Vietinbank to get US$65 million from foreign banks

The Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) signed a US$65 million loan contract with four major foreign banks in Hanoi on December 10.  

These banks include Commerzbank Aktiengesellschaft - Germany’s second largest bank and the world’s top 50 biggest banks; ChinaTrust Commerical Bank Co.,Ltd - Taiwan’s seventh largest bank and among the 288th in the world; Mega International Commercial Bank Co.,Ltd - Taiwan’s third largest bank and among 247th in the world; and Normura Special Investments Singapore Pte under Japan’s Normura Group.

The loan contract will provide additional capital to Vietinbank to prime the pump for enterprises.

In October, Vietinbank was awarded the Best Borrower in Vietnam by the prestigious FinanceAsia magazine.

Earlier in May 2012, Vietinbank successfully issued 250 international bonds to attract investment in its future development.

Leaf-cutter bee destroys pine forest

Nearly 1,000ha of pine forest aged from 8-12 years belonging to the Southern Paper Company in the Central Highlands province of Kon Tum is being attacked by pine sawflies.

The sawflies, with scientific name of Nesodiprion biremis, are eating 20-70 per cent of the pine trees' leaves with a density of about 2,000 sawflies a tree.

The company has sprayed chemicals but the pesticide didn't work.

Previously, about 20ha of pine trees in two districts of Dak Na and Dak To were also destroyed by the insect.

Australia offers economic reform assistance

Vietnam and Australia will strengthen technical assistance on budget management, macroeconomic stabilisation and economic reform policies.

This is the plan of a Memorandum of Understanding (MoU) signed between the Vietnamese Finance Ministry and the Australian Department of Treasury.

The MoU was inked during Finance Minister Vuong Dinh Hue’s visit to Australia from December 10-14, where he had a meeting with Deputy Prime Minister and Treasurer Wayne Swan.

The signing of the document marks a new step in the growing cooperation between Vietnam and Australia.

On the same day, the Vietnamese delegation visited Queensland University to discuss measures to boost cooperation with Vietnamese universities.

Vietnam aims for attractive business environment

Vietnam will consider reducing corporate income tax and improve its business environment to match the offerings of regional countries.    

Prime Minister Nguyen Tan Dung made the affirmation during his speech at the 2012 Consultative Group (CG) Meeting for Vietnam, opening in Hanoi on December 10.

Dung thanked international donors for their positive assessments of Vietnam’s recent socio-economic achievements as well as for the frankness of their opinions when pointing out the country’s weaknesses.

For the past 20 years CG meetings have followed every step of Vietnam’s development, from a poor nation in the 1990s to the middle income country classification it now enjoys. Vietnam has even fulfilled its Millennium Development Goals (MDGs) for poverty reduction.

Vietnam’s economic partners were disadvantaged by the global context of declining trade exchanges, a challenge only exacerbated when the country encountered runaway inflation, low credit growth, and increasing pressure on its poor.

Vietnam has embarked on a range of responses to curb inflation, stabilise the macroeconomy, and ensure social welfare. The situation has thus improved remarkably and the 2012 GDP growth rate is now estimated at 5.2 percent.

Dung highlighted Vietnam’s agricultural and export achievements. The country exported more than 7.5 million tonnes of rice and exports in general grew by 18 percent, ensuring export-import balance. Inflation was kept at 7.5 percent and the economic surplus reached nearly US$8 billion.

The initial successes can be credited to national economy, financial, and banking market restructures, and renewing growth models.

Vietnam maintained socio-political stability and ensured social security and social welfare over the year, Dung said.

The Government leader acknowledged the difficulties and challenges Vietnam is facing, such as an unstable inflation rate, large inventories, limited resource mobilisation capacities, job creation, and salary reform.

The equitisation of State-owned enterprises (SoEs) remained slow and there were little or no improvements in quality, efficiency, national competitiveness, administrative reform, and anti-corruption.

To deal with these issues, Dung argued, the Government needs to adopt more flexible management policies, mobilise all domestic resources, effectively implement solutions to short term difficulties, record a higher growth rate next year, and create a firm foundation for sustainable growth.

To successfully fulfil next year’s targets as set by the National Assembly (NA), the Vietnamese Government must realise macroeconomic growth, record a higher GDP growth rate, and lower the inflation rate in 2013.

The targets for next year’s GDP growth rate and inflation rate are set at 5.5 percent and 6.5 percent respectively. The balance of payment will be improved and information about the macroeconomy regularly updated to consolidate the people’s and investors’ trust.

The Government will focus on helping businesses deal with bad debts, large inventories, burdensome credit interest rates, high added value production restructuring, energy efficiency, and environmental protection.

PM Dung said he hopes donors will continue supporting the public-private partnership (PPP) model to develop infrastructure, particularly in relation to land management.

The Government will improve its management through administrative reforms aiming to reduce bureaucracy restricting citizens and businesses, prevent wastefulness, and create a competitive environment for attracting additional foreign direct investment (FDI).

Dung expressed his confidence international donors will stand side-by-side with Vietnam on its new path full of challenges but towards the future’s bright prospects.

Wood industry urged to reform
 
he wood processing industry is being urged to restructure to eliminate risks which might interfere with its future development and its goal of annual export turnover of US$7 billion by 2020.

The industry saw rapid development during the past decade, with the number of enterprises increasing from 600 in 2001 to nearly 4,000 to date. Exports have grown at an average of 22 per cent per year.

As of November 15, wood products exports were just shy of $4 billion, 19 per cent higher than in the same period last year. Export turnover was estimated to total $4.3 billion this year and grow to $4.5 billion next year. Vietnamese wood products were now present in more than 120 countries and territories around the world, according to the General Department of Customs.

However, unregulated development, neglect of the domestic market, and exports primarily through intermediaries were problems retarding the industry's sustainable development, experts said.

Reflecting the lack of overall planning for the industry, Ministry of Agriculture and Rural Development statistics show that around 80 per cent of wood processing plants are located in the country's southern region, even though the northwest offered with the most abundant source of raw materials.

HCM City Handicrafts and Wood Processing Industry Association chairman Nguyen Chien Thang said the industry needed a stable source of raw materials to develop sustainably. Thang pointed out that, without a region stably producing raw materials, enterprises would be forced to import wood for production.

Exploitation of immature trees for chip exports must also be reduced from the current 70 per cent of the market to 30 per cent by 2020, helping protect the environment and ensure a sustainable industry.

A forestry restructuring project is in progress, under which the industry will focus on developing the domestic market while maintaining key import markets in the US, Europe and Japan and expanding into such new markets as Canada, Russia, Australia and New Zealand. The project will also renew technology and prioritise investments in products with high added value.

Domestic exports set to reach record highs

The country's export turnover this year is expected to reach roughly US$115 billion, an increase of 18 per cent over last year despite continuing global economic difficulties, according to the Ministry of Industry and Trade.

The ministry noted that the rising export revenue was one of the bright points of the economy this year since demands in most major markets has fallen sharply and many domestic exporters have cut production.

Yet the value of many export products rose, including mobile phones and electronic components, the value of which has nearly doubled since last year.

Exports to Japan posted the highest growth of 23 per cent.

The value of imports was expected to grow by only about 6.7 per cent this year to $121 billion, helping the trade deficit remain low. The proportion of import goods has also changed, with goods and materials for domestic production accounting for $91.4 billion or nearly 88 per cent of total import value.

The slow growth in the trade deficit has contributed to improve the country's trade balance and balance of payment. The country's foreign reserves this year were expected to surge to $20 billion from last year's $9 billion, according to the Ministry of Planning and Investment,

However, the Ministry of Industry and Trade has warned that the country's export surge this year has been mainly due to foreign-invested firms. The export value of Vietnamese firms alone has risen by only 0.8 per cent.

The ministry has also voiced concerns about the difficulties facing domestic production next year, as domestic enterprises have sharply reduced their imports of equipment for production. The import value of equipment this year has grown by only 4 per cent over last year, compared to a 15-20-per-cent in previous years.

In light of the volatility of many export markets, the ministry also said that competitiveness of Vietnamese goods could decline next year as Viet Nam removes or reduces export subsidies in line with its international commitments. Meanwhile, importing countries are imposing stricter quality regulations as an alternative measure to restrict imports.

MoC looks to lift property market

The Ministry of Construction (MoC) has proposed that the Ministry of Finance (MoF) agree to slash value added tax (VAT) by 50 per cent for apartments below 70 sq.m and valued at VND15 million per sq.m, in order to ease difficulties facing the frozen property market.

The MoC says that it is necessary to extend VAT breaks for housing investors and property developers over the next 12 months.

In addition, construction of social housing will also need to enjoy a reduction of 50 per cent VAT.

According to the MoC, preferential corporation income tax should be applied at 10 per cent for any income from social housing business and investment.

The MoC has asked the finance ministry to consider the proposal and make a report to the National Assembly permitting VAT reduction to be applied within 10 months, in order to encourage property developers and stimulate the real estate market.

The MoC reports that the local property market is now facing hard times both in HCM City and Ha Noi. According to Nguyen Manh Ha, who heads up the ministry's Department of Housing and Property Market Management, housing transactions mainly carried out on projects that are already finished and operational.

Most buyers are young couples from other provinces. They often buy apartments ranging between 60 to 100 sq. metre at price of VND1.5-2.5 billion per unit, according to Ha.

Meanwhile, the price of villas and detached or semi-detached villas continues to decline.

The country is home to nine concrete-brick factories. Two are coming to a production standstill while seven others have stopped production entirely.

Over 500 companies dissolved in Ha Tinh

Due to the economic crisis, 511 enterprises in central province of Ha Tinh had dissolved or halted activities this year, the provincial Planning and Investment Department said.

Of this number, 392 had closed operations and 86 had closed tax codes and were completing procedures to dissolve.

The dissolution of these enterprises had put more than 4,700 workers out of work.

Laos-Viet Nam Bank on firm footing

Party Central Committee's Politburo member Pham Quang Nghi has commended the Laos-Viet Nam JV Bank for its efficient business performance and active engagement in social welfare activities in Laos.

Nghi, who is also Secretary of Ha Noi Party Committee, called at the bank on Sunday during his five-day visit to Laos.

He also expressed his hope that the bank would maintain its position and prestige by strengthening competitiveness and complying with Party and Government policies as well as local law, thus contributing to the special friendship ties between the two countries.

The bank was established in June, 1999 by the Bank for Investment and Development of Viet Nam and the Lao Bank for Foreign Trade.

At present, the bank's total assets are over US$540 million, 35 times as much as when it was founded, with an annual growth rate of more than 30 per cent and nearly $375 million in mobilised capital.

Delta rice exports rise by 6.2%

Cuu Long (Mekong) Delta provinces have exported 141,000 tonnes of rice in the first seven days of this month, increasing the amount of rice exported from the beginning of the year to 6.5 million tones, the largest amount ever.

It contributed to the value of rice exports of the whole area at $3.5 billion.

The region is expected to export 300,000 tonnes more till the end of the year, bringing the total rice output in 2012 to around 6.8 billion tonnes, up 6.2 per cent over last year.

Kien Giang province has exceeded this year's target, leading the whole country in both volume and value of rice exported.

To overcome the difficulties, Delta provinces have stepped up exports to Indonesia, China, Philippines and Africa markets, as well as increasing high-grade rice exports to the EU, North America and Middle East markets.

Foreign partner to buy seafood processor
 
Investors began to suspect seafood processor Go Dang (AGD) would be sold to its foreign partner after the company sold six million shares to Panga Holdco Pte Ltd and delisted its shares.

As Viet Nam News reported last Saturday, the company's Singaporean partner had increased its stake in the Vietnamese processor to nearly 49 per cent - the legal limit for foreign ownership in domestic businesses. However, when Go Dang finishes delisting its shares on the HCM City Stock Exchange, it will no longer be bound by the regulation.

While other enterprises faced difficulties raising funds, Go Dang could easily issue 6 million shares at VND63,000 (US$3), 4.2 per cent higher than its closing price yesterday.

Notably, the price rose from VND50,000 ($2.3) when the company announced its delisting to the current VND60,500 ($2.9), despite the market downturn.

Nguyen Tung Duong, Go Dang's deputy general director, declined to release further information on the purchase.

Meanwhile, on December 5, two board members of the company resigned, replaced by American David Martin Ireland and Vietnamese Hoang Long, both residents of Singapore.

On November 30, Panga Holdco became Go Dang's major shareholder with a 23.3 per cent stake. Prior to that, the Singaporean investor did not hold a single AGD share.

Back in October, Go Dang's chairman Nguyen Van Dao said the company planned to delist as it had not raised as much capital as it expected to. However, despite having received $26.5 million from Panga Holdco's purchase, Go Dang is continuing with the planned delisting.

While other firms delisted due to making losses, the seafood processor earned a profit of VND70 billion ($3.3 million) during the first nine months of this year.

Duong also estimated the company's export turnover at $40 million and this year's profit at VND120 billion ($5.7 million).

Provinces sign economic development pact

Six provinces in the Central Highlands and coastal regions yesterday signed an agreement on socio-economic development in the period 2012 - 2020.

The agreement was signed by the central coastal provinces of Phu Yen, Khanh Hoa, Ninh Thuan and Binh Thuan and the Central Highlands provinces of Lam Dong and Dak Lak.

The agreement, which focuses on improving the competitiveness of each province as well as the entire region, features six main areas with priority given to infrastructure development for road and rail transport, sea ports and aviation.

The six provinces will join hand to attract investment to build expressways between Dau Giay-Da Lat, Dau Giay Phan Thiet, and Phan Thiet-Nha Trang, and to upgrade a number of inter-provincial roads.

Under the agreement, the provinces will cooperate to upgrade coastal roads running from Binh Thuan through Ninh Thuan, Khanh Hoa to Phu Yen and build a road to transport bauxite from the Highlands provinces of Dak Nong and Lam Dong to Ke Ga Port in Binh Thuan Province.

A railroad will be built to link Tuy Hoa City in Phu Yen Province with Buon Ma Thuot City in Dak Lak Province, and the existing Thap Cham - Da Lat Railroad will be upgraded.

The provinces are expected to submit to the Government plans to expand the Lien Khuong Airport in Lam Dong Province and Phung Duc Airport in Buon Ma Thuot City into international airports.

Areas of cooperation will also include development of tourism, transport, investment promotion, aquaculture, agriculture and forestry, and product consumption.

The six provinces will also enhance cooperation on education and training, human resource development, healthcare, crime prevention and fighting, and forest management and protection.

The region plays an important role in the country's socio-economic development and political stability, national defence and security.

It has great potential in agricultural production and processing, forestry and aqua-products, and in energy industries, oil and gas exploitation and refinery, mining, shipbuilding and seas and mountainous tourism development.

The region also borders the southeastern ares, which is a large market that consumes products of the six provinces and a supplier of services to these coastal and central provinces, including finance, credit, import-export, training, healthcare and scientific and technological services.

Conference calls for SOEs to restructure
 
A neutral agency should be established to support the operation of State-owned enterprises (SOEs) in order to improve their efficiency and speed up the process of SOE restructuring, experts said yesterday.

Currently in Viet Nam, SOEs are owned and managed by one agency; with more than 1,300 wholly State-invested enterprises run by different State administrative agencies from Governmental to ministerial and local levels.

This model of ownership exacerbates many of the problems facing SOEs in Viet Nam and hinders reform, according to economists speaking at a conference on the issue held yesterday by the Central Institute for Economic Management (CIEM) in collaboration with the Beyond WTO Programme.

CIEM director Le Xuan Ba said, "for one agency to implement these two functions [ownership and management] is like a person being the judge in his own case, which is a practice mainly responsible for many SOEs' poor corporate governance."

Ba argued that this practice was also the major cause of the waste and losses of State capital and had also created a so-called "group interest" mentality in the country.

"SOE owners do not now have the capacity to undertake the role of an investor. Therefore, it is necessary to transfer the ownership function from State agencies to a neutral one," he stressed.

Tran Dinh Thien, director of the Viet Nam Economics Institute under the Viet Nam Academy of Social Sciences agreed with the necessity to separate these two functions, saying that Viet Nam's process of restructuring SOEs had taken a lot of time, money and effort, but had stalled in its progress due to the existing ownership model.

However, Thien warned that the creation of one new neutral agency may not work due to the number of SOEs in the country now, which he believed was too large for one agency to manage alone.

Bui Van Dung, head of the CIEM's Department of Enterprise Reform and Development, suggested that in the near future the independent agency should only be involved in the running of sole member limited liabilities companies and the State capital in parent companies of economic groups and corporations.

Pham Chi Lan, a well-known independent economist, said that the reform should be first conducted in State enterprises currently managed by central-level agencies because the capital that the enterprises were holding was accounting for more than 91 per cent of total capital of SOEs.

She said that the neutral agency must play the role of an investor, which means it must use the State capital efficiently and develop the State assets in the enterprises and ensure their operation is in line with the market mechanism and international rules.

"To successfully reform the ownership model, the prerequisite is to gradually reduce the number of SOEs and the Government should promulgate a law on SOEs which will form a legal framework to supervise the sector,"she said.

Le Thi Hoa, member of the Management Board of the Joint Stock Commercial Bank for Foreign Trade of Viet Nam (Vietcombank), said that there should be criteria for enterprises that require State management and the proportion of SOE contribution to GDP should be limited at under 10 per cent.

Otherwise, even the smallest fluctuation of a SOE may have a large effect on the whole economy, she said.

Hoa added that in order to address group interests, the Government needed to release legal documents to create an adequate and clear legal mechanism for State capital ownership and management, and acting as a basis for future inspections of SOEs.

Tax break lifts investor sentiment

Investor optimism following a newly announced tax cuts helped lift stocks on both national stock exchanges yesterday.

"Investor sentiment was boosted after the State Securities Commission proposed to extend tax cuts for securities investors through 2013 rather than stopping at the end of this year," said analysts of FPT Securities Co (FPTS).

The commission has also recently proposed tax incentives for new types of investment funds, securities investment companies, voluntary retirement funds as well as a tax exemption for bonus shares.

Additionally, the State Bank of VIet Nam is believed to be preparing to reduce the deposit interest rate ceiling to pave the way for a reduction on other market rates, FPTS's analysts said.

The VN-Index on the HCM City exchange closed yesterday up 0.75 per cent at 386.69 points with the value of trades rising to almost VND484 billion (US$14.4 million), up 24 per cent over Friday's trading value.

The VN30 tracking the top 30 shares on the bourse was also up 0.86 per cent to close at 453.69 points.

Gainers overwhelmed losers by 178-50 overall.

The biggest gainers yesterday were penny and mid-cap shares, such as Bac Giang Exploitable Mineral (BGM), Viet Nam Electricity Construction (VNE), wood processor Duc Long Gia Lai (DLG), Petro Capital Infrastructure Investment (PTL) and PetroVietnam Transportation (PVT), which all hit their ceilings.

Together with Tan Tao Investment Industry (ITA), BGM and VNE were also the most active stocks on the HCM City market with each code seeing more than 2 million shares traded.

On the Ha Noi Stock Exchange, the HNX-Index jumped 2.03 per cent to close at 52.71 points on an improved turnover of VND244.4 billion ($11.7 million), up 55 per cent over Friday's level.

Sai Gon-Ha Noi Bank (SHB) became the most active code by the end of yesterday's session following a total trade of 5.4 million shares, climbing over 2 per cent to VND5,000 a share.

Clear road laid out for PPP growth

A new fund with backing by the Asian Development Bank will provide financial fuel for a revamped Public-Private Partnerships model to improve Vietnam’s troubled infrastructure.

The planned fund conforms to a loan agreement for projects that is expected to be signed this month between the State Bank of Vietnam and the Asian Development Bank (ADB), according to the Ministry of Planning and Investment (MPI) report.

With the starting financial source of $20 million, this fund is expected to contribute significantly to the development of Public-Private Partnerships (PPP) investment structure in Vietnam. It is reported that the Agence Française de Développement (AFD) is likely to finance the fund up to $10.3 million, as well as many other sponsors.

“Another good thing is many sponsors are willing to raise the funds following ADB’s support,” said Le Van Tang, director of the MPI’s Bidding Management Department.

In addition, a proposed plan is to establish an open framework to lure investors effectively for critical projects. The new approach contrasts sharply with the initial PPP model which required the Vietnamese government to identify PPP projects and then choose appropriate investors.

“We will improve PPP if we create a market for it and apply more pilot projects to attract more private investors,” said Cao Viet Sinh, MPI’s Deputy Minister.

Several such pilot projects have long been proposed by either private investors or local authorities, but did not conform to Vietnam’s existing PPP policy for various reasons. These conflicts have resulted in the deadlock in many PPP projects such as Nguyet Vien-Thanh Hoa bridge construction project and Song Hau River water plant No.1 project.

Struggles with chronic PPP failures have prompted Vietnamese government officials to take a new, aggressive action.

For example, Prime Minister Nguyen Tan Dung has ordered the creation of the Public-Private Partnership Steering Committee led by Deputy Prime Minister Hoang Trung Hai. The committee’s objective is to improve PPP legal framework and enhance coordination among ministries.

Many foreign investors are monitoring opportunities in Vietnam’s PPP projects. A group of US investors, for example, has just sent MPI’s Minister Bui Quang Vinh a list of key infrastructure projects under the mode of PPP.

Insurers may fail the target for 2012

Vietnam’s insurance industry could break the business target planned in the beginning of 2012.

According to Phung Dac Loc, general secretary of Association of Vietnam Insurers, Vietnam’s insurance industry is expected to grow over 10 per cent in 2012, much lower than the early 2012 plan which is 17 per cent.

Of which, the non-life insurance segment could reap the growth of 13-14 per cent and life insurance could grow at only 11-12 per cent.

In fact, total general insurance revenue of Bao Viet Insurance who holds 24 per cent market share and is the leader in non-life insurance segment reached VND4,393 billion ($237 million), up by 12.6 per cent within the first ten months.

Despite the expected lower growth, Loc said Vietnam’s insurance industry was more positive than other industries within the economic downturn.

In concrete, many non-life insurers have transferred to more fast-selling and new insurance products such as individual asset, agriculture and healthcare and medical ones.

“In life insurance, persistent inflation may be limiting the real disposable income of Vietnamese households – with the result that their ability to use life insurance has been constrained further,” commented Business Monitor International for the Vietnam Insurance report for the fourth quarter, adding that it was over the time when Vietnam was one of the new frontiers of insurance in the Asia Pacific, but the sector has moved into a more exciting phase of its development with fiercer competitions.

Especially, there are 21 amongst 50 insurance companies listed in the top 1,000 companies with the highest corporate income tax contribution in 2012 recently released by Vietnam Report Joint tock Company.

This figure is 40 per cent higher than that in the top 1,000 taxpayers in 2011.

Of which, there are well-known names such as Bao Viet, Manulife Vietnam, AIA Vietnam and Petro Vietnam Insurance.

Despite the lower expectation of the insurance industry in 2012, Business Monitor International considers the prospects for both life and non-life insurers in the country in the long term, according to Vietnam Insurance report in the fourth quarter.

It said foreign insurance companies particularly in the life segment were present, and saw Vietnam as a natural extension of their regional or global footprints.

“New products are being developed. Agency networks are being built. As in the rest of South East Asia, bancassurance is being seen as an opportunity by some of the players,” commented Business Monitor International.

Furthermore, in the non-life segment, local companies have generally shown more pricing discipline than have their counterparts else where in the region.

Especially, motor insurance which is so often a profitless line in emerging markets accounts for only about one third of the premiums written in the non-life segment in Vietnam.

Phu Yen boats shipped to Switzerland

The Phu My trade village in central Phu Yen province’s An Dan commune has won a contract to export the first batch of 200 basket boats to Switzerland.

The modest deal presents a valuable opportunity for the village to advertise its traditional product.

The small, round bamboo boats, literally known in Vietnamese as Thuyen Thung, are typically used for tuna fishing, especially in southern and central provinces.

“Prices of the exported basket boats are reasonable from VND900,000-2.5 million (US$43-119), depending on size,” said Truong Thi Bich Kieu, who owns a production facility in An Dan commune.

“It’s now the fishing season so we have to speed up production in order to fill orders from domestic clients,” she added.

Her facility has created dozens of jobs for local people that offer a monthly salary of US$3 million (US$143), which is much higher than the local average. However, Kieu said, her business needs financial assistance to expand production.

The village shipped its first basket boats to Thailand last year when this country was struggling with its worst flood in history.

‘Triangle' growth up 10%
 
The Cambodia-Laos-Viet Nam (CLV) Development Triangle Area has achieved an average economic growth of 10 per cent in 2011 and 2012 period, meeting the target set for the period.

The CLV Development Triangle Area comprises four provinces in Cambodia, four in Laos and five in Viet Nam.

Delegates from all three nations attending a meeting in Viet Nam's Kon Tum Province last Friday discussed measures to foster and strengthen multifaceted co-operation that would help the Triangle Area develop to its potential.

A report at the 8th meeting of CLV Development Triangle Area noted that while some important targets have been met, much more remains to be done.

Most of the projects operating in the area, focusing on agriculture, construction, mining and hydroelectric power have been invested in by Vietnamese firms, the meeting heard.

Vietnamese businesses have invested in 25 projects with a total registered capital of US$1.4 billion in the four provinces of Modunkiri, Strung Treng, Rattanakiri and Kratie in Cambodia.

In the four Laotian provinces of Attapeu, Saravan, Sekong and Champasak, Vietnamese enterprises had 50 projects worth a combined registered capital of $1.65 billion.

Currently, enterprises from Laos and Cambodia have invested in seven projects with a total investment capital of nearly $200 million in five provinces of Viet Nam – Kon Tum, Gia Lai, Dac Lac, Dac Nong and Binh Phuoc.

The three countries have co-operated with each other to prepare an industrial development plan for the CLV Development Triangle Area until 2020, with a vision to 2025.

The plan would be the basis for the three countries to promote investment and industrialisation in the area.

Senior officials of all three countries spoke highly of the CLV Youth Forum organised by localities in the CLV Development Triangle Area, saying it had opened up opportunities for the youth to exchange information, understand each other and enhance solidarity and friendship.

However, the joint-coordination committee admitted that the implementation of projects to develop infrastructure in the area were still behind schedule.

There were also inconsistencies in tax policies and investment procedures as well as other bottlenecks in the area that have caused difficulties for investment and trade activities.

While a memorandum of understanding on preferential policies for the area had been signed in 2010, its implementation had exposed many limitations.

For instance, some border gates did not process goods on the weekend, others lacked equipment and customs officials.

After much discussion, the chairpersons of the respective Coordination Committees in the three countries agreed to pay more attention to upgrading infrastructure in border areas, especially trade and traffic infrastructure.

Towards attracting more investment, the three countries would issue more preferential policies, they agreed.

They suggested regular and timely information exchanges on investment attraction policies of each side, acceleration of border demarcation, and stronger checks on projects that can cause environmental pollution.

The three sides should pay more attention to simplifying procedures for granting through traffic licenses to commercial vehicles, and increase quota for transportation means to facilitate trade via borders, delegates said at the meeting.

Bui Quang Vinh, minister of Planning and Investment and chairman of the Coordination Committee of Viet Nam, said through bilateral agreements with Cambodia and Laos, the Vietnamese Government would annually provide students and officials in the development triangle areas with short and long-term training courses to improve the quality of human resources.

State firms owe workers millions

Enterprises in several sectors are reportedly in arrears with workers' salaries and bonuses.

The 17 companies under the Ministry of Construction currently owe employees a total wage of over VND256 billion (US$12.19 million) and a social insurance premium of around VND270 billion ($12.86 million).

Stagnant debts in infrastructure construction and a slower than expected check-upon-delivery process were the main culprits, according to the ministry.

A human resource report published by recruitment website vietnamworks.com showed that employment had fallen by half in both real estate and construction areas since the beginning of this year.

According to the Ministry of Transport, businesses in this sector were experiencing total salary arrears of nearly VND166.5 billion ($7.93 million), not including shipbuilder Vinashin and shipping firm Vinalines, which recently defaulted on their loans.

Slow State budget disbursement for capital construction during the first months of the year and stagnant debts in many localities left countless building projects unfinished.

As a result, many investors could not afford to pay contractors, who in turn could not afford to pay wages. Many even went bankrupt or dissolved.

Financial news portal cafef.vn reported that the banking and finance sectors were also facing a gloomy situation, with many employees losing their jobs.

At a recent National Assembly session, State Bank of Viet Nam Governor Nguyen Van Binh said banks would be prohibited from increasing salaries or distributing bonuses if they failed to establish large enough risk provisional funds or did not set aside portions of their profits for resolving bad debts.

The website forecast that next year would continue to be a tough period for workers, as 29 per cent of local enterprises would not recruit new employees and 3 per cent would cut their existing workforce. Only 68 per cent was expected to recruit more staff, a decline of 7 per cent compared with this year's figure.

VN ponders first cap on interest rates

Because of an expected inflation rate of 7.5 per cent by the year-end, the Government has asked the State Bank of Viet Nam to cap and lower lending interest rates in an attempt to helping enterprises access soft bank loans. If approved, it would be the country's first cap on lending interest rates.

The Government's interest-rate controls on loans has raised opinions from the public about its effectiveness.

Since late 2011, the central bank has tightened monetary policy to keep inflation in single digits.

The central bank's deposit interest-rate thresholds and commercial banks' deposit interest-rates remained at levels high enough to reduce inflation.

However, lending interest rates also climbed to high levels, thus restricting access to bank loans.

To help enterprises gain more capital, the government and the central bank said they might put a cap on lending interest rates, particularly now when inflation stands at an acceptable level.

The lending interest rate cap would help the economy recover by lowering interest rates and increasing demand. It would also help enterprises survive, thanks to a reduction in capital-related costs.

However, the lending interest-rate cap would likely have contrary effects.

In particular, if the lending interest rate is capped at a low level and deposit interest rates remain unchanged, commercial banks will increase their interest rates close to the cap on all kinds of loans to ensure profits.

To prevent risks, the banks will give top priority to major customers with high prestige, meaning that small – and medium-sized enterprises (SMEs) would have less access to loans. SMEs would even have to pay additional fees to access bank loans.

Thus, enterprises will still not be able to get bank loans and banks would not be able to lend and their credit growth would not increase.

In addition, as the loan and deposit interest rates would be similar, both borrowers and depositors would choose major banks for their transactions, and small banks would suffer. Larger banks have stronger financial capacity and better value-added services.

Deposit interest rates at local banks now average 10 per cent per year, so commercial banks would be difficult to lower their lending interest rates under 15 per cent.

Low-cost retail space

The occupancy rate at many big trade centres has fallen as many companies are taking advantage of cheap rentals to expand their retail businesses and build their trade names.

According to Savills Viet Nam's recent report, in the third quarter of this year, HCM City's total space used for retail activities was about 678,000 sq. metres, a fall of 0.7 per cent compared with the previous quarter.

Meanwhile, CB Richard Ellis (Viet Nam) said that 48 per cent of 168 surveyed shops and trade centres closed, but 30 per cent of them had recently opened.

Because of these changes, the price of retail space had become much cheaper than before.

To take advantage of this opportunity, many retailers have developed their store chains and strengthened the promotion of their products to build brand names.

Passio Coffee, for example, since the beginning of the year, has expanded its store chains in prime locations downtown thanks to a sharp cut in rental of retail space.

At its 100-sqm coffee shop on Nguyen Du Street, the rental price is US$3,000 per month, compared to the previous rate of US$5,000.

As a result, the company opened eight new stores within six months.

Similarly, Viet Fashion Company has opened more shopping centres by taking full use of cheaper rental prices.

The company has signed many contracts to rent spaces for their businesses, with the rental equivalent only half of the price recorded early this year. Its shops are between 600 and 1,000 sq m in size.

Although purchasing power has declined, many businesses believe it will pick up in the near future as the recession ends. In addition, sales of some goods in the local market remain good.

Many companies have used their savings on rental prices to diversify and improve their brands.

More people use cards

More Vietnamese consumers are using cards to make payments when shopping as more banks issue debit and credit cards.

In 2008, a mere 2 per cent of consumers used cards to make payments at Nguyen Kim, compared to 98 per cent who paid in cash. This year, the percentage of those using cards has risen to 10 per cent, and even reached 25 per cent when sales promotions took place, according to figures of Nguyen Kim retail company.

The more common use of payment cards is in line with the shift from traditional shopping channels to modern ones.

In 2009, up to 82 per cent of consumers in Viet Nam went shopping at traditional markets and retail shops while only 18 per cent chose to shop at supermarkets and commercial centres. But in 2012, 30 per cent chose the latter.

A 2011 report from Euromonitor (Sai Gon Economic Times) said the number of payment cards issued in Viet Nam was 36.6 million while Singapore had 18.5 million.

However, the number of cardholders' transactions in Singapore was 449,000, 2.5 times higher than the figure in Viet Nam.

Some cards have been issued in Viet Nam but are not being used. In addition, a shortage of credit-card processing equipment has contributed to lower usage.

Euromonitor's report says the country has only 44,000 credit card processing machines, while Singapore has 100,000.

Many Vietnamese consumers also do not understand the advantage of using cards for payments.

Banks should work with companies to encourage people's use of payment cards and help consumers recognise the benefits of using credit cards for payments.

Enterprises should have better sales policies in line with new payment methods to encourage credit card use. In addition, enterprises can achieve stronger sales if they sell their products at lower prices to cardholders. They can also diversify sales channels by selling their products online.

Computer market still sluggish

The sale of laptops at electronics shopping centres in HCM

City continued to decline in the third quarter, despite major promotions.

At Thegioididong and Dienmay.com, which are the largest electronic store chains in the city, the sale of mobile phones, tablet computers and laptops remained stagnant in November.

Sales of laptops alone dropped by eight per cent compared with October although many kinds of laptops that can meet the needs of students and low-income earners were selling for VND5-6million (US$ 250-$300).

The quarterly report on Asia-Pacific from IT market research firm International Data Corporation shows that the computer market in the third quarter in Viet Nam dropped by 4 per cent year-on-year.

Many companies'turnover for one month reduced by half as they sold no desktop computers or laptops.

Computer vendors launched huge sales to attract customers. But overall spending remained low, as concerns about the economy remain, thus affecting short – and medium-term sales.

The government is still tightening spending as the country focuses on inflation reduction and bank restructuring. Meanwhile, high interest rates on loans have also affected enterprises' financial capacity and restricted their spending.

Computer purchases by individuals and companies are not expected to change in the near future, and the market will remain sluggish.

Six Vietnamese CSOs honoured at CSO Asean awards 2012

The top 10 chief security officers (CSO) in Asean have been awarded at the fourth CSO Asean Awards by International Data Group including six Vietnamese CSO and four foreign ones.

Of whom, Vietnamese CSO are Quang Trung Software City Development Company Vietnam’s CEO Tran Huu Dung, HD Bank’s director IT centre Nguyen Phuc Duong, DongA Bank’s chief security officer Pho Duc Giang, Agribank’s head of standardisation and quality assurance IT centre Le Van Ha, Nam A Bank’s deputy general director Nguyen Binh Phuong and Bao Viet Holdings’ head of information security department IT division Mai Anh Tuan.

CSO Asean Awards 2012 was held by International Data Group in Vietnam in conjunction with Department of Information and Communications of Ho Chi Minh City, Vietnam Computer Emergency Response Team under the endorsement of Ministry of Information and Communications, Ministry of Public Security and Ho Chi Minh City People’s Committee.

The fourth CSO Asean Awards’ criterion of evaluation was not only to assess technical knowledge and successful projects that are implemented by CSOs in enterprises but will concentrate more on CSO’s leadership role, strategy vision and the innovation to provide the highest performance for the organisations and society.

The fourth CSO Asean Awards received 56 nominations and application letters from CSOs in the region.

After four consecutive years, CSO Asean Awards has looked for and honoured 43 outstanding CSOs in Asean.

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