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CLEAN ENERGY - Vietnam now the aiming point of clean energy investors
SGTT
Lacking
energy and wishing to develop clean energy sources, Vietnam has become
the attractive destination for foreign clean energy investors.
When
announcing the project to build a solar panel factory in HCM City in
March, the US First Solar group aims to make more profits with
the low-cost solar cell technology, about 78 cent per watt.
The
project by First Solar to increase the capacity from 1.4GW to 2.7GW,
which is expected to create 600 jobs in Vietnam, has the total
investment
capital of one billion dollars. IC Energy has also set up a solar panel
factory in the Chu Lai Open Economic Zone with the investment capital of
more than 390 million dollars. Meanwhile, German Roth&Rau has also
invested 275 billion dong in a factory in the
Hoa Lac High-Tech Park.
A
lot of other large-scaled wind power projects in Vietnam have also been
kicked off. The 99MW wind power plant in Bac Lieu province has
the total investment capital of 4500 billion dong. One of the biggest
equipment suppliers of the project is the US-based GE Group. A project
on wind power plant in Tra Vinh province has been developed by German
EAB, which is expected to have the capacity of
30MW. Meanwhile, a project in Soc Trang is expected to have the capacity
of 300MW when becoming operational.
Meanwhile,
sources say that the US Cenergy Power is moving ahead with the solar
energy projects in the two islands of Cat Hai and Bach Long
Vi.
Investment funds jump into clean energy sector
Of
the 150 million euro worth of ODA (official development assistance)
capital granted by the German government to Vietnam in 2010-2011,
33 percent of the capital will be poured into the energy sector and
climate change. This has helped catch more attention from foreign
investors when considering investment plans in Vietnam.
Besides
this, the market now has favorable conditions to develop, because a lot
of investment funds which plan to funnel capital into the
recycle energy sector have been established.
A
World Bank’s survey on the energy for Asia conducted in 2010, shows
that Vietnam has great advantages to make wind power with the total
potential capacity of 500,000 MW, which is 200 times higher than the
capacity of Son La hydropower plant and 10 times higher than the
forecast total electricity capacity to be reached by 2020.
Vietnam
has 8.6 percent of its area which is believed to have “good” and “very
good” potentials to set up big-scaled wind power stations,
and more than 40 percent of land in rural areas for small-scaled
stations.
Meanwhile,
scientists have warned that Vietnam may meet big problems in the
future, when the electricity consumption is forecast to increase
by 20 percent, while the electricity output increases by 13 percent
only.
Indochina
Capital has set up MRRF with the capital of 50 million dollars, a fund
which plans to pour money into recycle energy and environment
projects. The fund also plans to mobilize 150 million dollar worth of
capital from other sources which will then be injected in wind, solar
power plants, small hydropower plants and energy saving projects.
Prior
to that, Dragon Capital announced the establishment of the regional
Mekong Brahmaputra fund which specializes in making investment
in recycle energy, clean water production and waste treatment. To date,
45 million dollars worth of capital has been mobilized from financial
institutions such as FMO, ADB, Finnfund and BIO, while the capital is
expected to increase to 100 million dollars
this year.
IFC
and Norwegian SN Power have also agreed on the establishment of
InfraVentures which specializes in seeking investment opportunities in
recycle energy projects. For the last many years, IFC has been well
known as a big investor in energy saving and clean production sectors.
INVESTMENT – Foreign contractors to prioritise local workers
Tuoi Tre
Foreign
contractors are now required to prioritise local workers for the jobs
and positions for which they have adequate qualifications,
the Ministry of Labour, War Invalids and Social Affairs has said.
In
a directive sent to provinces, cities and relevant agencies across the
country, minister of Labour, War Invalids and Social Affairs Pham
Thi Hai Chuyen said foreign contractors are required to include in their
bidding dossiers plans for the employment of foreign and local
workforce.
They
are also required to report the recruitment of Vietnamese workers to
the local People's Committee of the province or city where they
are implementing the project, including the number of Vietnamese
workers, their expertise, experience and length of recruitment.
The
directive came in accordance with the government's Decree No.46 on the
recruitment and management of foreigners working in Vietnam that
took effect last month.
Under the decree, local authorities are responsible for supplying domestic workers to the foreign contractors as requested.
If
they fail to do so within 30 days (for the recruitment of less than 500
workers) and 60 days (for a request of over 500 workers), they
have to permit the contractors to employ foreign workers for the
positions left unfilled by the locals.
All foreign workers must have work permits before their visa applications with the Ministry of Public Security are approved.
The
decree was issued in an effort to reduce the number of foreign workers,
most of whom are undocumented, dominating projects carried out
by foreign contractors in Vietnam, while a large proportion of the local
workforce is unemployed.
In
early August, for instance, local authorities of the Mekong Delta
province of Ca Mau reported that 1,051 of the 1,728 Chinese nationals
working at the construction site of the Ca Mau Urea Plant had no work
permit.
Similarly,
in August 202 Chinese workers at the Nhan Co Aluminum Plant in the
Central Highlands province of Dak Nong were reported to be
without a work permit by the provincial Department of Labour, War
Invalids and Social Affairs.
Economists evaluate policies
VNS
Foreign
and Vietnamese economists presented their studies on the country's
social and economic policies at the two-day fourth Vietnam Economist
Annual Meeting (VEAM) that ended yesterday.
Prof
Dr Nguyen Thi Canh of the University of Economics and Law analysed the
factors affecting economic growth in the last 20 years.
Economic growth following reform and global integration had reduced poverty and increased living standards in Vietnam.
The
quantitative model of total factor productivity and other econometric
models (the statistical relationship between various economic factors)
showed that the country's economic growth was determined by capital and
exports.
But
there were major challenges in improving the investment environment,
including the slow restructuring of State-owned enterprises, leading
to reduced faith among investors.
Tortuous
tax policies, lack of investment-friendly land policies, and tardy
administrative reforms also limited investment, and the government
had to give priority to overcoming these challenges.
Delegates
tabled 43 other studies including those on energy consumption and
economic development, the effect of growth on companies' survival
in Vietnam, privatisation and corporate performance in transitional
economies, and the impact of exchange rate fluctuations on trade
balance.
Assoc
Prof Dr Nguyen Van Luan, rector of the University of Economics and Law,
said VEAM had helped researchers and academics across the country
and world network with each other.
Research projects and economic cooperation had been set up thanks to the network, he added.
Dr
Nguyen Duc Nghia, deputy director of the Vietnam National
University-HCM City, said VEAM also enabled delegates to compare notes
and recommend
economic policies.
The
meeting, held by the University of Economics and Law in cooperation
with Foreign Trade University, the French National Centre for Scientific
Research, and the Development and Policy Research Centre, attracted
economists and researchers from various countries.
FDI enterprises reluctant to invest in Vietnam industry: UNIDO
Vietbiz24.com
United
Nation Industrial Development Organisation (UNIDO) has revealed that
merely 8 percent of FDI enterprises in manufacturing sector would
like to expand production in Vietnam.
Recently,
UNIDO in collaboration with the general Statistical Office of Vietnam
and Foreign Investment Department (Ministry of Planning and
Investment) have finalised the draft report on industry investment in
Vietnam in 2010.
Although
a detailed version will not be available until the end of the year, the
initial information partly unveils the outlook of investment
in Vietnam particularly in industry sector.
The
survey of nearly 1,500 enterprises (57pct of which are FDI businesses)
indicates foreign businesses’ pre-tax return of 7.6pct (the average
level over the past three years) compared to 6.7pct at domestic firms
(DI), which are expected to pick up in the years to come to 9pct and
7.8pct respectively.
FDI
enterprises affirmed meeting the targets over the last three years
whereas domestic peers optimistically reported their overshooting
the goals.
Being
one of the rare surveys that look into the “average age” of machines in
use at FDI firms, the draft reports the average figure of 10
years for FDI businesses and domestic ones alike.
Still,
most of the manufacturers have failed to fully deploy these machines
despite such long period with the equipment utilisation rates
of 86 percent at FDI enterprises and 84 percent at the other.
The
principal attraction of foreign investors to Vietnam’ industry is a
newly emerging market that has been partly hit by economic difficulties
and cheap labour which has now sparked concerns of quality.
“Several
factors that were competitive advantages five years ago may no longer
remain”, said Dr Brian Portelli, a UNIDO’s expert.
Massive
investment of 400 FDI enterprises and 360 DI businesses out of nearly
1,500 surveyed firms could mean its implications presently
negligible. Those who are of intention of expansion in three years’ time
account for 8pct and 30 percent at FDI and DI firms respectively.
Another
issue included in the report is continuously increasing wages over the
last few years which should be accompanied by labour quality
improvement and productivity enhancement.
On
the brighter side, UNIDO affirms the FDI enterprises’ excitement of
improvement in infrastructure and supporting services as well as
economic
stability.
The
majority of information concerning investment climate is reportedly
sought through their compatriots with 60pctas opposed to surprisingly
low 2pct via diplomatic representatives, 6pct visa trade and investment
promotion agencies.
“The
reality raises the importance of further involvement of such agencies
so as to concentrate on investment quality rather than quantity”,
deputy minister of Planning and Investment, Dang Huy Dong said at the
announcement of the draft report on September 23.
Also,
outward investment of 12 FDI enterprises and 10 FDI firms is mentioned
in the draft, which would, to some extent, signal their strong
competitiveness, and yet cast the doubt on the likelihood of FDI
outflows out of Vietnam.
Foreign invested enterprise production grows
VNS
Foreign
invested enterprises (FIEs) in the two major cities have seen a
significant growth in industrial production in the first nine months
of the year, despite both cities facing sluggish industrial production.
According
to Hanoi’s Department of Industry and Trade, during the first nine
months, FIE industrial production values have attained a year-on-year
growth of 16.4 per cent in comparison with the average figure for the
nation of 12.7 per cent.
Although
facing many difficulties, several FIEs still grew significantly, such
as YAMAHA Motor Vietnam, Machino Auto-Part Co Ltd, Canon Vietnam,
GM Vietnam Motors and INAX Vietnam, the department said.
Meanwhile,
Hanoi experiences sluggish industrial production growth of 3.9 per cent
this month in comparison with the previous month.
In
the first nine months of the year, the figure is estimated to have
increased 12.7 per cent compared with the same period last year. Of
this, State-owned enterprises grew 7.5 per cent, the private sector was
up 11.2 per cent, and foreign direct invested enterprises rose 16.4 per
cent.
Trinh
Thi Ngan, head of the Industrial Management Division under the
department, said inflation was blamed for a reduction in domestic
consumption
which, in turn, impacted adversely on domestic investment motivation.
She
said many producers were facing difficulties due to enormous
stockpiles, costly input materials and high interest rates, while many
businesses
were unable to access bank loans.
In September, Hanoi’s Index of Industry Products (IIP) rises by 3.6 per cent compared with the same period last year.
In the first nine months of 2011, the index is estimated to have climbed 7.98 per cent.
Of
this, mining rises 23.02 per cent, the processing industry is up 7.93
per cent; water, electricity, gas production and distribution increase
8.17 per cent.
Hanoi’s industrial production is predicted to surge 12.5 per cent for 2011.
FIE
industrial production in HCM City rises 14 per cent in the first nine
months of 2011, compared to the city’s total industrial production
growth of 12.3 per cent.
However, the city’s State-owned enterprise figure grows only 3.9 per cent.
In
September alone, the country’s largest city’s industrial production is
estimated to reach 66.523 trillion dong (US$3.2 billion), an increase
of 2.1 per cent compared with August.
Of
27 industries, about 20 industries see growth, including leather shoes,
textile/garments, construction materials, electrical machinery
and appliances and furniture.
The city’s industrial production is forecast to increase 12.2 per cent for the entire year
Experts
said that to fulfil the 2011 production plan, set at the beginning of
the year, manufacturers of both cities ought to cut costs by
minimising expenses.
Vietnam unlikely to achieve FDI target
Tuoitre News
Vietnam’s
foreign direct investment in the first three quarters was only US$9.9
billion, raising doubts if the country would reach its full-year
target of $20 billion.
The Ministry of Planning and Investment’s Foreign Investment Agency said the figure was down 28 percent year-on-year.
New projects accounted for $8.23 billion, down 31 percent, while investors added $1.66 billion to existing projects.
Processing and manufacturing accounted for $4.91 billion, or 49.6 percent of investment.
Electricity production and distribution attracted $2.52 billion and construction, $689.3 million.
Viet
Nam News said the northern province of Hai Duong was the top
destination for foreign investors, attracting $2.48 billion, or 30
percent
of the total FDI.
It was followed by Ho Chi Minh City with $1.68 billion, Ba Ria-Vung Tau Province with $548 million, and Hanoi with $451 million.
FDI
disbursement in the year to date was $8.2 billion, up 2 percent, and
the department said the year’s target of $11.5 billion was achievable.
Of
47 countries and territories that have invested this year, Hong Kong
topped the list with $2.9 billion, or 29.3 percent of total FDI,
followed by Singapore and Japan.
Transition to market economy faces hindrances: survey
Saigon Times Daily
The
transition to a market-oriented economy in Vietnam will be tougher than
perceived as even well-educated people still want to rely on
State protection for economic security rather than letting market forces
to do their part, according to a survey.
The
common attitudes of the majority of highly-educated Vietnamese towards
the roles of the State and market are mixed, according to the
survey just released by the World Bank and the Vietnam Chamber of
Commerce and Industry.
Of
892 people interviewed on the topic, 93 percent are university and
post-university graduates and work for the central government,
provincial
government, national assembly, the Party's Central Committee office,
private businesses, foreign-invested firms, international donors, and
others.
According
to the survey, an overwhelming number of respondents (87 percent)
prefer a market economy, while 7 percent say the State-led economy
is better than the market economy and 6 percent say it does not matter.
Only one out of four agrees that Vietnam has become a market economy.
The
majority also advocate entrepreneurship, as up to 69 percent say they
believe private ownership is better than any other forms of ownership,
while 13 percent say state ownership of enterprises is better.
Ironically,
however, an overwhelming rate (68 percent) of respondents think prices
of common items consumed by households should be determined
by the State that should intervene in the market.
Meanwhile,
only 29 percent of respondents believe the prices should be determined
by market forces with no interference from the State, and
3 percent say it does not matter to them.
The
mixed signals from the survey give way to concerns among economists and
experts, who say the transition to a market economy would face
resistance.
Economist
Pham Chi Lan, former vice chairwoman of VCCI, said that the rate showed
the State role was still needed in determining market forces
when it comes to important items like petroleum, power, and air tickets.
"People
have get used to the state monopoly for a long time, so they've clung
to an attitude of State protection," Lan explained.
Meanwhile,
economist Nguyen Quang A said he felt afraid that it would be worse for
Vietnam if state agencies would continue to intervene
in the economy based on such findings.
The
survey shows that number of respondents dissatisfied with the current
state of the economy exceeds those satisfied by a two to one ratio,
at 39 percent against 19 percent.
The
World Bank's chief economist Deepak Mishra concluded that most
respondents prefer market-led economy, private ownership of enterprises,
and greater transparency in decision-making. However, they still approve
intervention by the State to stabilise prices.
He
added that the group that seems most satisfied with the status-quo are
those working for the government, the National Assembly and the
Party, as well as private businesses and foreign enterprises. On the
other end of the spectrum are those working with international donors,
social organisations and the media.
"Those
working in the government are less enthusiastic about reforms than
those working outside of the government, so Vietnam's transition
to a market economy is unlikely to be fast," he said.
The survey is to support Vietnam Development Report 2012 to be issued late this year by the international donors.
RESOURCES - PetroVietnam keen on acquiring assets of ConocoPhillips
Vietbiz24
A
source from Vietnam National Oil and Gas Group (PetroVietnam-PVN)
confirmed that PVN is negotiating with local banks to seek capital
sources
serving its acquisition purpose of the assets of the US-based
ConocoPhilips Oil Co in Vietnam.
Earlier,
ConocoPhillips announced restructuring of its operations by selling off
a number of existing assets, including assets in Vietnam.
ConocoPhillips
currently holds a 23.3 percent stake in a cluster of five oil fields of
Lot 15-1, 36 percent stake in Rang Dong field in Block
15-2 in Cuu Long (Delta) tank region and 16.3 percent equity in Nam Con
Son gas pipeline, with total asset value of about $1.5 billion.
Will fuel prices decline in Vietnam?
Tuoi tre
Vietnamese
consumers and fuel dealers are anticipating a retail price cut and a
commission hike since global oil prices are declining.
WTI
crude oil for delivery in October yesterday tumbled US$2.37 a barrel to
$77.48, while London’s Brent North Sea crude dropped to $103.19.
In
Singapore, Vietnam’s largest fuel supplier, A92 gasoline quoted at $118
a barrel on September 23, and analysts said the current downward
trend could take it down to $115 this week.
In Vietnam, there is expectation of a fall in retail prices.
Fuel retailers said the current commission of VND150 per liter of gasoline was not enough for them to cover expenses.
They
wanted the commission to be increased back to VND800, the rate
obtaining in late July and early August when A92 was between $118 and
$120.
Last month fuel retail prices edged down by VND300 – 500 (($0.015-0.025) per liter after soaring by VND2,900 in February.
The pump prices of A92 and A95 are now VND20,800 and VND21,300, while diesel and kerosene cost VND20,800 and VND20,500.
Vietnam government disagrees with electricity, petrol price hike proposals
StoxPlus
Vietnam
government disagreed with the proposals to raise electricity, petrol
prices, Vu Duc Dam, Minister, Chairman of Government Office,
told state-run Vietnam Television at a press conference after Government
regular meeting in September.
The
Minister also said that the Government does not agree with the fact
that electricity and petrol groups excusing loss making to propose
for price hike. Raising electricity and petrol prices will threat
macro-economy stability as the move would result in massive price hike
in other goods, Dam said.
“One
of the rooted reasons for inflation is cost push, Vietnam has always
had to subsidize prices of essential goods including electricity
price. Vietnam is mulling the timing to pursue both curbing inflation,
economic stability and approaching market mechanism. Price subsidy can’t
last for long”, Dam stressed.
Vietnam’s
Decree 84 allows market mechanism under government’s management in oil
& gas industry, accordingly, petrol enterprises are allowed
to set retail prices. However, the deployment of this decree is not
effective. Therefore, the government ordered the Ministry of Finance and
the Ministry of Industry and Trade to seriously implement the decree to
ensure the transparency of electricity and
petrol prices and approaching to market mechanism.
ENERGY - Japan offers consultancy for nuclear power plant
VIR
Electricity
of Vietnam Group (EVN) and Japan Atomic Power Company (JAPC) inked a
contract in Hanoi on September 28 to provide consultancy
for the Ninh Thuan 2 nuclear power plant in Ninh Hai district of the
central Ninh Thuan province.
Under
the contract, JAPC will provide consultancy on Ninh Thuan 2 plant
project for investor EVN within 18 months at the cost of almost 2
billion JPY funded by the Japanese government and disbursed by the
Japanese Ministry of Economics, Trade and Industry.
Speaking
at the ceremony, EVN general director, Pham Le Thanh said that as an
important strategic partner, Japan has so far financed 420
billion JPY for EVN’s power projects, adding that over the past more
than 15 years, Japan has actively supported Vietnam in supplying
information, training and public relations in the field of nuclear
power.
Japanese
ambassador to Vietnam, Tanizaki Yasuaki expressed his desire to help
Vietnam apply the most modern and safest technologies to develop
its nuclear power plants.
As
Vietnam’s first nuclear power project under the National Electricity
Development Plan for the 2011-2020 period and vision towards 2030,
the Ninh Thuan 2 power plant will have a designed capacity of nearly
2,000 MW annually.
FINANCE - State Bank authorises more gold imports as prices soar
VIR
The
State Bank of Vietnam has designated businesses that will be allowed to
import additional gold in an effort to cool down the domestic
price.
The
bank said on September 26 that gold price had dropped to its lowest
level in weeks to just 1,532.45 USD per ounce on global markets -
from a record high of 1,920 USD per ounce on September 6 - leading to
dramatic fluctuations on the domestic market. The result has been a
domestic gold price that has remained for weeks much higher than the
world price.
On
the same afternoon, after plummeting to 43 million VND (2,067.30 USD)
per tael, the domestic gold price quickly soared to 45 million VND
(2,163.46 USD) per tael - 4 million VND (192.3 USD) per tael above the
global price. (One tael is equivalent to 1.2 ounces).
At
the same time, the exchange rate between the dong and the US dollar
also spiked dramatically on the black market, rising to 21,300 VND
per dollar, even as interbank and official rates remained at 20,628 VND
and 20,834 VND, respectively.
The new gold imports, by increasing supply, were expected to help stabilise some of these fluctuations.
However,
Nguyen Thanh Truc, general director of Agribank Gold Joint Stock Co,
warned that gold traders would continue to be able to set their
own prices without management from authorities, and some companies might
continue to hold supplies back from the market, contributing to price
manipulation.
By
late on September 27, DOJI Gold and Germs Group was posting buy/sell
prices of 45.05 million VND/44.6 5 million VND per tael, while the
world spot price on the London Bullion Market was 1,649.90 USD an ounce.
The black market foreign exchange rate had also eased back to 21,270
VND per dollar.
Eximbank
general director Truong Van Phuoc said that it was necessary to import
more gold to cool down the overheated domestic market, noting
that domestic commercial banks were holding a significant quantity of US
dollars, so the additional gold imports would not affect foreign
currency reserves.
Meanwhile,
Tran Thanh Hai, general director of the Vietnam Gold Business Co,
suggested that the central bank issue gold certificates to sell
to individuals at prices below the market price, discouraging citizens
from buying and selling gold on the market and incurring risks, while
helping the country retain its foreign currency reserves.
State
Bank deputy Governor Nguyen Dong Tien also revealed on September 27
that the central bank would submit its final draft of a decree
on the gold market to the government for approval this week. Under the
draft, the State Bank would control and intervene in the gold market if
needed, preventing speculation and price manipulation. Trading in gold
bars would also be restrained, Tien said.
Individuals
and organisations who wanted to do business in gold jewellery or
artworks would be required to establish enterprises and meet
several stringent requirements, he added. Meanwhile, the central bank
has warned investors to be wary of speculation and manipulation when
trading in gold.
Large banks start to face capital withdrawal pressure
Vietbiz24
Asia
Commercial Joint Stock Bank (ACB) and Vietnam Export Import Commercial
Joint Stock Bank (ACB) said that their deposits declined recently.
Some banks implicitly raised the deposit interest rate to 15-16 percent
per year through gift and promotion programmes.
According
to the local newswire Tuoi Tre (Youth), on September 27, Vietnam Bank
Association (VBA) worked with its members in the south of
Vietnam to create a high consistency between the members in complying
with the deposit interest rate cap.
Duong
Thu Huong, VBA's secretary general, said the better implementation of
the saving interest rate cap decreased the total deposits in
banks, including large banks such as ACB and Eximbank.
A
general director of a joint stock bank said at the meeting that some
member banks implicitly pushed the real deposit interest rate up to
15-16 percent per year through the provision of gifts and promotions,
but he could not give any evidences.
Huong
said that VBA has sent message calling banks to take advantage of this
opportunity to re-establish the order in the market, thereby
pulling down the lending interest rate.
Money Flows Out Of Banks, But Bankers Do Not Fear About Liquidity
Vietnamnet
dong
deposits have been leaving banks since the interest rates were eased to
14 percent per annum. However, bankers have affirmed that this
will not in no way affect bank liquidity.
Dam
The Thai, deputy general director of HDBank, said that over the last
three weeks, more than 1000 billion dong have been withdrawn from
the bank, and that while there has been no significant growth in the
dollar deposits, the mobilised gold volume has increased considerably.
Depositors don't extend due deposits
Bui
Tan Tai, deputy general director of the Asia Commercial Bank (ACB),
said that a lot of money has been withdrawn from the bank, and a
big proportion of the withdrawn money has been injected in the US
dollars and gold. According to the general Statistical Office, the gold
price has increased by 30.48 percent so far this year and by 61.26
percent over the same period of the last year, while
the US dollar price has increased by 7.78 percent.
Deputy
general director of a HCM City-based bank said that the biggest problem
for the banks is that the people, who withdraw money, are
"big clients" who have big sums of deposits.
The
banker said that approximately 70 percent of clients of his banks have
the deposits of between 500 million dong and 5 billion dong. And
nearly all of them decide to withdraw money when the deposits become
mature.
In
order to attract more depositors, the banker said, banks have to pay
the highest possible interest rate of 14 percent per annum for all
kinds of deposits. However, this seems to be not enough to retain
depositors, and it is necessary to offer more preferences to please
customers.
The
bank now offers the 14 percent per annum for demand deposits as well,
and 12-13 percent for overnight deposits. Especially, clients now
can withdraw money at any time.
After
three months of keeping the interest rates for gold deposits unchanged,
ACB has decided to raise the gold deposit interest rates. The
bank has raised the interest rates of gold deposit certificates for
nearly all types of deposits. Especially, 11-month term deposits now
have the interest rates of 1.3 percent per annum instead of 1.1 percent
per annum. Meanwhile, the 0.2 percent per annum
increase has been applied to the remaining types of deposits
Meanwhile,
HD Bank has raised the interest rate for short term 364-day gold
deposit certificates to 2 percent per annum, and the rate for
3-9 month term gold deposits to 1.5-1.6 percent per annum. This is
considered an effective measure to retain money at banks, when people
are believed to take money back from banks to purchase gold.
Not
only focusing on taking care for customers, banks are rushing to launch
promotion campaigns in order to attract more depositors. "Interest
rate is not a tool for banks to compete to scramble for depositors any
more, because all the banks are offering the same interest rate of 14
percent per annum. Therefore, banks have to launch promotion programmes
to attract depositors and maintain their market
share," said Thai.
Liquidity not a worry for now
According
to the Hanoi Statistics Office, by the end of September 2011, the total
capital mobilised by the local banks had reached 746,289
billion dong, a decrease of 0.76 percent in comparison with the figure
by the end of August and a decrease of 6.15 percent with that at the end
of December 2010. Of these, deposits had decreased by 2.42 percent and
5.23 percent, respectively.
According
to Bui Tan Tai from ACB, the volume of money withdrawn from ACB is not
big, because most of the deposits have the fixed terms of
1-3 months. However, Thai said that since the deposits are mostly short
terms (1-3 months), the deposits become due very quickly.
Bankers
say they do not face any problems in liquidity, but they still offer
high interest rates in order to maintain the market share. Prior
to that, the State Bank of Vietnam removed the limit on the credit banks
can provide based on the mobilised capital, which has made the usable
capital of banks increase.
Meanwhile,
the State Bank has decided that banks' credit growth rate must not be
higher than 20 percent. Banks still have not used up the
capital they have mobilised.
One-month term interbank interest rate up to 16pct p.a
Vietstock
The interbank interest rate for 2-week term on September 28 climbed to 15 percent per annum (p.a.) and it was 14.5 percent p.a.
According
to the local newswire Tuoi Tre (Youth), after 20 days of strictly
implementing the State Bank of Vietnam (SBV)'s provisions on
deposit interest rate cap of 14 percent per year, on September 28, the
lending interest rate on the interbank market for 1-month term jumped to
15.8-16 percent p.a., up 0.5 percent p.a. from last weekend.
The interbank interest rate for 2-week term was at 15 percent p.a. and it was 14.5 percent p.a. for 1-week term.
Black Mark For Banks' Lending
VIR
Bad
debts are hurting banks' ambitions. State Bank statistics show that
local banking sector's bad debts made up 3.04 per cent in total
outstanding
loans by the end of July 2011 against 2.16 per cent in late 2010.
The
bank's Hanoi branch office figures showed bad debts occupied 2.05 per
cent of total outstanding loan balance, surging 0.18 per cent against
the end of 2010. State-owned commercial banks saw bad debts rising 0.4
per cent and joint stock banks' bad debts advancing 0.05 per cent in
amount by late August 2011.
Bad
debts amounted to VND23.953 trillion ($1.15 billion) at Agribank as of
June 30, 2011 in the total VND419.438 trillion ($20.26 billion)
outstanding loan balance.
Outstanding
loans exceeded VND191.589 trillion ($9.25 billion) at Vietcombank in
the year ending June 2011 with fifth-group debts reaching
VND3.732 trillion ($180.2 million), tantamount to 1.94 per cent.
HCM
City-based Sacombank kept its overdue debts at 0.675 per cent and bad
debts at 0.4 per cent as of August 9, 2011, according to the bank's
chair Dang Van Thanh.
Thanh
said the bank's outstanding loans hiked 4.6 per cent and deposits up
3.8 per cent in late August 2011 against the end of 2010.
"The
bank's top target is maintaining sustainable credit growth, so that we
will not strive to push up lending by all means in this current
difficult market," Thanh added.
"At
this point of time the bank puts credit quality at top importance.
Therefore, we just lent to customers with viable production and trading
projects and healthy finance to address bad debts," said DongA Bank
general director Tran Phuong Binh.
HCM
City-based HD Bank reported VND39.923 trillion ($1.92 billion) in
deposits in 2011's first half which was doubled that on-year and kept
bad debts at less than 1.39 per cent of total outstanding loan balance.
Banking
sector's bad debts came to around VND75 trillion ($3.62 billion) in the
year ending June, a 50 per cent jump on-year, with fifth-group
debts occupying 47 per cent of total, according to National Financial
Supervisory Committee deputy chair Dr Le Xuan Nghia.
Industry
experts said banks should be cautious with lending to minimise risks in
the face of rising inflation and an unstable macroeconomy.
FOOD AND BEVERAGE -
EU meat producers target Vietnam
VIR
The
Union of Producers and Employers of the Meat Industry (UPEMI) on
September 27 launched a campaign to promote the sale of European beef
and pork in Vietnam.
“The
programme, titled “Tradition, Quality and European Taste”, is
co-financed by the EU and Poland. It will be carried out in the US,
Vietnam
and the Republic of Korea over the next two years,” said Agnieszka
Rozanska, director of UPEMI’s International projects.
The
campaign targeted distributors, wholesalers, importers, local
manufacturers and processors, industry associations, and five-star
hotels,
she said.
Kamil
Czub, foreign trade director of the Poland based PKM Duda SA, said
Vietnam would a potential market for EU beef and pork since current
meat consumption per capita in Vietnam is still low compared to an
average of 43 kilos per year per person in the EU.
In addition, with increasing annual incomes in Vietnam, demand for meat had been expected to rise significantly, Kamil said.
Europe
is famous for its rich tradition of producing high quality beef and
pork of unique quality. The high quality of the meat is the result
of breeding based on stringent EU regulations and on care given to each
and every element of the food chain.
“EU is very dependent on exports so animal health and food safety are crucial requirements,” he said.
”
Vietnam has a great tradition of fresh, healthy dishes, and we think
that European meat would fit perfectly within this tradition,” Wieslaw
Rozanski, UPEMI’s president, said in a press release.
PROPERTY - Real estate experts call for amendments to property law
VNS
Real
estate experts have asked the State to consider a new legal
documentation system for the real estate market and regulations on
charter
capital, commissions and capital mobilisation in order to respond to
current needs.
During
a recent seminar reviewing the laws on land and real estate businesses,
Nguyen Van Minh, deputy chair of the Vietnam Real Estate Association,
said that according to current regulations, real estate businesses must
have VND6 billion (US$288,000) in charter capital and at least 20 per
cent of the total project investment or 15 per cent of a housing project
in equity.
The
rate was not meaningful so the State should remove the charter capital
licence requirement for property projects to reduce administrative
procedures, he said.
Nguyen
Thi Nga, a law expert from the Hanoi Law University, said the charter
capital requirement of VND6 billion was insignificant when compared
with business demand, which made the requirement unnecessary.
She
recommended the State to abolish the low charter capital regulation
which would encourage fair competition for property projects. The
companies with solid financial capacity would thrive while those without
sufficient funds would be forced to abandon property investment
activities which required significant long-term capital.
With
regard to regulations, there were many contradictions in terms of
timing and the rate of mobilisation capital required for property
construction projects among official letters and decrees. An amendment
was needed to avoid duplication, conflict and difficulties in the
application of the law, Minh said.
Additionally,
a floor rate or ceiling rate should be set for remuneration and
commissions for real estate brokers to create transparency
in the market, he said.
Pham
Sy Liem, deputy chair of the Vietnam Federation of Civil Engineering
Associations, said the amended law on real estate business should
consider the interests of property buyers because the current law was
primarily focused on sellers and investors.
ENVIRONMENT - Plastic bag tax unlikely to help reduce pollution
Tuoi Tre
Plastic
bags will be taxed next year in the government's attempt to reduce its
use and raise environmental awareness but experts and consumers
are afraid this target cannot be achieved.
As
from January 1, 2012, a tax rate of up to VND50,000 (US$2.5) will be
imposed on every kilogram of plastic bags, with the government aiming
to reduce the use of this product at supermarkets and shopping centers
nationwide by 40 percent by 2015.
In
fact, most Vietnamese consumers are yet to get used to using
non-plastic bags and find it a disadvantage if they have to bring the
non-plastic
bags with them or to buy them from the supermarket.
In
HCM City, 19.4 percent of the supermarkets and traditional markets said
they would not willingly join the programme to reduce the use
of plastic bags unless it was forced by the government.
Supermarkets bear the grunt
Do
Thi Thuy Hang, deputy director of quality management at Saigon Co.op,
said all of the supermarkets were currently delivering plastic bags
to consumers for free.
"If
a supermarket charges its customers on the plastic bags or forces them
to buy [the bags], consumers will all go to another supermarket
where plastic bags are delivered for free," she said.
"Hence, we have to accept to pay the taxes to keep customers."
She
said the plastic bag taxation would thus fail to raise environmental
awareness among consumers and the number of plastic bags would not
be reduced either, adding that the government should ban all
supermarkets from delivering plastic bags.
"This
will help us actually achieve the environmental protection target and
prevent unhealthy competition among the supermarkets."
Her
idea was shared by many supermarkets, which said none of them would
voluntarily stop delivering plastic bags for free unless there was
a regulation requiring them to do so.
Le
Van Khoa, director of the HCM City Department of Natural Resources and
Environment's Waste Recycling Fund, also said the government should
encourage consumers to use alternative bags.
"It
will be difficult to persuade consumers to reduce the use of plastic
bags if the government only focuses on taxing the plastic bags without
letting the consumers know what the tax will be used for," he said.
However,
Nguyen Trung Viet, head of the solid waste management of HCM City
Department of Natural Resources and Environment, said the initial
difficulties when the tax law takes were inevitable.
"We still have to impose the tax on plastic bag first and make further amendment later," he suggested.
LEGAL NEWS - Bar raised to usher in better investments
VIR
Vietnam has underscored its determination to heighten the quality of foreign direct investment.
Prime
minister Nguyen Tan Dung last week issued Directive 1617/CT-TTg asking
ministerial bodies and local authorities to "intensify" and
"regulate" the management of foreign direct investment (FDI).
Dung's
directive aims to improve FDI quality and encourage projects to apply
state-of-the-art and environmentally-friendly technologies.
During
the past five years, Vietnam has emerged as a hot place for investment,
with some $150 billion in committed FDI since 2006. The government,
in 2009, issued a resolution outlining measures to effectively attract
and manage FDI projects.
However,
Dung said FDI management had not gone as expected, adding that many
licensed projects were not appropriate, especially in golf course
development, steel, forestry and mining sectors.
"Many
projects were not carefully appraised in terms of technologies,
environment impact and labour mobilisation, resulting in poor quality,"
said Dung.
New
FDI projects must effectively utilise natural resources, reinforce
linkages with domestic enterprises, and lure investment into auxiliary
industries, agriculture, preferential services, information and
technology and hi-tech industries, according to the directive.
Dung
asked local authorities "not to grant investment certificates to energy
and natural resource-incentive projects as well as the ones
which use outdated technology and can pollute environment." The
government will not encourage FDI projects in non-production sectors.
A
survey released early this year by Vietnam Chamber of Commerce and
Industry and United States Agency for International Development showed
that 67 per cent of foreign-invested companies in Vietnam were involved
in some form of low-end manufacturing. Only 13.5 per cent of FDI
companies could be considered high-tech investors with sophisticated
technology or equipment, according to the survey.
"The
prime minister's directive means that Vietnam will change its policy to
maintain its position as among the top priority for investments
in the world," said Nguyen Mai, chair of Vietnam Association of Foreign
Invested Enterprises.
"The directive indicates that the government wants to remove all poor quality FDI projects," he added.
With
the directive, Dung ordered ministries and local authorities to inspect
the disbursement of large-scale projects and prevent price transfer
activities.
The
directive also assigned the Ministry of Planning and Investment (MPI)
to work with other ministries and provincial authorities to raise
FDI attraction efficiency in the next decade.
Furthermore,
the MPI, in collaboration with ministries of Industry and Trade,
Finance, Construction and Natural Resources and Environment,
will have to devise policies on supporting industries, tax incentives,
price transfer prevention and natural resources management. Such
policies must be completed within 2012.
State-run companies' investments in banking, insurance and securities limited at 10pct: draft
Vietbiz24
Investments
of state-run groups and corporations in industries of finance, banking,
insurance and securities will be limited at no higher
than 10 percent of chartered capital of the units receiving the capital
contribution instead of the current of 20 percent, according to a draft
decree on investment and business of state capital in enterprises that
Ministry of Finance is building and consulting
the relevant units.
The
finance ministry said that according to this draft decree, state-owned
enterprises (SOEs) are still allowed to invest in non-core sectors.
However, with the high risks and sensitive fields like finance, banking,
insurance and securities, SOEs are allowed to set up one subsidiary in
each sector.
The
investment capital in each sector will not exceed 10 percent chartered
capital of units receiving the capital contribution. The draft
also stated that if in one group, the holding company and its
subsidiaries jointly contribute capital; the total combined capital
contribution will not exceed 15 percent equity of the organisation
receiving the capital contribution. In special cases, enterprises
must submit for the prime minister's consideration and decision.
Under
the current provisions, SOEs are allowed to invest maximum 30 percent
of the total investment in non-core sectors. Particularly, the
capital contribution to finance, banking, insurance and securities is
not exceeding 20 percent of chartered capital of the organisation
receiving capital contribution. The capital contribution of both holding
company and its subsidiaries is not exceeding 30
percent equity.
Oliver Massmann
Rechtsanwalt
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