BUSINESS IN BRIEF 29/9

Hanoi manages prices to stem inflation

The capital would strengthen price management to ensure price stability and curb inflation in the latter months of this year and the forthcoming Lunar New Year, according to a directive issued recently by the municipal People’s Committee.

The city would closely monitor prices of essential goods and services such as food, sugar, medicine, petroleum, gas, fertiliser and travel services, and stop unreasonable price hikes.

Fertiliser imports increase in first eight months

The country had spent US$1.12 billion in importing 2.94 million tonnes of fertiliser over the past eight months, or a yearly increase of 28 per cent in value and 12 per cent in volume, according to the General Department of Customs.

During the reviewed period, SA fertiliser posted the highest import quantity at over 740,000 tonnes, up 15 per cent.

It was followed by potassium diammonium phosphate (DAP) fertiliser at 530,000 tonnes, up 34 per cent; urea fertiliser at 420,000 tonnes, up 29 per cent; and NPK fertiliser at 350,000 tonnes, up 81 per cent.

AmCham promotes co-operation with Dong Nai

A delegation from the American Chamber of Commerce (AmCham) in Viet Nam held a working session on Tuesday with authorities in the southern province of Dong Nai.

The session was part of the two sides’ efforts to expand co-operation in foreign investment, export promotion and high-quality human resources training.

Provincial Department of Planning and Investment Director Bo Ngoc Thu said that the locality wanted foreign investors, including US businesses, to invest in areas such as high-tech industries, support industries, high-tech farming and breeding projects, safe food processing and infrastructure building.

AmCham Viet Nam President Mark Gillin said his association was seeking co-operation with Viet Nam, particularly Dong Nai Province, to produce garment accessories, with AmCham Hong Kong expressing its intention to invest about US$1 billion in the sector in Viet Nam.

Officials from several US businesses such as Intel and Walmart wanted to increase co-operation with the province in a number of areas, especially training human resources for high-tech industries.

VFA lowers rice export target

The Viet Nam Food Association (VFA) has lowered its rice export target for 2013 from 7.5 million to between 7 – 7.2 million tonnes with a turnover of US$3 billion due to low export levels and falling prices.

For this month alone, the association estimated rice exports would be 650,000 tonnes, 100,000 tonnes below the set target.

It forecast that rice exports would stand at 1.8 million tonnes by the end of the third quarter, 230,000 tonnes lower than previously planned.

The association’s chairman, Truong Thanh Phong, said the rice export market had faced difficulties as supply outstripped demand, while rivals from Thailand implemented generous price subsidies for farmers and India’s export volume rallied.

Phong said the market had seen fierce competition as rice prices in Thailand, India and Pakistan had fallen, bringing them closer to those of Viet Nam.

Viet Nam’s rice price was $431 per tonne, equal to those of India and Pakistan, making it hard for the country to export to these markets due to transport costs.

The Ministry of Industry and Trade said countries such as Thailand, India and China used a large amount of their State budgets to purchase rice at high prices, while others took advantage of natural conditions, land and climate to produce high quality rice to gain competitiveness.

For example, India, the world’s second largest rice producer strongly supported its rice market, while Myanmar, Cambodia and Pakistan had also made efforts to raise export volumes.

Rice importers had adjusted policies by increasing the food supply themselves, reducing inventories and carefully considering exporters.

Pham Van Bay, VFA’s vice chairman, said Viet Nam’s rice exports had seen shortcomings as its quality was not highly valued in the world market and the country lacked a well-known rice brand.

Bay said rice exporters lacked clear, long-term strategies for their exports as well as market expansion.

He said Vietnamese enterprises’ ability to reserve rice was low, while pressure from high interest rates made them rush into selling their products.

Under the ministry’s plan, Viet Nam would have just 150 rice exporters by 2015 to establish large production zones for in-depth business strategies.

Local lending grows by 5.83%

Credit growth by September 18 rose 5.83 per cent against last December, according to the State Bank of Viet Nam.

Director of the SBV’s Monetary Policy Department Nguyen Thi Hong said that the rise was positive, explaining that last year, the same period saw only a growth rate of 2.52 per cent.

Lending in Vietnamese dong rose 9.98 per cent while lending in US dollars declined 13.05 per cent.

Deposits during the period surged 11.74 per cent, of which deposits in dong increased 11.63 per cent while US dollar deposits rose 12.43 per cent.

The central bank reported that the loan-to-deposit ratio (LDR) also declined slightly to 92.21 per cent from 93.7 per cent late last year.

Industry insiders predicted that deposit interest rates were unlikely to fall further, although commercial banks may decide to lower lending rates by 0.5-1 per cent for the rest of the year to boost lending growth at the year-end.

In recent months, banks have constantly been launching preferential credit programmes for consumers and good businesses. However, lending has remained low and some lenders even reported that lending declined.

Many businesses suggest banks aggressively cut interest rates to balance supply and demand. The Prime Minister recently asked the central bank to operate interest rates in accordance with inflation to boost the economy.

Experts and some bank executives admitted it would be better if interest rates were further reduced, but also said that the interest rate was no longer a barrier to businesses, especially good ones, as lending rates were now the same as in the 2005-06 period.

Commercial banks currently offered dong lending rates of 7-9 per cent per year for short-term loans for prioritised sectors including agricultural and rural development, export, support industries, small- and medium-sized enterprises and high-tech enterprises; 9-11 per cent for short-term loans for other production and business; and 12- 13 per cent for medium and long terms.

Several enterprises with healthy and transparent finances as well as effective business would get loans with interest rates of 6.5-7 per cent per year.

Local firms lack knowledge of TPP trade agreement

Business experts have warned that local Vietnamese enterprises still do not have a clear understanding of the Trans-Pacific Partnership Agreement (TPP), while foreign firms are preparing to take advantage of the trade agreement through strategic investments in Viet Nam.

Lam Thuy Ai, deputy general director of Mebipha, a company producing medicine to safeguard animals and seafood products in southern Tay Ninh Province, said her company planned to expand its business to neighbouring countries in the coming years.

However, she admitted that the company may face challenges in meeting the development criteria of the TPP, as she was unaware about what the deal will involve.

Le Quang Hung, chairman of the Sai Gon Production and Trade Joint Stock Company (Garmex Sai Gon), said he also had little information about the TPP, although he knew that it would help his company broaden their market.

However, opportunities to learn more bout the TPP for him have been limited because there have been no detailed statements given about the partnership agreements following each round of negotiation, he said.

Local media had failed to provide adequate official information about the TPP, he added.

Van Duc Muoi, chairman of Vissan Ltd Company, said when tariffs are abolished under the TPP, local firms would face fierce competition from rivals and a reduction of market share. He warned that their lack of understanding left them at risk of serious damage when Viet Nam finally joins the TPP.

Luong Van Ly, head of the Trade and Investment Division of the Viet Long Thang Law Ltd Company, said the state should provide useful information about the TPP for local firms to help them increase competitiveness in plenty of time.

Ai said each enterprise should study the regulations of the TPP when they are made available in order to get an advantage.

Meanwhile, foreign companies already started investing in Viet Nam in anticipation of the tax advantages that will arrive with the TPP.

TAL, a textile and garment company from Hong Kong, has twice sent representatives to provinces in the north of Viet Nam with a view to opening a factory in the country.

C.K Sun, TAL strategic director, said Hong Kong enterprises have paid attentions to investment opportunities in the textile and garment industry because the industry would be given many advantages to export to the US once the TPP is signed among member countries.

Viet Nam Textile and Garment Group (Vinatex) said more than 10 firms from Japan, Hong Kong and Taiwan planned to co-operate with them in building factories producing fibre, dyes, textiles and garments.

Diep Thanh Kiet, deputy chairman of the Viet Nam Leather and Footwear Association, an expert in the textile, garment, leather and footwear industries, said the state should have reasonable policies for developing this sector to avoid a situation where only foreign firms would enjoy advantages from the TPP when the deal is agreed.

Lax management blamed for uncontrollable imported milk prices

The Ministry of Finance and Ministry of Health have exchanged blame over unmanageable rises in prices for baby formula, with no solution in sight.

Public concerns have been recently raised when these two ministries were passing the responsibilities on each other and blaming each other for inadequate policies.

Recently the Ministry of Finance (MoF) sent a report to the prime minister in which it claimed that it was unable control nutritional and milk-supplemented products as many products have been re-labelled in accordance with the Ministry of Health (MoH)’s new regulations.

MoF claim means that the MoH should be responsible for the uncontrollable rising prices of imported milk.

Nguyen Thanh Phong, Deputy Director of the MoH’s Department of Food Safety and Hygiene, however, said, “Over the past five years milk prices have continued to increase annually before the issuance of the regulations on formula milk re-labelling. It’s popular that traders of foreign milk products make big profits in Vietnam.”

While their arguments have no deadline for an end, consumers continue to have to bear irrational milk prices. Many have to tighten their belt to prioritise spending for their baby milk.

An anonymous official from a milk company said that it’s inadequate when the MoF blamed product re-labelling for unmanageable milk prices.

“In fact the MoF should be held accountable for inefficiently management over business expenses,” the official commented.

According to the official, the MoF was really able to control milk prices if it effectively used available tools like inspection, customs agencies, market watchdogs and tax tools.

Meanwhile, Associate Prof and Dr. Ngo Tri Long said that uncontrollable milk price hikes were a result of the lack of responsibilities by both ministries.

Long, however, state that the MoF should be first to blame for their lax management despite being empowered with several price management tools.

“Being functioned to manage prices, the MoF should make report to and propose the government to apply suitable measure in cases of any irrational price hikes. It should also conduct inspections to tighten control over the market,” he noted.

A price expert said the MoF didn’t apply strict measures over irrational milk price hikes maybe because it’s afraid of being held accountable. Inspections over milk prices should be conducted as soon as possible and the results and solutions should be made public.

Market watchdogs said currently there are over 500 formula milk products in Vietnam which are all produced and distributed by 200 private companies without the participation of any state-owned enterprises. This is strange as milk is among the list of 14 good items subjected to the government’s price stabilisation programmes.

Nguyen Tien Thoa, Vice Chairman of the Vietnam Price Appraisal Association, said recent inspections found that advertisement expenses by several milk companies were up to 40% higher than the regulated rates, adding to the product prices.

“It’s possible to tighten control over milk prices. With evidence of inflated selling prices compared to the import prices, relevant authorities are able to conduct an inspection and strict punishments should be applied to violators,” Thoa added.

SHB recovers nearly VND3 trillion of bad debt

Saigon-Hanoi Commercial Bank (SHB) announced that it has settled nearly VND3 trillion (USD144 million) of bad debt one year after being merged with Hanoi Building Commercial Joint Stock Bank (Habubank).

Last year, the State Bank of Vietnam gave its approval for the merger between SHB and Habubank. According to SBV’s decision, as part of the merger process, SHB took over all legal assets, rights and duties of  Habubank.

During the first six months of 2013, SHB successfully dealt with nearly VND3 trillion of Habubank’s bad debt via enterprise re-structuring, interest rate reduction and delaying debt deadlines for some customers. SHB also plans on selling some of their bad debt to Vietnam Asset Management Company (VAMC).

VAMC would buy bad debts from banks via their self-issued bonds. These bonds have no interest rate and credit institutions can use them to apply for refinance loans and only have a five-year limit to resolve the acquired bad debts. According to the plan, from September 21 to October 30, VAMC will issue VND10 trillion worth of bonds to buy bad debts from Navibanks, SCB, Agribank and SHB.

However, as of June 30, SHB’s bad debts still accounted for 9.04% of its total outstanding loans– 0.24% higher than last year. The rate increased because of Habubank’s bad debts, but SHB assured everyone that these customers are all manufacturers and that they have proper collateral.

Furthermore, SHB will follow the instructions of the government and the State Bank of Vietnam to deal with the bad debts of Vietnam Shipbuilding Industry Group (Vinashin). It’s hoped that by the end of the year, bad debt will account for less than 5% of the total outstanding loans.

As of July 31, SHB’s revenues were seriously decreased after it contributed over VND2.1 trillion to the risk prevention fund. Even though their shares do not have high prices, they do have high liquidity. SHB said some well-known foreign financial institutions have asked to buy their bonds.

Soc Trang calls for tourism investment

Foreign tourists on a tou of an orchard in th mekong Delta province of Soc Trang.

Soc Trang authorities are calling for investment in eco-tourism projects to serve local and foreign tourists aware of sustainable development.

Soc Trang’s tourism sector has made certain achievements in terms of infrastructure development, revenues, tourist arrivals and length of visitors’ stay. The number of visitors to this Mekong Delta province grew from 500,000 in 2005 to 800,000 in 2010. Tour sales increased 10% annually on average. Tourism revenues in 2006 reached VND40 billion and the number surged to VND70 billion in 2010. Over 908,000 tourists came to the province in 2011, generating total revenue of nearly VND80 billion for the tourism sector. The respective figures last year were 955,000 (including 20,000 from abroad) and VND170.4 billion. There were 170,582 hotel guests in the province, accounting for 154% of that year’s target.

Though the sector has gained steady growth, it has yet to fully tap its potential. Tourism products are not attractive enough, hindering the development of tourism.

To attract more tourists, especially those from other countries, the provincial authorities have embarked on a plan designed to improve service quality such as building roads to tourist destinations, upgrading tourist facilities, re-arranging farm produce and specialties stores, coping with illegal soliciting at tourist sites and enhancing safety for tourists.

As of the end of 2012, there were 37 accommodation facilities, including one three-star hotel, 10 two-star hotels and 13 one-star hotels in the province. Some new hotels and tourist sites have been put into operation such as Tan Hue Vien and Cong Lap Thanh rest stops, and Minh Phuong and Tin Hoa hotels. More food, beverage and entertainment services have been launched to meet increasing demand.

In addition, Soc Trang is focusing on calling for investment in key eco-tourism sites. Ho Be and Song Phung eco-tourism sites are some of the major projects in the pipeline in the province. The roles of the provincial tourism steering committee and tourism association are being strengthened to improve the quality of tourism promotion and management.

Through the provincial tourism association, businesses are encouraged to expand markets and open tours from Soc Trang to other parts of the country and to neighboring countries. The provincial government has also set up a mechanism for forging ties with travel and service companies to improve service quality and create attractive tours so as to make tourists stay longer in Soc Trang.

As for manpower in the sector, many training courses have been held to create and develop human resources. The province’s tourism cadres have also been sent to training courses to improve management and professional skills.

Soc Trang has a strong demand for investment in eco-tourism projects, and looks to open more tours to attract more local and foreign tourists. These goals are expected to help Soc Trang earn more from the tourism industry, contributing to its budget revenue collection and making tourism an economic mainstay of the province.

VietJetAir receives fuel-saving Airbus A320 aircraft

Private carrier VietJetAir took delivery of a Sharklet-equipped Airbus A320 aircraft from European aircraft maker Airbus in France’s city of Toulouse on Tuesday, making the airline the first operator of such aircraft with new fuel-saving wing tip device in Vietnam.

The aircraft delivery took place while Vietnam’s Prime Minister Nguyen Tan Dung was paying an official visit to France on the occasion of the two nations’ celebrations of the 40th anniversary of their diplomatic ties.

Luu Duc Khanh, managing director of VietJetAir, said in a statement that the Sharklet-equipped Airbus A320 aircraft was the carrier’s strategic decision as it enabled the airline to offer quality services to passengers and save much from fuel bills.

Put into service last year, the new Airbus allows airlines to cut fuel consumption by up to 4% and reduce some 1,000 tons of CO2 emissions per aircraft per year. With these aircraft, operators are flexible in either adding a range of 100 nautical miles or an increased payload capability of up to 450 kilograms.

Khanh said that VietJetAir became Vietnam’s first airline to operate Sharklet-equipped Airbus A320 aircraft and to join a list of few users of such a modern Airbus model in the region.

In April this year, the no-frills VietJetAir clinched an agreement with global aircraft leasing firm AWAS to lease Sharklet-equipped Airbus A320 aircraft for its domestic and international services. Both sides did not disclose the deal value.

Currently, VietJetAir operates nearly 500 weekly flights on 14 domestic and two international routes connecting Vietnam’s HCMC and Hanoi to Bangkok of Thailand. The second largest carrier in Vietnam after Vietnam Airlines plans to expand its network to Taiwan, South Korea, Singapore, Malaysia and Japan.

Just last weekend, VietJetAir announced that it had transported three million passengers after nearly two years it took off. The 3.000.000th passenger Duong Chau Toan with ticket code 9689540 for the HCMC-Bangkok route was awarded one year of free flying with the carrier’s flights on all its routes.

War for talent intense in tough time

The competition among local companies and multinationals in attracting and retaining talent in Vietnam has intensified despite economic downturn, as employers are in dire need of qualified staff to help drive their businesses out of the troubled time.

Keng Chong Yan, senior consultant from ITD World – the Institute of Training and Development in Asia – Pacific, said it was true that the competition for hiring employees in terms of numbers had decreased when the economy was in difficult but the war for qualified executives had not moved in the same direction.

“In a time of economic slowdown, if we look at the quantity game, things may be slower a little bit but not the game for quality. In fact, the game for quality would be even more intense,” Yan told the Daily on Monday while in Vietnam to prepare for sharing his know-how in winning the “War for Talent” with 300 human resource (HR) practitioners and senior leaders from various industries.

At the “War for Talent” workshops held by VietnamWorks in HCMC and Hanoi, Yan is expected to speak about how to compete effectively for scarce talent, to retain newly hired talent, and to compete across multiple talent segments and workforce demographics.

Jonah Levey, chairman and founder of VietnamWorks as the largest job website in Vietnam, said some 1.3 million jobseekers visited VietnamWorks.com a month and the company had delivered more than two million job applications to companies so far this year.

“So, there are still a lot of activities in the recruitment space. Even in the downturn of the economy, companies have to invest in attracting the right people. And for the very best executives, there’s always competition,” Levey told the Daily.

Data of the recruitment firm showed there was a severe shortage of professionals in certain industries, and this had resulted in rapidly increasing salaries, rampant job hopping, and companies competing with each other to attract and retain the best employees.

Levey said over the year, the demand for foreign talent working in Vietnam had been down as most companies had tried to localize their staff and foreign companies had employed more local talent.

“The demand for local talent, at senior levels, in foreign companies is going up,” Levey said based on what he had learned from VietnamWorks.com    

Vietnamese talent will be able to go to work in other ASEAN nation when Vietnam joins the ASEAN Economic Community by 2015 as this bloc has pledged. This, according to Levey, would benefit Vietnam in a long run because Vietnamese go overseas to be trained and to learn in a more advanced working environment and they will return to contribute to their home country.

At that time, Vietnamese companies would be forced to do their utmost to keep their best people and improve operations, Levey noted.

AES Corp’s CEO appointed US Export Council member by President Obama

Andres Gluski, CEO of AES Corp., the largest shareholder of the 1,240MW coal-fired Mong Duong 2 BOT Power Project in northern Quang Ninh province has been appointed as a new member of the US President Barack Obama’s export council.

The council, which includes more than a dozen business leaders, various administration officials and lawmakers, advises President Obama on ways to boost exports, the White House said Wednesday.

The Mong Duong 2 power plant, capitalised at $1.9 billion, started construction in August 2011. It is forecasted to enter into commercial operation for both units during the second half of 2015 and will generate 7.6 billion kilowatt hours of electricity a year. After 25 years of operation, the plant will be transferred to the Vietnamese government per the build-operate-transfer (BOT) contract.

AES-VCM Mong Duong Power Company Limited was formed by three shareholders from subsidiaries of the US’ AES Corporation (51 per cent), Korea’s Posco Energy Corporation from Korea (30 per cent) and China Investment Corporation (19 per cent). The project’s EPC contractors include Doosan Heavy Industries Vietnam Co. Ltd. and its subsidiaries.

DaiA Bank passes procedures to merge with HD Bank

Dong Nai-based DaiA Bank has completed all necessary procedures for its merger plan with HD Bank after an unusual shareholder meeting in Bien Hoa city on Wednesday.

DaiA Bank, fully known as DaiA Commercial Joint Stock Bank, said in a statement released on the same day that it had successfully organized the meeting and passed all important documents, including the merger plan, contract, and the new rules for the merged bank, with HD Bank, or the Ho Chi Minh City Development Joint Stock Commercial Bank.

“The merger will create a stronger credit institution, bringing benefits to the two banks in particular, and the banking system in general,” the bank said in its statement.

Under the merger plan, all DaiA Bank employees will maintain their current working positions as well as wages and salaries. If HD Bank has better incentives in several aspects, the employees will be subject to those benefits, instead of those of DaiA Bank.

Moreover, DaiA Bank shares will be converted into HD Bank shares at a 1:1 ratio.

Prior to the merger, DaiA Bank had a total registered capital of VND3.1 trillion with 1,477 shareholders.

HDBank will also hold a similar shareholder meeting on Saturday to pass its plan to merge with DaiA Bank.

Vinaphone launches distance learning via mobile devices

VinaPhone will soon start rolling out online training modules through mobile devices. It will be the first lcoal telco to offer the service.

Vietnam Telecom Services Company (VinaPhone), a member of leading state telecom group VNPT, announced it would launch the service in September.

VinaPhone partnered up with Artificial Intelligence Company Limited (AI Vietnam) to design lessons for secondary school students, state employees, and workers.

The training modules will first focus on foreign languages, information technology, economics-finance, management skills, soft skills, and around 2,000 lessons for secondary school students.

Lessons on agricultural sciences, science and technology, vocational training, and healthcare are slated for launch in the near future.

Explaining the move, Nguyen Dac Hung, an expert at VinaPhone’s Value Added Services Development Centre, said “Of our 26 million subscribers, more than 20 per cent of the market, 25 per cent use smartphones, and this figure made it feasible to finally deploy this service.”

The contract between VinaPhone and AI Vietnam stipulates that the former will provide unlimited access to lesson downloads under a monthly service price of VND35,000 (around $1.5).

The service will give mobile users access to 3,000 lessons in diverse fields.

At a workshop last week entitled Applying Information Technology to Promote Learning in Society in Hanoi, a VinaPhone representative said that with well-planned investments and a long-term growth strategy, they expected VinaPhone’s training services to see exceptional growth.

As to why AI Vietnam was not providing free training, the company’s director Hoang Ngoc Trung said, “We could not attract good teachers and lecturers under a no-fee model. But for less than two dollars a month, users will have a complete package that includes interacting with teachers, timely response to service issues, and a comprehensive appraisal system of pupils’ performance.

When asked about potential cooperation with other telcos such as Viettel and Mobifone, Trung replied “We are open to new opportunities, but we have current responsibilities to VinaPhone as they are our first partner.”

Around 400 lecturers and experts are reported to be taking part in developing the online training materials for mobile devices. Also, agricultural production advisory services will be offered for free in the near future, as it received the support of the General Department of Vocational Training’s National Agricultural Extension Centre under the Ministry of Labour, Invalids, and Social Affairs.

VietJetAir orders 62 Airbus A320 jets, takes options on 30

Airbus announced on Wednesday that VietJetAir signed a letter of intent to purchase 62 A320 medium-haul aircraft worth US$6.1 billion (4.5 billion euros) at catalogue prices and take options on another 30.

PARIS: VietJetAir signed on Wednesday a letter of intent with Airbus to purchase 62 A320 medium-haul aircraft worth US$6.1 billion (4.5 billion euros) at list prices as the low-cost carrier starts expanding beyond Vietnam.

The memorandum of understanding was signed by the managing director of the Vietnamese airline, Luu Duc Khanh, during a ceremony in Paris attended by the French and Vietnamese prime ministers.

Khanh told the press that the first airplane would be delivered next year, and the last one by 2022. “That is nearly ten aircraft a year”, he pointed out.

The airline just took delivery of a ninth leased A320.

The order is for 14 of the current single-aisle A320 model and 42 of the new A320Neo due to enter into service in 2015, which promises airlines considerably better fuel efficiency.

Another six planes will be the longer A321 version, which can be configured with up to 220 seats.

VietJetAir will lease eight more A320 from third party lessors and the deal includes options for another 30 aircraft, both companies said in a joint statement.

Airbus’s executive vice-president for Asia, Jean-Francois Laval, said the whole deal was worth US$9.1 billion at list prices.

VietJetAir began operating in late 2011 and is the first private airline in Vietnam to operate domestic and international flights. It currently serves 11 cities in Vietnam plus the Thai capital Bangkok.

Singapore-based aviation analyst Brendan Sobie said the airline already has a fifth of the Vietnamese market and should attain a quarter by the end of this year.

“They have established a good foothold on the Vietnamese market, it’s time for them to expand internationally,” Sobie, chief analyst at CAPA Centre for Aviation, told AFP.

VietJetAir’s Khanh said his company would open a new route to South Korea by the end of the year, and was looking at expanding to northern Asian destinations like Japan and Taiwan.

“We want to be the first low-cost carrier to fly to those countries,” he said.

Taiwan is the richest foreign investor in Vietnam, and there are currently 200,000 Taiwanese businessmen living in Vietnam and 100,000 Vietnamese wives living in Taiwan, said Khanh.

Sobie noted, however, that VietJetAir is now the fifth airline to enter the low-cost segment in South East Asia, behind Malaysia’s Air Asia, Lion Air of Indonesia, Singapore’s Tiger Airways and JetStar of Australia.

“They’re going to have to do some work to build up the brand,” he said.

Rice export volume poised to fall

Vietnam’s rice export volume this year is expected to stay at some 7-7.2 million tons compared to the initial forecast of 7.5 million tons given in the year’s beginning, according to the Vietnam Food Association (VFA).

Pham Van Bay, vice chairman of the association, said rice trade had been stagnant in recent months and the gloomy outlook would continue into 2014 due to predicted bumper crops in the world’s key rice exporting countries.

Earlier, in a conference to review rice trade in the January-August period, the association predicted that September rice shipment would be around 650,000 tons, shrink by some 100,000 tons compared to the initial target.

In the third quarter, the country shipped abroad nearly 1.85 million tons, or a shortfall of 230,000 tons against the prediction in early June.

Vietnam’s rice price has taken the downtrend over the months, and is now among the lowest on the global market.

On the rice website Oryza, Vietnam’s 5%-broken rice in the past few days was offered at between US$360 and US$370 a ton, which is lower than the same type of Cambodia by US$75, of Thailand and India by US$70, and of Pakistan by US$30.

The lower-grade 25%-broken rice is now offered by Vietnamese exporters at some US$345 a ton under free-on-board terms, far lower than the level of US$375 suggested by VFA.

Bay of VFA noted that supply was now outpacing demand, so local rice exporters would continue experiencing hardship at least until early 2014.

Meanwhile, the U.S. Department of Agriculture predicts that Thailand and Vietnam as the two biggest rice exporters would have bumper crops in 2013-2014, with their yields expected to increase by one million tons and 600,000 tons respectively.

Meanwhile, Vietnam’s fragrance rice is selling hotly, according to Bay.

Rice processed from jasmine and such strains as ST5 and ST20 are selling for as much as US$900 a ton, as supply is limited. Especially, the japonica rice is being sought after by Chinese traders, Bay said.

Highway upgrade must not block runoff

Local transport experts say that more bridges and drainage systems should be built during the expansion of National Highway 1A so that the high-elevated highway will not block water runoff.

The issue has surfaced after many areas in Central Vietnam along National Highway 1A were heavily flooded due to torrential rains caused by the storm No.8 these days.

Speaking with the Daily, transport expert Pham Sanh insisted that the construction of sewage holes and drainage pipelines on National Highway 1A were needed given the highway’s high platform. Without these facilities, areas along the highway will suffer more severe flooding when the highway is upgraded and expanded in such a massive way, he said.

Specially, Sanh noted that a thorough calculation was needed for expanding the sections of the highway passing through residential areas in the central region or these areas will be prone to dangerous flooding.

Similarly, a lecturer of the HCMC Transport University ascribed the slow water drainage on National Highway 1A to the fact that the route now is blocking rainwater from being drained out. He therefore deems it necessary to focus on seeking solutions against flooding on the highway during the upgrade.

As many sections on the highway are being upgraded while the drainage system there is insufficient, these sections become the dyke containing water inside, causing unpredictable consequences when flooding appears.

Regarding the flood drainage problems on the sections of National Highway 1A running through central provinces, a representative of the planning and investment department under the Ministry of Transport informed that his agency had established a flooding control and fighting project to minimize the disaster along the route in the region.

The project comprises of upgrade, design and construction of works to fight flooding besides offering maintenance services for the highway’s sections regularly suffering flooding from Nghe An to Binh Thuan.

National Highway 1A is divided into 37 sections for expansion running from Hanoi to Can Tho, with 17 projects set for the build-operate-transfer format having a total length of 562 kilometers costing some VND42.5 trillion.

HCM City’s island benefits from sea-crossing cable line

More than 4,000 residents in Thanh An Island Commune in HCMC’s outlying coastal district of Can Gio will get hooked to the national power grid next year thanks to a 22 kV sea-crossing cable line to be installed by HCMC Power Corporation.

Pham Quoc Bao, deputy general director of HCMC Power Corporation, said the project will cost nearly VND170 billion, with the cable buried in the seabed with a depth of four meters stretching some 5.6 kilometers from Can Thanh Town to Thanh An Island.

The company will also upgrade the power grid in the commune from the low tension to the middle level of 22 kV whose construction takes around nine months using loans given by the World Bank.

Nearly 900 households in Thanh An so far have relied on local diesel turbines with the combined output of only some 2MW, with an annual power consumption volume of around 1.7 billion kWh or an average of 400kWh per capita annually, Bao said. The power consumption volume is pretty low as compared to the average demand of roughly 2,200 kWh per person annually in the city.

Out-of-town projects given priority to turn low-cost homes

Housing projects in HCMC’s outlying districts will be given priority for approval on division into smaller condos and conversion into low-cost homes before the central area under a request of the city’s government.

Speaking at a meeting with related authorities and property developers on Monday, Nguyen Huu Tin, vice chairman of the city, said that the housing conversion and adjustment policy aimed to remove troubles facing local companies on condition that such transformation must be subject to the city’s zoning plans. He said that the process of the housing transformation in the city was too slow.

The problem arises when apartment projects awaiting approval for division of condos into smaller units or conversion into low-cost homes have to ensure requirements of the current zoning plans or related criteria. That is because the population of the projects will certainly be increased in sync with these adjustments, thus putting higher pressure on the social and traffic infrastructure.

The municipal Department of Construction at the meeting informed that division of commercial apartments into smaller condos should be done in line with safety and minimum space and usage area criteria. Each condo after being split up must be equivalent to or bigger than a standard commercial flat measuring at least 45 square meters, according to the department.

Meanwhile, commercial housing schemes seeking approval on conversion into budget homes will have their construction density and land usage coefficient raised besides enjoying incentives. Those projects with land usage fees already paid will have the fees either refunded or deducted into financial obligations of the project owners.

Representatives of many districts noted that the approval couldn’t be carried out with multiple projects at the same time and that each scheme should be taken into consideration to avoid exerting infrastructure pressure on the scheme.

Nguyen Thi Nhu Loan, general director of Quoc Cuong Gia Lai Joint Stock Company, proposed State management authorities consider every application in a flexible way to give the nod to involved applicants soon. Loan complained that her company over the past few months had asked for permission to split up flats of a commercial housing project in the outlying district of Binh Chanh from 300 units into 490 units but so far has not received any response from relevant authorities.

Lenders turn to household businesses

Many banks are increasing lending to household businesses due to their good performance at a time when it is extremely tough to find eligible big corporate borrowers.

Nguyen Van Hoan, deputy general director of OceanBank, said household enterprises, small and micro businesses had strong demand for bank loans to supplement their working capital and fund their short-term investments. Therefore, short-term credits for such customers are on the rise at this commercial joint stock bank, Hoan noted.

“Household businesses often rely on loan sharks to seek short-tem funding in peak business seasons. In the past two years, banks including OceanBank have been targeting these entities,” Hoan said.

OceanBank has designed a credit package for household, small and micro enterprises with affordable interest rates, simple procedures and additional services, he said.

As one of the lenders focusing on household businesses, SeABank, also a commercial joint stock bank, reported credit growth of some 4.5% against early this year but outstanding loans for household businesses, which are counted as personal loans at the bank, grew over 20%, said Dang Bao Khanh, general director of the bank.

Since a lot of households are doing good business, SeABank has been able to look for eligible borrowers in the segment.

Due to a dearth of good large corporate borrowers, household businesses have become an attractive source of clients for local banks, Khanh noted.

Similarly, state-owned commercial banks are also switching attention to household businesses though they traditionally center on major corporate clients. In fact, VietinBank has been sending credit officers to household businesses to extend loans.

A director of a branch of BIDV said his bank had recently increased lending to businesses owned by households.

He, however, cautioned that when lending to these customers, careful consideration should be made because their accounting books often do not follow any standards and because it is very difficult to ascertain whether they are in real need of capital for business and production.

ANZ opens office in Binh Duong

ANZ Vietnam Bank has opened a representative office at Canary Plaza in Binh Duong Province’s Thuan An Township, marking its presence in the southern province.

ANZ Vietnam CEO Tareq Muhmood said that the new representative office enables the bank to get closer to customers in Binh Duong, particularly those active in manufacturing industries.

The bank is preparing to open more branches in some big cities in Vietnam. Credit growth in the local market continues rising steadily and ANZ has a positive outlook on this year’s business results, Muhmood said.

ANZ has 11 branches and transaction points in Vietnam, offering a full range of services including retail banking, commercial banking for small, medium and emerging businesses, as well as institutional banking.

Imported products hit local jewelry industry

The HCMC market has recently seen the overwhelming presence of imported jewelry products much cheaper than local items of the same kind, which is dealing a hard blow to the struggling jewelry processing industry at home.

Jewelry products imported from China, Hong Kong and Malaysia are favored by local buyers due to nice and diversified designs and cheap prices. Imported jewelry products have flooded the local market as up to 70% of nearly 3,000 gold jewelry production and trading companies in the city were already dead, according to Nguyen Van Dung, chairman of the city’s Fine Arts and Jewelry Association.

Dung ascribed the disappearance of many industry players to the fact that local banks are not allowed to provide loans to companies in need of gold purchase for jewelry production and processing. Dung’s association has asked for support from the city’s government to deal with the problem.

Banking merger gets license

The central bank has just issued a license for the merger between WesternBank and PetroVietnam Finance Corporation (PVFC), which now goes with the new name of Vietnam Public Bank.

The new bank, whose abbreviated name is PvcomBank, is headquartered in Hanoi, and has chartered capital of VND9 trillion, or some US$440 million, according to the license issued last Monday by the central bank’s governor.

The license is the final regulatory approval for the new bank to assume operations, as the central State Bank of Vietnam on September 12 had issued a decision on merging these two institutions.

The new bank will take over all assets and liabilities of the two former institutions, and within 30 days, the bank will have to complete procedures on business registration, issue a public statement on the merger, and kick-start operations.

Short-term inter-bank rates decline

Inter-bank interest rates have been dropping slightly, with overnight and one-week lending rates for loans in Vietnam dong hovering between 2.4% and 2.9% a year.

Local commercial banks forecast short-term inter-bank rates to keep falling this week. Meanwhile, those with tenors of two weeks or more would remain stable.

Overnight interest rate was around 2.75% per annum on Monday, down by 0.3 basis point against the previous week. One-week rate was 3.15% per annum, a 0.1 basis-point reduction.

Meanwhile, two-week rate stood at 3.5% and one-month rate 4.2% per annum, which were almost unchanged compared to last week.

Last Friday, lending rates on the inter-bank market fell slightly against the previous day, with overnight and one-week rates staying at around 2.5-3% per annum. During August, lending rates for short-term tenors were above 5% per annum.

On the government bond market, secondary bond transaction rates also declined, hovering at 7.56%, 7.89% and 8.63% for two-year, three-year and five-year tenors respectively. In the previous week, the yields were 7.63%, 7.96% and 8.67% respectively.

Meanwhile, auctions of government bonds with tenors from five to 10 years have still seen low demand. Government bond yields lost 10 percentage points on the secondary market last week and are forecast to drop strongly in the coming time.

Recently, there have been concerns that the Ministry of Finance has plans to revise up 2014’s budget deficit target to 5.5% of gross domestic product (GDP) compared to the current level of 4.8% of GDP.

Higher budget deficit will inflate Vietnam’s public debts, which is a big challenge for the ministry in maintaining low capital expenses and improve attractiveness of government bonds.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

BUSINESS IN BRIEF 29/9