opinions on new regulation of gold and raw ore export tariffs.
"Since the new tariff regulation in Circular 184 took effect, we have sought enterprises' respond to have further amendments. Still, first, regulations on material gold export tariffs will be unchanged", an official from Taxation Policy Department said.VIETBIZ

STATE FUEL SUBSIDIES - Vietnam Govt to keep fuel price stabilisation fund
The Vietnamese government will continue to operate the fuel price stabilisation mechanism though there are reports that a fund meant for it is running out of money.
The Ministry of Finance report that 83 billion dong (US$4.25 million) is left in the fund while fuel wholesalers claim it is 1.35 trillion dong in the red.
The Ministry said this means the oil companies overdrew 1.4 trillion dong from it last year to cover their losses. The fund receives the 300 dong surtax that has been slapped on a litre of gasoline.
But the companies complain that they suffer a loss of 2,000-2,400 dong on every litre of gasoline despite using the fund to offset losses.
In December, the ministry accused Petrolimex of surreptitiously drawing 1.24 trillion dong (US$60 million) from the fund to cover its losses.
Last year the government provided the industry 7 trillion dong in the form of import tax cuts and 3 trillion dong from the fund. This year the total amount has already topped 8 trillion dong.
There has been speculation that retail gasoline prices will shoot up after the Lunar New Year since international prices have rising to above $90 a barrel and seem headed for the $100 mark. The oil firms late last year called for shutting down the fund and increasing fuel prices instead. But the government has defended the fund saying it is meant for a rainy day.VNS

EXPORTS - Vietnam's rice exports reach high in first days 2011
Vietnamese enterprises registered to export more than 1.5 million tonnes of rice according to signed contracts till January 31, up 15.74 percent year-on-year, the Vietnam Food Association (VFA) reported. The number of registered contracts in January also reached high, mainly those signed to ship 300,000 tonnes to Malaysia and Indonesia. The country's rice export last month achieved over 485,000 tonnes, beating the estimate of 350,000-400,000 tonnes thanks to high volume of deals signed between December (2010) and January (2011) with Indonesia and Bangladesh. At a recent meeting, some rice traders expressed concerns that Vietnam so far has not yet signed export deals with Philippines for 2011. This has affected strongly to Vietnam's rice price as speculation sentiment declines and pressure of interest rates is tenser. Truong Thanh Phong, chair of VFA expected the demand for Vietnamese rice was still satisfactory, boosted by the contracts signed since late 2010. If Vietnam signs export contract with Philippines, Cuba, Iraq, Malaysia, VFA estimated, the enterprises will export 1.6 million tonnes in the first quarter, 2.24 million tonnes in the second quarter. The association will announce to purchase 1 million tonnes of rice for storage and distribute export quota to 65 enterprises, up 10 enterprises against 2010. He also recommended the associates to comply with VFA regulations and guidance. VFA prohibited sale of 25 percent broken rice in the centralised market without signing government contracts and sale of rice to private firms before the contracts being inked.vns
Exports of Vietnam textile and garment industry in 2010 reaches $11.2b
Exports of Vietnam textile and garment industry in 2010 reached $11.2 billion. The industry currently ranks fifth among those countries with largest export scale of textile and garment in the world. Vietnam is currently the second largest textile and garment exporting country to the US, the third in Japanese market and European market.
Particularly, the industry targets to become a key economic industry in 2015. How would it achieve the target?
Succeed in crisis
According to Le Tien Truong, deputy general director of Vietnam National textile and Garment Group (Vinatex), textile and garment industry has stood firm in the global economic crisis in 2007 – 2009. Specifically, while the world textile and garment sector fell deeply by 12 to 15 percent, Vietnam export turnover was still maintained, the industry even increased market shares in all three major markets and ranks second in market share in the US market. With such results, Vietnam's textile and garment industry is in the top five largest textile and garment exporting countries in the world. In 2010, with exports of $11.2 billion, the industry overcame 80 percent of the crisis effects. As estimated, Vietnam would have about 100 million people by 2015, 50 percent of them in the working age.
In addition to asserting to be the key economic sector, 2011-2015 is the period that the sector will accelerate towards working environment, working conditions, cultural and spiritual life and income. According to Truong, Vinatex has developed action plans including organising cultural and spiritual activities, community house, and apartment building for workers. Truong said that the group's target is to become the key unit with advantages. Therefore, it should soon start preparing for market and business issues. Especially, textile and garment industry of Vietnam still depends heavily on imported raw materials; thus, the issues on labour, supporting industries and raw material sources are important for the breakthrough.
Localisation rate target of 60 percent
From only processing and packaging in 1995, to date, localisation rate of the industry has reached 46 percent, 49 percent in Vinatex. With the target to increase localisation rate to 60 percent in 2015, the group has built complete textile and garment centres to be the core units. Specifically, it is the model of supply chain from design, fibre producing, weaving, dyeing, to making a complete product in industrial parks with good environment treatment solutions. In addition, production and business activities of the group have also associated with vocational training to provide labour for the industrial parks.
However, such modern and standard model is only suitable for industrial zones with high automation, less labour usage and convenience transportation. Therefore, relocating textile and garment companies is necessary. In which, the garment companies should be close to local areas so that workers do not have to travel far to work.
Truong added that the 10-year strategy (2011-2020) of Vietnam textile and garment industry is to build core units in scattered industrial parks. Accordingly, the group has made movement plans. Typically, Nha Be Garment Company has stably moved 12,000 workers to Binh Dinh province instead of locating in HCM City, contributing to reduce pressure on transport, accommodation for workers. Specially, textile and garment industry strives to reach monthly income of workers from $250 to $300 per person by 2015, instead of around $100 per person as at present.VNS

STOCK MARKET GOES INTERNATIONAL - Vietnam stock market aims for global connection
Vietnam will complete the legal framework for its stock market this year in an effort to connect it with regional and world markets, deputy Finance minister Tran Xuan Ha said Tuesday.
The plan to globalise the Vietnamese stock market has been under review for several years and hopefully it will be connected to the global market this year, the Vietnam Economic Times reported Ha as saying, during the re-opening of the Hanoi Stock Exchange following a 10-day holiday break.
He said Vietnam's market capitalisation accounted for nearly 37 percent of the gross domestic product last year. Since 2009, stock transactions have declined in terms of value but capital flow increased by 350 percent.
Vu Bang, chair of the State Securities Commission, said the stock market has "many opportunities" to grow this year.
"We expect more foreign investment to come in," he said, noting that local companies will boost share sales this year.VNS

RATING - Fitch rates Vietnam's Hoang Anh Gia Lai at 'B'; outlook stable
Fitch Ratings has today assigned 'B' Long-term foreign currency and local currency Issuer Default Ratings (IDR) to Vietnam's largest listed real estate developer, Hoang Anh Gia Lai JSC (HAGL). The Outlook for both ratings is Stable.
HAGL's ratings are constrained by its large capex plans of over USD400m until the end of 2013. The company plans to diversify away from its established, but volatile, residential property development business in Vietnam into hydropower generation, iron ore mining and rubber plantations in Vietnam, Cambodia and Laos. This concern is heightened by the company's high funding costs, with current interest costs of 16 percent to 17 percent per annum on its existing floating rate dong denominated loans, reflecting the current high interest rate environment in Vietnam.
Furthermore, there are execution risks in the planned expansion as the company has a limited track record in the new businesses which face material regulatory risks. For instance, the Vietnamese iron ore mining rights need to be renewed every three years, and the company has yet to secure many of the mining rights and an export quota. In the hydropower sector, Fitch notes that independent power generation in Vietnam is still in its infancy, and there is a limited track record of pricing mechanisms, power purchase agreements and on-time payments by the state utility.
However, Fitch notes that HAGL has taken steps to address many of these risks. It has plans for a US dollar denominated offshore debt funding, which, if successful, will lower its funding costs and improve its debt maturity profile. Furthermore, the company has recently sold new shares and minority stakes in operating subsidiaries to raise capital. The company also maintains high cash balances and undrawn committed facilities to manage liquidity risks.
There is also significant flexibility in its capex plans to reduce, delay and/or cancel projects as they are modular. For instance, its expansion into hydropower involves 17 distinct projects, with an average planned capacity of 27 megawatts. Furthermore, many of its projects are being executed with in-house project management and construction know-how, where it has a proven track record in its property development business. In addition, the company has begun selling iron ore domestically at prices not materially lower than international prices less export taxes and transportation costs, suggesting that this venture can be profitable even without exports.
The ratings are also supported by HAGL's established residential property development business, which focuses on the mid-tier market in HCM City. The company has a sufficient land bank for proposed projects over the next five years. This land was acquired at materially lower costs than current market value, which in addition to the reliance on in-house construction, allows for high profit margins. Liquidity risks are relatively low as most of the development costs are funded via pre-sales. In addition, the company has demonstrated a track record of pricing competitively to ensure high take-up rates. For instance, it reduced selling prices by up to 40 percent to generate sales during the property market downturn in 2008 and 2009. Despite this, the company was able to generate a reasonable level of profitability due to its low costs.
The Stable Outlook reflects Fitch's expectation that cash flows from property development would be sufficient to cover funding costs during HAGL's expansion phase until the end 2013. Fitch expects the company's funds from operations (FFO) interest coverage to range between 2x to 3x during this period. Negative rating actions could be taken if the company's FFO interest coverage is sustained below 2x and/or if the company does not scale back its capex without securing longer term lower cost funding. A positive rating action is not envisaged until the new ventures contribute to at least half of total operating profits and generate sufficient FFO to sustainably provide 2.5x coverage of interest.fitchrating





Oliver Massmann
Rechtsanwalt