finance & business news
FINANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Jan-August credit grows 9.54pct
1
Quantitative easing packages are needed in the current context 2
Concerns about the existence of a finance company in each bank 3
Bad debts erode banks' revenues
4
VCSC: bad debt recovery will not be improved unless it
has appropriate legal framework
5
208tr dong bad debts bought by VAMC
6
Weaker VND feared to cause flight of hot money out of Vietnam 6
More tight and safe regulations in banking operations issued 7
Pressure on exchange rate remains high
9
Banks manage to increase chartered capital
9
Demand for treasury bills increases unexpectedly
11
Nam A Bank cancels merger plan
12
HDBank earmarks $178m for loans against deposits
13
Offshore investors may get support
13
KPMG Asia-Pacific leader to visit Vietnam
13
Vietnam trade deficit raises alarm over GNP
14
Over $9 billion trade deficit forecast next year
15
Vietnam's GDP growth likely to reach 6.4 pct this year
15
Vietnam Takes Steps to Protect Against Chinese Slowdown 16
Vietnam imports nearly $18.8b commodities from
Korea in Jan-Aug
17
RoK tops foreign investors in Vietnam
18
Vietnam plans to drop fines for some tax defaulters
18
SME reforms vital to progress
19
VN plans five IPOs this month
19
Transport infrastructure investment should not burden
residents, experts
20
Policy, financial hurdles stymie Vietnam auto industry
21
Weaker VND drives cash to real estate market
23
Revised law on foreign property ownership has issues to iron out 23
8 September
BIZ NEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Business Brief Sep 08
Brokerages forecast continued low liquidity this week
VN Realty Dealbook: Hung Thinh Corp buys condo project;
US firm invests $120m in industrial park
Apparel and footwear lead surge in exports
Rice exchange proposed for Mekong Delta
Vietnam farmers' income still too low
Mekong Delta's sugar plants in risk of material shortage
GE to supply steam turbines for thermal power plant
Self-defence measures considered for imported MSG
Kien Giang's island to access national power grid
Dong Nai port's new pier to handle bigger ships
VN's fuel prices cheaper than in neighbouring countries
Wholesale, retail trade attractive to small businesses
Work starts on major resort on Phu Quoc
Phu Quoc island draws 164 investment projects
City taxi firms to lower fares
Oman's sovereign fund scores over home bidders in
Vietnam's Hai Phong Port stake sale
Oman eyes highway, water projects in Vietnam
First low-cost airline provides Hanoi-HK service
Vietnam Airlines launches special offer on Hanoi-Paris route
Vietjet launches new domestic routes
Danang airport planned to handle 13m passengers by 2020
Vinaland sells stake and partners Chow Tai Fook
Construction of Long Phu 1 thermo-power plant in progress
Saigon Co.op among top 500 Asia-Pacific retailers
Samsung agrees to take domestic parts suppliers
Vietnam network operators to provide 4G broadband
service this year: media
Export tax on sliced cassava cut to 0pct
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FINANCE
F I NA N CE
Jan-August credit
grows 9.54pct
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
January-August credit grew 9.54 percent compared to the end of 2014, well above the 4.33
percent of last year's same period, according to an updated report the Credit Department
under the State Bank of Vietnam.
The report said of the five priority sectors, outstanding loans of credit institutions, excluding Vietnam Bank for Social Policies and Vietnam Development Bank, for the agriculture
and rural development sector had reached VND811.64 trillion (US$36.07 billion) as of the
end of August, up 9 percent against last end of the year.
Credit for production of goods for export had stood at VND184.6 trillion by June 30, up
4.99 percent against the end of 2014. Meanwhile, loans for hi-tech enterprises totalled
VND25.61 trillion (up 29.12 percent), supporting industries VND110.62 trillion (up 3.2
percent) and small and medium enterprises at VND976.73 trillion (up 4.07 percent).
Despite the nation's high credit growth of 9.54 percent in the first eight months of this
year, HCM City had recorded growth of 6.52 percent by the end of last month. The city
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FINANCE
Vietnam finance & business
8 September
saw loans in dong rising by 7.94 percent over the end of 2014 but those in foreign currencies inching down 1.23 percent.
Outstanding loans in HCM City as of August had not included bad debt handled via
risk provisions and sold to Vietnam Asset Management Company (VAMC). If bad
debt was added, growth of outstanding loans in the city was nearly the same that of
the country.
http://english.thesaigontimes.vn/42875/Jan-Aug-credit-grows-954.html
Quantitative easing
packages are needed
in the current context
Intellasia
08/SEP/2015 INTELLASIA | VOV
In the recent two months, the world crude oil has constantly going down, by more than
30 percent compared to the beginning of the year, and by 70 percent compared to the
peak in 2008. As forecasted, in the worst scenario, the crude oil price will be about 30
US dollars per barrel, leading to a significant loss to the state budget revenue and
putting pressure on the economic growth. Therefore, Vietnam needs to take measures
to minimise the negative impacts and best exploit the benefits from the decrease of oil
price.
Reporter of VOV has interviewed Dr Luong Van Khoi, Head of the Global Economy
Department at the National centre for Socioeconomic Information and Forecast (Ministry of Planning and Investment) on this issue.
Regarding prediction on the price of the world crude oil in the near future, Dr Khoi
said that the oil price has inched up in the recent time (to 46-47 US dollars per barrel)
after hitting a new low of below 40 US dollars per barrel and in his point of view, it is
a short-term fluctuation which is appropriate with the forecast of the International
Monetary Fund (IMF). On August 27th, IMF forecasted that the world oil price will rise
to 48.1 US dollars per barrel in the third quarter of 2015, and fall to 46.2 US dollars per
barrel in the fourth quarter of 2015. Dr Khoi added that in the near future, the world
oil price could probably fall to 30 US dollars per barrel as earlier forecast of the National centre for Socioeconomic Information and Forecast. This is because the oil price is
affected by numerous factors, such as the supply-demand, and the strong US exploitation of shale oil, because the US has mastered the technology and no longer has to import oil from the OPEC countries (Organisation of the Petroleum Exporting
Countries). The second factor that affects the world oil price is the fragile of economic
recovery prospect, especially the considerable decrease of Chinese economic growth;
and the return of Iran, a country with huge oil supply, which perhaps will lower the
oil price to regain market share. The third factor is political crisis.
All of the above factors affect oil price, and in the future, the oil price may decline to
30 US dollars per barrel or lower, because the breakeven point of oil exploitation of the
OPEC group is ranging from 20 to 30 US dollars per barrel.
According to Dr Khoi, in all scenarios, especially in the case when oil price falls to 30
US dollars per barrel, Vietnam's inflation rate will significantly fall and Vietnam will
probably fall into deflation period. Therefore, if Vietnam does not have comprehensive
and appropriate solutions, the oil price will strongly impact the economic growth. Dr
Khoi thought that Vietnam should think of launching quantitative easing packages to
stimulate economic growth.
The decrease of oil price also positively affect the real economy, and it will increase the
tax revenue from corporate sector. According to Dr Khoi, the government should comprehensively improve the tax system to increase tax income from corporate sector and
ensure the macroeconomic stability. The oil price decrease will strongly affect the central budget and we should have effective solution to reform the economic structure
and particular the corporate sector.
Dr Khoi said that the corporate sector is currently very weak, and the majority of Vietnam's businesses can only meet about 40 percent of the optimum efficiency. Moreover,
at the present time, the domestic petrol prices have not fallen in line with those of global oil. Dr Khoi suggested that the government should adopt intervention measures to
lower the petrol prices to stimulate the sectors which directly uses petrol, in order to
promote economic growth.
8 September 2015 2 / 39
FINANCE
Vietnam finance & business
8 September
However, the government also needs sanctions to request the sectors using petroleum
products such as transportation services to reduce service prices, in order to cut input
costs for the production of corporate area, and thus stimulate economic growth.
Concerns about the
existence of a finance
company in each bank
Intellasia
08/SEP/2015 INTELLASIA | DTCK
The Vietnam's consumer finance market is considered having great potential, with
over 90 million people in population and rising consumer demand. Therefore, it is understandable when the tendency to establish finance company has been promoted in
the recent years, especially the wave to acquire finance company of banks.
Regarding the tendency to establish finance company in the market, economic expert
Dr Le Xuan Nghia, shared to DTCK that in developed countries, finance companies are
established by large economic corporations in order to support the sale of the corporations. For example, customers buying Mercedes cars can borrow capital from Mercedes's finance company; or the large-scaled Export Import Bank of the US (USEximbank) also has a finance company to support the sale of the national corporations,
such as the Boeing Group. In addition, when the stock market grows strongly, people
tend to think that using finance companies for indirect investment in the stock market
and direct investment in other companies can be profitable, and thus finance companies are more and more developing. According to Dr Nghia, establishing finance companies is not a new idea, but is one of the ways to extent credit and avoid the
investment in backyard corporations, which the State Bank of Vietnam (SBV) cannot
monitor.
However, in fact, the people will have more opportunities to access consumer credit
with simplified procedures with the existence of finance companies. Therefore, establishing finance companies is worthwhile.
Talking about the concerns for the establishment of finance companies, Dr Nghia said
that finance companies under the management of economic groups are not worrying,
as the scope of capital mobilisation is not large, and the investment focuses on the areas
which are profitable to the groups. Nevertheless, the establishment of finance companies of banks, especially when every bank has its own finance company, is a matter of
concern.
Banks' capital indirectly flows into finance companies, and then is invested in other
sectors. When accounting the balance sheet on the total assets, the banks' asset quality
will surely be negatively affected. It is even more dangerous if banks pour capital into
their finance companies or their securities companies to invest in backyard companies
or the stock market, for example the cases of Sacombank Leasing, and Agribank Leasing Company No. 1 and No. 2, etc.
The formation of finance companies is not simple, and it is not a lucrative field as people thought. According to Dr Nghia, finance companies should only be formed with
limited functions such as consumer lending. On the other hand, some people thought
that it is less risky and the risks (if any) will not significantly affect the entire society
and economy, as it does not involve public deposits. However, in fact, if finance companies are established massively with large-scale operations, the risk is fairly high, as
the economy, at that time, will lose a healthy capital source. Instead of being invested
effectively, it may heat up a certain market, such as real estate, or stock market, etc.,
and there are various consequences if the bubbles burst.
Dr Nghia thought that in order to avoid those risks, the top principle is to prohibit finance companies from mobilising capital from the public, and they should only be allowed to issue bonds or mobilise capital from funds and groups to invest in other
sectors inside or outside the groups. More specifically, it is necessary to avoid the indirect transfer of banks' capital into finance companies via the issuance of bonds, (in
which bonds are cross-sold), in order to avoid out-of-control lending into the sectors
which may create bubbles that collapse finance companies, as what happened in China
and Thailand in the past time. Furthermore, it is necessary to avoid using finance companies to dodge the control of SBV under Circular 36 on lending to related persons.
Moreover, although finance companies are not rigorously tied to the safety ratios as
8 September 2015 3 / 39
FINANCE
Vietnam finance & business
8 September
banks, the management authorities must be very careful in monitoring and forcing finance companies to comply strict financial ratios. Therefore, both investors pouring
capital in finance companies and the finance companies themselves should understand that they are bearing the real risks.
Regarding the comment that finance company is the focal point of black credit, Dr Nghia said that consumer credit or finance companies are not black credit, but a cure for
customers suffering black credit. At the present time, since finance companies are operating mainly to dominate the market before it becomes popular in social life, consumers can easily access the loans and the requirements for documents are usually
simple, and thus the risks is higher for finance companies.
In the 2015 annual shareholders' meeting, many banks have consulted shareholders on
the establishment of finance companies. In particular, the Commercial Joint Stock
Bank for Investment and Development of Vietnam (BIDV) submitted its shareholders
the plan to establish finance company with three options, including to acquire an existing finance company in the market, or to convert its financial leasing company into
a finance company for consumer lending, or to establish new finance company. The
Commercial Joint stock Bank for Industry and Trade of Vietnam (Vietinbank) has
transferred a part of Petrolimex Group Bank (PGBank) into PG Finance Company.
Asia Commercial Joint Stock Bank (ACB), Saigon Thuong Tin Commercial Joint Stock
Bank (Sacombank), and Nam A Commercial Joint Stock Bank (NamA Bank), etc. have
also submitted plan to shareholders on establishing new finance companies with charter capital of 500 billion dong.
Bad debts erode
banks' revenues
Intellasia
08/SEP/2015 INTELLASIA | BAO DAU TU
Although banks have set profit targets at modest levels, as they anticipated that the
economic difficulties may negatively affect their operations, the continuously rising
bad debts have also eroded their revenues, and many banks are considering to lower
their profit goals which were set in the early year.
Deputy general director of a bank having three trillion dong charter capital in Hochiminh city said that after the first half of 2015, his bank has just completed 40 percent of
the yearly profit target (200 billion dong before tax). Although the second half of the
year is considered the peak season, the profit target could hardly be completed. He
added that his bank must accelerate the sale of over 500 billion dong bad debts to the
Vietnam Asset Management Company (VAMC) in the third quarter of 2015 and will
have to set aside 100 billion dong profit to risk provisions.
Nguyen Dinh Tung, general director of Orient Commercial Joint Stock Bank (OCB)
said that the bank has only completed 75 to 80 percent of the profit target set for the
first half of the year. The bank aimed to achieve about 360 billion dong pre-tax profit,
and there are various difficulties to complete such target.
According to the recently released financial statement for the second quarter of 2015 of
the Export Import Commercial Joint Stock Bank (Eximbank), all business targets of the
bank have declined, and the after-tax profit was less than 27 billion dong. The operating expenses strongly rose by 32 percent to 600 billion dong, making the net profit from
operating activities before risk provisioning to remain only 195 billion dong, down by
46 percent. One of the reasons affecting Eximbank's profit in the second quarter of 2015
was the huge risk provisions due to large amount of bad debts sold in the quarter. In
order to achieve the one trillion dong profit target set in 2015, Eximbank planned to
handle about two trillion dong bad debts in 2015. The bank expected that the recovery
of real estate market will be an opportunity to write off bad debts and revert the risk
provisions into profit.
Meanwhile, according to the semi-annual financial statement recently announced by
the Asia Commercial Joint Stock Bank (ACB), the pre-tax profit of the bank reached 731
billion dong, slightly increased compared to the same period of 2014 and completed 56
percent of the yearly plan. The growth rates of assets, outstanding loans, and mobilisations were respectively six percent, 11 percent, and five percent, compared to the beginning of the year. ACB continued to have good capital safety with the total capital
8 September 2015 4 / 39
FINANCE
Vietnam finance & business
8 September
adequacy ratio and tier 1 capital ratio of 13.5 percent and 9.4 percent, respectively.
Tran Hung Huy, Chair of ACB's Board of directors said that the completion of 56 percent of the yearly plan in the first half of 2015 was a positive sign for the bank. Huy
believed that ACB is on the right track towards building foundation and regarding
customers as the central point for long-term and sustainable development strategy.
ACB is capable of achieving the set targets with better results. In fact, ACB's profit in
the second quarter of 2015 fell by 10.3 percent compared to the same period of 2014,
reaching 289.89 billion dong, and the bad debt ratio fell to 1.69 percent.
VCSC: bad debt
recovery will not be
improved unless it has
appropriate legal
framework
208tr dong bad debts
bought by VAMC
Intellasia
08/SEP/2015 INTELLASIA | NDH
The State Bank of Vietnam (SBV) has issued Circular 14/2015/TT-NHNN on August
28th 2015 amending and supplementing Circular 19/2013/TT-NHNN on the buy, sale,
and settlement of the purchased bad debts of the Vietnam Asset Management Company (VAMC).
In addition to the issuance of special bonds, the new circular allows VAMC to issue another type of bond to purchase bad debts at lower level than the market price. The circular aims to promote the establishment of the market for bad debt trading, at the same
time loosen the risk provisions for credit institutions (CIs) having high bad debt ratio.
The circular will take effect on October 15th 2015.
The new type of bond issued by VAMC can be used for trading between CIs or with
SBV. The risk ratio of the new bond is zero percent when calculating the capital adequacy ratio, while it is 20 percent for special bonds. The provision ratio is zero for
banks which receive the new type of bonds from VAMC, but banks are subject to greater debt relief when selling bad debts at lower price than the book value. The new type
of bond can be used in open market operations or for refinancing purpose, similarly to
the special bond. The bond tenor is from one year, and can be extended by three years
otherwise agreed by the bondholders.
VAMC's special bonds are still not allowed to be freely traded in the market. The term
of the special bond is five years, and can be extended to maximum 10 years if CIs face
financial difficulties or are conducing restructuring process. CIs can make decision on
the annual provision for risks for the issued bonds if the risks provision are fully made
five days before the maturity. It means that the provision for risks and corresponding
net income are under the control of credit institutions.
Under the new mechanism, VAMC can decide the market price of the debt, maintain
direct ownership on guaranteed-assets, and be more active in selling bad debts to investors. However, the current regulations applicable for some sectors such as real estate still limit the participation of foreign investors, making the opportunity to access
the bad debt trading market to remain less open for all investors. Thus, according to
Viet Capital Securities Company (VCSC), the recovery of bad debts will not be significantly improved unless there are suitable legal framework.
VAMC aimed to purchase 500 to 700 billion dong bad debts at market price in the remaining time of the year, and proposed SBV to raise the charter capital by an addition
of 1.5 trillion dong. The progress to recover bad debts has been slow in the recent time
(only 6.5 trillion dong bad debts were recovered, while there are 142 trillion dong need
to be purchased).
08/SEP/2015 INTELLASIA| BIZLIVE
Since its establishment till the end of August 2015, Vietnam Asset Management Company (VAMC) purchased 208 trillion dong bad debts, and issued 177 trillion special
bonds.
As per Nguyen Quoc Hung, chair of the board members of VAMC, since early 2015 till
the end of August 2015 alone, VAMC bought 77.355 trillion dong bad debts, issued 68
trillion dong special bonds.
In a report to members of the National Assembly on inquiry and inquiry response at
the 9th session of the National Assembly XIII, Governor Nguyen Van Binh said that
after three years (2012-2014), the total amount of bad debts estimated to have been han8 September 2015 5 / 39
FINANCE
Vietnam finance & business
8 September
dled was 311.1 trillion dong, equivalent to 67 percent of total bad debts estimated at
the end of September 2012 that the State Bank reported to the Politburo and the government when developing the scheme on bad debt settlement.
Thus, at the end of September 2012, total bad debts of the entire banking industry were
about 465.328 trillion dong.
VAMC was established in July 2013 and at the end of the year, this organisation purchased 40 trillion dong bad debts, bringing the total bad debts of the entire banking
sector till the end of 2013 to about 3.61 percent, and as of the end of December 2014, the
non-performing loan (NPL) ratio accounted for 3.25 percent of the total outstanding
loans (report sent members at the 9th session of the National Assembly XIII).
In the process of handling bad debts through VAMC, bad debts of the banking system
has fallen dramatically. As of the end of June 2015, the NPL ratio of the whole sector
remained at 160 trillion dong, representing approximately 3.72 percent of the total outstanding loans, down about 305.328 trillion dong from the end of September 2012
when the State Bank conducted survey about bad debts to work out a scheme on bad
debt settlement to submit to the government.
In order to continue bringing NPL ratio to below three percent, the State Bank recently
issued Document No. 5057/ NHNN-TTGSNH requiring credit institutions and foreign
bank branches to perform debt classification following Circular 02/2013/TT-NHNN,
implementing drastic measures to solve bad debts, bringing NPL ratio to below three
percent and completing the bad debt settlement plan approved by the State Bank before September 30, 2015.
The State Bank also provided sanctions for Vietnamese credit institutions that do not
complete the bad debt settlement plan in 2015 and reduction of NPL ratio to below
three percent before October 01, 2015, i.e., that credit organisation will not be considered and approved to expand its network at least until December 31, 2015.
As per Nguyen Quoc Hung, the State Bank refinanced some credit institutions by
VAMC special bonds but the volume was not much.
Information from some bank leaders shows that these banks still have not used special
bonds to refinance at the State Bank as deposits in banks still increase. In addition, the
discount rate is only 50 percent out of the par value of the special bonds and the State
Bank only consider those banks that have real need. For example, the State Bank gives
priority to refinancing in special bonds to zero-dong banks so that they can carry out
restructuring.
Weaker VND feared to
cause flight of hot
money out of Vietnam
Intellasia
08/SEP/2015 INTELLASIA| TBKTSG
Analysts warned that dollar price fluctuations would prompt foreign investors to
withdraw capital from Vietnam. If so, this would put pressure on the exchange rate.
Foreign investors' net stock sales had reached VND657 billion in seven consecutive
trading sessions by the end of last week.
From July 31 to August 21, 2015, according to the Hanoi Stock Exchange, foreign investors' government bond net sales climbed to VND2.783 trillion.
The foreign investors' excess of sales over purchases is expected to last a long time.
An analyst commented that foreign investors were more resolute than domestic investors, and would stop losses as soon as they need to do so.
However, he said foreign investors cannot sell securities in large quantities now because of weak market liquidity.
The liquidity of the HCM City Stock Exchange in July and August decreased sharply
by 30 percent compared with the first and second quarters of 2015.
There are few bond transactions these days because commercial banks' liquidity is
weak.
Thoi Bao Kinh Te Sai Gon cited a report of a bank's treasury division as saying that foreign investors may withdraw $2.5-3 billion worth of capital by selling bonds and
stocks.
The amount of capital was hot money that flowed to Vietnam prior to July 2015, when
the dong/dollar exchange rate was stable, as investors sought profits from the gap in
8 September 2015 6 / 39
FINANCE
Vietnam finance & business
8 September
the dong and dollar interest rates.
The capital withdrawal, if it happens, would put pressure on foreign currency supply
and demand.
The moves taken by two foreign ETFs (exchange traded funds) - Vaneck VNM and
FTSE Vietnam ETF - which are holding $850 million worth of stocks listed on both the
Hanoi and HCM City bourses - have caused special attention from the public.
The price of V.N.M ETF managed by Vaneck has decreased sharply by 15 percent since
early August, from $18 per certificate to $15.6 on August 21. It is estimated that more
than 1 million fund certificates have been withdrawn in the last three weeks.
The hot money once helped Vietnam in issuing government bonds, easing dong interest rates and helping the State Bank buy more foreign currencies to consolidate foreign
exchange reserves.
However, 'hot money' does not always stay in one place. The world has witnessed $600
billion worth of hot money leaving emerging 15 emerging markets in the last three
years.
Therefore, keeping watch over the movement of hot money is necessary, even though
Vietnam is not the centre of the world's financial markets.
http://english.vietnamnet.vn/fms/business/140682/weaker-vnd-feared-to-causeflight-of-hot-money-out-of-vietnam.html
More tight and safe
regulations in
banking operations
issued
Intellasia
08/SEP/2015 INTELLASIA| VNECONOMY
It has been over two years since the gold account settlement story ended, but echo still
remains. Both objective and subjective risks are available, and are generally heavy.
More than two years ago, the risk in finalising gold accounts was noted in Asia Commercial Bank (ACB), amounting up to trillions of dong. But so far, at least in terms of
publicised information, ACB remains solid and is coming back, albeit along with gold,
the bank is still greatly affected by the legal trouble.
More broadly, in the whole system, the finalisation of gold accounts and removal of
gold from lending-mobilising succeeded. Hundreds of trillion dong capital from gold
had been separated but did not cause subsidence or major disturbance in the asset
structure of the system in general - which directly influenced on liquidity and interest
rates.
But so far, the risk from gold to banking operation has still been fresh.
Looking back to this risk, a long time business leader in the gold trading sector said, it
is necessary to look in a more comprehensive way.
First, the previous mechanism allowed banks to convert capital from mobilised gold
into dong to do business. Deposit rate in gold were very low while that in dong in previous years was very high. Profits were in credit. So, when mentioning gold capital
risk, this also needs to be considered to determine the actual level.
Second, the gold capital risk can still persist till now.
In previous years, some banks lent in gold with very long term, about ten years to several decades. Gold capital gradually returned and matured while the status had to finalise several years ago. Gold price fell very deeply from the previous time, the risk
about received value is there.
Third, also as per the above mentioned business leader, gold trading is risky. Not just
objective but also subjective factor may lead to consequences later.
Where is the subjective factor? The above mentioned leader said: in 2012 and earlier,
gold trading business was a "burning issue" in the operation of a group of banks, especially the pressure on gold status finalisation. Banks often had agents, which might be
companies having ownership relationship.
In a period, one or more agents purchased gold for banks. The situation was, after buying, gold prices increased, that transaction was profitable. On the contrary, after the
purchase, the price plummeted and risk was revealed, agents transferred such risks to
banks.
In the aforementioned situation, instead of the fact that agents suffered from losses due
to falling price, the losses moved to banks.
8 September 2015 7 / 39
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Vietnam finance & business
8 September
Whether there is the above situation or not, the relationship between banks and agents
including ownership relations, the trading mechanism and accounting, etc. must have
been inspected by inspection agency of the State Bank.
With limited publicity, especially when banking inspection conclusions are sensitive
and allowed to limit information, whether the aforementioned situation is practical or
not, has not been specified.
The same situation was also available in lending operation and capital usage of some
commercial banks in the past.
After leaving the industry, recently, a person who had many years leading some commercial banks shared with the local Newswire Vneconomy that "After nearly twenty
years working in the industry, a thing that I think is necessary but impossible is "how
to go back to the old days?".
That was more than ten years ago when the majority of commercial banks had only a
few hundreds of billion dong capital. The scale was small and suitable to administration and management level. Normally, small scale means easy to manage and monitor.
But then, just three years later, with the conversion of a series of rural banks to urban
ones and the requirement on legal capital, banks had to increase their capital by dozens
of times, even a few dozens of times. That was a too fast and rapid expansion when the
administration and management level was still small.
As per the insider's perspective, the problem is when the capital scale suddenly hiked,
banks cannot expand immediately channels and profit-generating operations. The
contributed capital suffered from dividend pressure while capital from borrowing suffered from increasingly high pressure.
The most common and traditional way (even until now) was to promote credit.
Banking operation showed that in the following years, credit boomed, sometimes
amounting to over 50 percent. And interbank loans were also very vibrant.
Similar to the aforementioned gold capital situation, banks having ownership relationship, when facing difficulties in boosting credit, especially for newly expanded cases
that had not had large foundation of customers, relied on interbank.
In 2010 - 2011, the interbank market appeared the situation that industry insider called
"prey birds" in capital and interest rates. Profits from this channel were considerable,
even some banks made good profits from there.
Of course, operators saw those inadequacies and stepped in.
Since 2012 until now, though echo still remains, the gold capital story basically ended
in the mobilising-lending operation of commercial banks.
Also from 2012, this story on interbank was also tightened. That was the introduction
of Circular 21 dated June 18, 2012, changing rules of the game in this market, moving
deposit operation to lending.
And so far, the State Bank has brought the aforementioned borrowing capital to the
specific record, i.e. credit, linked with tighter safety regulations.
And more basically, with Circular 36, the similar story in banking operation is expected to limit in a deeper way by handling cross-ownership relationships in the system.
The reporting period of banks in the first half of this year also showed a very clear
point: total assets of many members continued to decline, in which the main reason is
the decrease in depositing - lending on interbank.
However, credit to the economy has improved, the growth has been stronger. As of
August 25, 2015, credit rose 9.54 percent from the end of 2014. The priority areas
achieved good growth such as nine percent for agriculture and rural area, 4.99 percent
for export, 29.12 percent for hi-tech application businesses.
Especially, after a long period when credit growth was negative or very low, credit
growth for small and medium-sized enterprises (SMEs) have also edged up more
clearly with 4.07 percent.
Pressure on exchange
rate remains high
Intellasia
08/SEP/2015 INTELLASIA| TIEN PHONG
"The dong/US dollar exchange rate has signs of cooling at the end of August after intense developments a week earlier thanks to the strong intervention of the State Bank
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8 September
of Vietnam (SBV). However, the pressure on exchange rate this year still remains quite
large", assessed Military Bank Securities Company (MBS).
As per MBS, the pressure on exchange rate increase from now till the end of the year
remains high due to increased trade deficit (reaching $3.6 billion in the first eight
months). The US dollar is likely to continue rising on the world market due to tighter
interest rate policy of the US Federal Reserve and good growth of the US economy.
Banks manage to
increase chartered
capital
Intellasia
08/SEP/2015 INTELLASIA| SAI GON DAU TU TAI CHINH
So far, many banks still keep the chartered capital at the minimum legal level of three
trillion dong. With the strong restructuring pressure, managing to surpass this minimum level is currently an enormous pressure for banks in this respect. Even, some organisations accepted to merge with other entities to ensure financial capacity and
operation but still failed.
*Managing to increase chartered capital
Saigonbank has announced to shareholders about the collection of opinions in writing
to increase chartered capital to 4.080 trillion dong. The bank's chartered capital now remains at 3.080 trillion dong. In fact, in 2014, Saigonbank planned to increase its chartered capital from three trillion dong to four trillion dong but failed. As per the bank's
explanation, as the stock market has not stabilised, it has not completed the issuance
of shares to raise chartered capital.
So far, there still remain many banks whose chartered capital are about three trillion
dong including NamAbank with 3.021 trillion dong; Saigonbank with 3.080 trillion
dong; VietABank with 3.088 trillion dong; BaoVietBank, KienLongbank, Vietbank, PGBank, VietCapitalbank with three trillion dong.
The banks whose chartered capital are below five trillion dong include BacABank with
3.7 trillion dong; OCB with 3.547 trillion dong, VIB with 4.250 trillion dong; ABBank
with 4.798 trillion dong. Although, they are not forced to do so, the target of continuing
to exceed three trillion dong is still a great pressure.
Recently, NamAbank announced results of sale of shares to increase chartered capital
from three trillion dong to four trillion dong. However, the total proceeds from the sale
of shares was 21.16 billion only. Consequently, NamABank's chartered capital only increased modestly to 3.021 trillion dong.
It is worth mentioning that, the bank's chartered capital increase plan had been calculated since 2012 but could not be carried out until August 2015. Before the offering for
sale was conducted, NamAbank also asked to extend again since April 2015.
For VietABank's case, in its financial plan, the chartered capital is expected to increase
from 3.088 trillion dong to 4.200 trillion dong in 2015. By May 2015, the central bank
only approved for VietABank to raise the chartered capital to 3.5 trillion dong.
Like Saigonbank, the capital raising plan has been outlined by VietABank for many
years but failed in 2014. In addition, the target of increasing to 3.5 trillion dong in 2013
was also not achieved while VietABank's ambition is to raise capital to five trillion
dong in 2015.
In several recent years, the chartered capital increase plans were made by many banks
in their annual general meeting (AGM) but not many were successful, especially for
small banks, the pressure is increasingly high. These are also banks that maintained
the chartered capital at legal level, i.e. at least three trillion dong, which has been too
long since 2010 to the present.
Earlier, Decree No.141/2006/ND-CP dated November 22, 2006 required banks to meet
the milestone of three trillion dong at the end of 2010. At the end of that year, many
banks had run back and forward to offer for sale shares to meet the capital increase requirement.
Even, the central bank worked out a draft decree promulgating the list of legal capital
of credit institutions, with the chartered capital to increase to five trillion dong in 2012
and 10 trillion dong in 2015. However, this draft was no longer mentioned again in recent years.
Though not mandatory, the target of continuing to exceed three trillion dong remains
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Vietnam finance & business
8 September
a great pressure for many banks. This is reflected in the fact that many banks have consecutively wanted to issue to raise capital but did not succeed. Moreover, in recent
years, the restructuring pressure have been happening strongly. Banks whose chartered are below five trillion dong had to merge with other banks such as DaiABank,
MDB, MHB and Southernbank. It shows that banks have to find ways to improve their
financial capacity during the current restructuring process.
*Growing pressure
Current trends show that many banks choose to merge with other banks to improve
financial capacity. Many banks also accept losing brand in acquisitions, but were not
easy. For example, over time, the market expects that there will have a merger deal between the two banks including NamAbank and Eximbank when NamAbank's senior
personnel was assigned to represent the voting share on the eve of Eximbank's shareholders' meeting.
Surprisingly, this content was not mentioned in the AGM of these two banks. The recent sources of news show that, NamAbank will follow the self-restructuring path that
SBV approved since last year. Simultaneously, NamAbank also had no plan to merge
with other banks. Perhaps, this deal has almost come a long way but still had to stop
as the two sides had not yet found a common voice.
Earlier, the most popularly forecasted scenario if this deal was successful was NamAbank brand would no longer exist on the market because if merging with the representing shares of over 20 percent in Eximbank at that time, the voice of NamAbank in
the post-merge bank was entirely not small. With the current reality, NamAbank surely must continue making efforts to carry out its restructuring process if it wants to get
out of the list of three trillion dong banks.
The pressure on capital increase over the last period is reflected in DongABank. Earlier, DongABank was supposed to be quite safe because the chartered capital had been
five trillion dong. However, this bank had to manage to increase its chartered capital.
It even learnt to accept to merge with an equally strongly partner but still failed.
For many times, the State Bank of Vietnam (SBV) said it will reduce the number of
banks in the coming years from 35 banks to about half. So far, eight bank brands have
no longer been available on the market. Thus, the pressure on improving financial capacity so as not to fall into the above mentioned cases is a matter of survival for many
banks having minimum capital level now.
However, in the current period, as assessed by Dr Le Xuan Nghia, it is necessary to
raise chartered capital to improve financial capacity and competitiveness of banks, but
to execute this plan is not easy because the falling stock price leads to the difficulty in
issuance, while the pressure on merger, acquisition among small banks are increasingly high.
But, there still have opinions saying that chartered capital is not the most important issue for the banking system. In fact, in the United States or many other countries, there
remains small banks that coexist with giant ones. Small banks perform their specific
functions and still work well.
Therefore, it is not necessary that all Vietnamese banks must be large ones. A more important thing for banks is governance issue. The operation of banks should be transparent, the risk management system needs to be good so despite small chartered
capital, it is not worrying. Thus, it is not necessary that all banks having small chartered capital have to race to increase capital but a more important thing for them is to
improve the governance quality.
Demand for treasury
bills increases
unexpectedly
Intellasia
08/SEP/2015 INTELLASIA| VNECONOMY
Vietnam Bond Market Association (VBMA) said in the first eight months of 2015, the
issuance of government bonds only reached 37.7 percent of the year plan. Analysts explain the aforementioned situation is because the issuance period is inconsistent with
the capital structure of the purchaser.
The National Assembly's Resolution No. 78/2014/QH dated November 10, 2014 on
2015 state budget estimates stipulates that "Since 2015, G-bonds from five years above
8 September 2015 10 / 39
FINANCE
Vietnam finance & business
8 September
will be issued. Short-term loans to offset the state budget deficit, reduce the debt rollover will not be carried out". As the result, the G-bond issuance becomes stagnant compared to the previous time.
*Demand for treasury bills increases unexpectedly
Concerning this issue, VBMA's report shows that, in August 2015, the State Treasury
only mobilised 4.206 trillion dong out of 14 trillion dong bid tender and the success
rate was just 30 percent.
Generally, in January-August 2015, the Association issued 94.258 dong bonds and
21.130 trillion dong treasury bills of different terms.
A noteworthy point is, after a long time when treasury bills with one-year tenor or below were almost absent, then in the past eight months, the volume of goods sold by the
Treasury amounted to 21.130 trillion dong.
When being asked whether there is the law circumvention or not when the Resolution
No. 78 required that the term of issued G-bonds must not be less than five years so the
State Treasury circumvented the regulation by issuing treasury bills to finance the
budget, Do Ngoc Quynh, general Secretary of VBMA said "I would not say whether
there is the circumvention or not but the amount of Treasury bills has been rising very
sharply since the beginning of the year".
Especially, the Transaction Office of the State bank which should only be the place to
carry out such professions as pumping/withdrawing money on the open market to
strengthen liquidity took place treasury bill auctions for less than one year period.
The troublesomeness generally remains in the National Assembly's Resolution No. 78
on prohibiting the issuance of G-bonds with less than five-year term as mentioned
above.
As per the Ministry of Finance (MOF), 80 percent of G-bonds is held by commercial
banks but the medium and long-term mobilised capital only accounts for 20-30 percent
(depending each specific moment) while the rest is short term.
Many commercial banks said that the provisions on long-term purchase made banks
afraid of liquidity shortage especially in the context that the market developments are
unpredictable and keeping a big amount of capital in a long term may lead to the risks
of maturity and interest rates.
Therefore, banks limit buying long-term G-bonds. This also explains why the amount
of treasury bills issued has increased rather sharply in the first eight months of the
year.
* Unanswered questions
Facing the situation of unsalable G-bonds, the National Financial Supervisory Commission (NFSC) said, "with the bid winning rate decreasing to the very low level in recent weeks, the State Treasury should have adjustments to strengthen the G-bond
issuance in the four remaining months of the year".
So, how to adjust? Certainly, the first possibility, in order to sell goods, the State Treasury have to push up interest rates. Currently, the bid winning rate in August 2015 is
6.4 percent per year for 5-year term compared to 7.65 percent/year for 15-year term (10year term has no transaction).
In order to mobilise, interest rates need to be raised. Meanwhile, the State Bank is looking to reduce medium and long-term interest rates to a lower level from 1- 1.5 percent/
year from the beginning of the year to support growth target set by the government.
Currently, the market interest rate curve, in which the G-bond interest rate curve has
been quite stable and relatively consistent to the rule (the longer the maturity, the higher interest rate is and vice versa). If the State Treasury raises interest rates to mobilise
bonds, it will lead to the inconsistency between G-bond interest rate and the policy rate
of the State Bank.
The second possibility, the State Treasury will increase issuing treasury bills to finance
the budget as mentioned above but that will leave doubts about the transparency between management and market as well as the lack of professionalism in compliance
issue.
The third possibility, the Ministry of Finance (MOF) and the relevant ministries need
Intellasia
8 September 2015 11 / 39
FINANCE
Vietnam finance & business
8 September
to urgently propose to the National Assembly to study and consider so as to timely adjust some problems in Resolution No. 78.
After all, in a financial market, the sale should follow market demand. Eight long
months, a dominant force that governs as much as 80 percent of the market share
turned away with government bonds but authorities had no obvious move while considering situational measures was very noticeable.
The bond market participants said that there needs to create "highway" for different
kinds of bonds. There, the variety of terms, interest rates, scale will generate a benchmark interest rate curve for capital market in which government bonds have also kept
the orienting role.
However, in order for the G-bonds to become an orienting tool, it is necessary that
these kinds of commodities need to be buyable and sellable by anyone.
And so, they need to be diversified, have reasonable price and can be traded anywhere. Then, the interest of G-bonds will direct the entire capital market.
For businesses that issue bonds having the same term with G-bonds but the price is
higher or equal while the risk is higher, the insurance rate is lower, then the market
will not purchase but will direct to G-bonds and vice versa.
Nam A Bank cancels
merger plan
Intellasia
08/SEP/2015 INTELLASIA| VNS
Nam A Bank is restructuring itself as per the plan approved by the State Bank of Vietnam and does not plan to merge with other banks, the chair of the bank's Board of directors, Phan Dinh Tan, has said.
Tan told Vnexpress that considering Nam A Bank's size, restructuring the bank was
feasible option. He added that the bank would streamline its system to make it more
effective and in accordance with international rules as applicable to the Vietnam's
banking system.
He said together with enlarging the network nationwide, the bank would also focus
on risk management, attaining a healthier financial status and will also follow the legal
regulations on ownership structure.
For nearly a year now, investors privately speculated that Nam A Bank would merge
with Eximbank, just as it had announced in the middle of the last year that it was finding another bank to merge with.
Investors had one more reason to believe in the success of the deal when in March, two
members of the Nam A Bank's management board, Tran Ngo Phuc Vu and Tran Ngoc
Tam, resigned from two important posts. They were also running for election to Eximbank's Board of directors at the yearly shareholders' meeting which took place a
month later.
However, contrary to predictions, the Eximbank shareholders' meeting did not discuss
the merger of Eximbank with another bank.
Currently, Tran Ngo Phuc Vu represents 8.4 per cent of institutional shares and holds
2.85 per cent of individual shares in Eximbank. Similarly, Tran Ngoc Tam holds 7.5 per
cent and 2.85 per cent shares, respectively.
Nam A Bank's Tan said the investment of Vu and Tam in Eximbank was private and
did not involve Nam A Bank.
Nam A Bank did not hold any share of Eximbank, Tan said.
An official of the State Bank of Vietnam said the central bank has still not approved the
list of candidates for Eximbank's Board of directors, so it was too early to comment on
any possible merger.
Nam A Bank currently has 60 transaction offices with a charter capital of VND3.021
trillion (US$134.26 million). Its total asset and profits reached VND37.293 trillion ($1.65
billion) and VND242 billion ($10.75 million), respectively, at the end of last year. The
bank this year has a target to increase its total asset to VND40 trillion ($1.77 billion),
pre-tax profits of VND360 billion ($16 million) and non-performing loans of less than
three per cent of total outstanding loans.
http://english.vietnamnet.vn/fms/business/140820/nam-a-bank-cancels-mergerplan.html
8 September 2015 12 / 39
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Vietnam finance & business
HDBank earmarks
$178m for loans
against deposits
08/SEP/2015 INTELLASIA| VNS
Offshore investors
may get support
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
KPMG Asia-Pacific
leader to visit Vietnam
Intellasia
8 September
The HCM City Housing Development Bank (HDBank) has set aside VND4 trillion
(US$178.17 million) for lending to businesses against their deposits in dong or dollars
at any bank.
Loans under the programme, targeted at corporate customers nation-wide, carry interest rates starting at 6.5 per cent. The rate will remain unchanged during the loan period.
The programme will run from now to December 31.
http://bizhub.vn/banking/12856/hdbank-earmarks-178m-for-loans-against-deposits.html
The HCM City government plans to partly subsidise loan interest for local enterprises
to develop commercial centers and supermarkets in Laos and Cambodia and production projects in Moscow, Russia.
Interest subsidies are part of a plan drafted by agencies in HCM City for a revised demand stimulus programme in the city. The city government is expected to announce
the plan this month.
Investors of the commercial centre and supermarket projects will enjoy interest support if they set aside at least 70 percent of floor space at their facilities to promote and
sell Vietnamese products and ensure Vietnamese products make up at least 70 percent
of goods for sale there.
As for domestic projects, the city's interest subsidies will apply to investments in livestock farms, slaughterhouses, breeding farms and animal feed production facilities.
Such facilities must meet food safety and hygiene requirements and do not pollute the
environment.
Interest support will also go to investment projects in health, education, culture, infrastructure and environment sectors, power grid upgrade, construction of underground
telecom and power cable lines, and investments in wind power/solar power/renewable energy plants.
Investors can get full interest backing for investments in production of key industrial
products and supporting industries in the city's major sectors of mechanical engineering, rubber, plastics, food processing, apparel, footwear, electronics and information
technology.
The city government plans to reserve no more than VND12 trillion (around $534 million) for loan interest support under the demand stimulus programme. The city will
not cover interest for investors who fail to repay principal upon maturity.
According to the HCM City Department of Planning and Investment, the city has implemented the demand stimulus programme in the past 14 years and provided financial aid for around 880 projects with investment capital of between VND35 billion and
VND80 billion each.
http://english.thesaigontimes.vn/42877/Offshore-investors-may-get-support.html
08/SEP/2015 INTELLASIA| VIETNAMNET
Simon Topping, head of KPMG's Asia-Pacific Financial Services Regulatory Centre of
Excellence will visit Vietnam this week to share his experiences in Basel implementation in other countries in Asia.
The local regulators, the State Bank of Vietnam is progressing with implementation of
Basel requirements to strengthen the banking sector and to ensure that banks are sufficiently capitalised.
Topping will tour the country with Steve Punch, KPMG's local head of Financial Risk
Management and meet with the central bank (SBV) and several banks in Hanoi and
HCM City. He will also be facilitating a workshop in Hanoi themed "Lessons from Basel implementation in Asia".
Topping is a globally recognised leader in banking regulation, having spent 30 years
with the Bank of England and the Hong Kong Monetary Authority (HKMA).
8 September 2015 13 / 39
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Vietnam finance & business
8 September
As executive director (Banking Policy) at the HKMA, he was the leader of the Basel II
programme for Hong Kong. He is particularly noted for his involvement in the HKMA
policy development of Basel regulations.
Throughout his career, Topping has worked with numerous regulators across Asia to
develop country-tailored Basel frameworks. Most recently he advised the Chinese and
Indonesian regulators on their Basel programmes, as well as several major banks in
those two countries.
His main areas of interest in the Basel framework are internal capital adequacy and assessment process (ICAAP), capital management, model validation, operational risk
(AMA), stress-testing, and Basel III liquidity risk metrics.
Topping will stay in Vietnam from September 8-11.
KPMG- a global network of professional firms providing audit, tax and advisory services- operate in over 155 countries and have more than 155,000 professionals working
in their member firms around the world.
http://english.vietnamnet.vn/fms/business/140734/kpmg-asia-pacific-leader-to-visitvietnam.html
Vietnam trade deficit
raises alarm over GNP
Intellasia
08/SEP/2015 INTELLASIA| VOV
Vietnam's trade deficit continued to broaden in the eight months leading up to September, adding to growing concerns over weakening domestic demand for homegrown goods and services.
Though exports rose 9 percent to $106.3 billion from a year earlier, imports jumped
16.4 percent to $109.9 billion, pushing the trade deficit up to $3.6 billion, according to
the latest statistics released by the General Statistical Office (GSO).
Vietnam's economy for the eight months January-August was sapped mainly by
weaker than expected consumer spending for local goods and services, though domestic exports also were also a drag.
"The trade deficit enlarged for the period and should continue to rise in coming
months," said the GSO, making it harder for the nation to keep it in check and in the
range of $6-8 billion for the year.
The GSO said the deficit is bringing to centre stage the problems with the low gross
national product (GNP), which is a measure of the market value of all goods and services produced in Vietnam by domestic businesses.
The gross domestic product (GDP) on the other hand measures the total value of all
goods and services produced within Vietnam's borders by both domestic and foreign
invested companies.
The GNP actually generated a $13 billion trade deficit for the eight month period,
which was offset by a surplus from foreign invested companies of $9.4 billion, which
nets to the overall $3.6 billion deficiency.
China remained the largest supplier for the country with imports spiking 20.4 percent
year-on-year to $32.7 billion, accentuated by a weakening of Chinese imports due to a
slack in demand.
China's recent move to devalue the yuan, making its own products more price competitive in overseas markets, has further deepened unease over the trade outlook.
The GSO also forecast that lower sales prices and demand for oil in the remaining
months of the year would most likely negatively impact the nations' exports of oil and
gas and thereby fuel the deficit.
One bright spot is that the US remained the largest importer of Vietnamese products
with exports surging 19.8 percent year-on-year to $22.1 billion.
Shrinking the trade deficit
For domestic manufacturers, one way to shrink the deficit is to persuade the nation's
consumers to purchase more home produced Made-in-Vietnam goods by becoming
more competitive, said the GSO.
This means they must learn more about consumer's wants and needs and do a better
job marketing to those desires whether that be functional or emotional to deliver a better deal to the consumer.
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Vietnam finance & business
8 September
Manufacturers need to raise the skill levels to create more flexible and productive
workforces that can utilise innovative technologies and enable them to move into new
areas of work.
They need to support science and innovation to promote the development of new technologies and more efficient ways of working. Most importantly, they need to create an
economy that depends on its ability to create innovative goods and services.
Developing a better industrial strategy and identifying those particular industries that
will contribute to long term economic growth also goes to the heart of shrinking the
deficit.
They should follow the lead of foreign invested manufacturers who currently are successfully importing components and raw inputs, adding value and exporting the finished product at a profit.
Domestic manufacturers focus too much on commodity and processing industries,
which are subject to wild fluctuations in the global market, add little value and concentrate too much on price competition, with insufficient emphasis on quality.
It isn't just about manufacturing but in short - the trade gap is all about lower level of
skills, investment, research and development, and innovation by domestic businesses
relative to their foreign counterparts, said the GSO.
http://english.vov.vn/Economy/Trade/Vietnam-trade-deficit-raises-alarm-over-GNP/
300322.vov
Over $9 billion trade
deficit forecast next
year
08/SEP/2015 INTELLASIA| SGGP
Vietnam's GDP
growth likely to reach
6.4 pct this year
08/SEP/2015 INTELLASIA| XINHUA
Intellasia
The Ministry of Industry and Trade has forecast that trade deficit will maintain less
than 5 percent of total export turnover equivalent to $9.05 billion in 2016.
The total export turnover is predicted to reach $181.5 billion.
Basing on GDP growth of 6.5 percent, the ministry has predicted a year-on-year
growth of 9 percent industrial production index. Total retail sales of goods and service
will jump 9.5-10 percent.
Electricity consumption demand is expected to increase 11.4 percent over 2015.
This year, total export turnover is likely to touch $165 billion and imports to break $173
billion, an increase of 17 percent over 2014. Trade gap is estimated to reach $8 billion,
accounting for 5 percent of total export turnover.
http://www.saigon-gpdaily.com.vn/Business/Economy/2015/9/115243/
Vietnam is likely to achieve a gross domestic product (GDP) growth of 6.4 percent in
2015 despite impacts from currency adjustment and low oil prices, the Ministry of
Planning and Investment said on Monday.
Amid complicated developments in the global and regional markets, the government's
solutions and measures yielded good results, properly controlling the macro-economy
and putting it back on track with positive outcomes, minister Bui Quang Vinh was
quoted by the website of Vietnamese government on Monday as saying.
In August, the Industrial Production Index (IPI) fell 1.3 percent month-on-month but
went up 9 percent year-on-year. In the first eight months, IPI increased by 9.9 percent
compared to the same period of the previous year.
During the month, the country's export turnover stayed at around 14.5 billion US dollars, a month-on-month increase of 2.3 percent and a year-on-year surge of 9.5 percent.
Meanwhile, total retail sales and service revenues were estimated to grow 10.1 percent
compared to the same period in 2014. Recovering purchasing power was expected to
boost production, business, and economic growth, said analysts.
Last month, as many as 9,301 enterprises were set up with a total registered capital of
55.2 trillion dong (around 2.5 billion US dollars), up 41 percent in number of enterprises and 41.9 percent in capital value compared to the previous month.
Earlier, Vietnam's economic growth is set to reach 6.2 percent in 2015.
http://www.globalpost.com/article/6644235/2015/09/07/vietnams-gdp-growth-likelyreach-64- percent-year
8 September 2015 15 / 39
FINANCE
Vietnam finance & business
Vietnam Takes Steps
to Protect Against
Chinese Slowdown
Intellasia
8 September
08/SEP/2015 INTELLASIA| VOA NEWS
Vietnamese business people may be bracing as China, their country's biggest trading
partner, devalues its currency and struggles with economic slowdown. Yet Vietnam is
making bigger changes that could help turn it into a regional factory export powerhouse.
When China let its yuan currency weaken by 3.5 percent in August, Vietnam took immediate notice. The $186 billion Southeast Asian economy, like China's, is led by export manufacturing, and that sector grew nearly 9 percent last year. China's cheaper
currency would let Chinese export manufacturers earn more money offshore, competing with their peers in Vietnam.
Vietnam may also face a flood of Chinese imports as its neighbour to the north leans
more on other countries to escape slowing demand at home. Pham Luu Hung, associate investment advisory director with SSI Research in Hanoi, said low tariffs and problems in China are already increasing shipments of Chinese trucks and steel to Vietnam.
"We share a border with China, so we import a lot from China, so if the economy is
slowing down, I think cheap Chinese products would be easier to come in to flood the
market here," said Hung.
But Vietnam is taking steps to bolster its own exporters. The country of 89 million people and a $50 billion annual trade relationship with China devalued its own currency
in August. The central bank in Hanoi had already let the dong weaken twice earlier in
the year to stoke more foreign investment in country, not offshore.
Vietnam now vies with its neighbours Cambodia and Myanmar to win factories that
produce garments for world export. The Philippines has stepped up construction of infrastructure this year and advertises its English-literate workforce as an incentive for
foreign companies to set up plants.
Like much of developing Southeast Asia, Vietnam has also struggled to find money for
infrastructure that meets demands of international cargo shippers. It accepted development aid from Japan to open a new air terminal in Hanoi this year and ease overcapacity there. More aid went to help build HCM City's yet-to-open metro system.
With stronger infrastructure and labour still relatively cheap, Vietnam also hopes to
win higher-value manufacturing to replace garments. That ambition competes directly
with China's export manufacturing sector. Intel and Samsung Electronics have already
invested billions of dollars in Vietnam since 2010, the possible start of a high-tech hardware industry.
The World Bank's lead Vietnam economist Sandeep Mahajan suggests Vietnam is
making few strategic errors.
"Overall the view is that Vietnam is among the more competitive destinations for FDI
in the region. So the question is how do they leverage that to the maximum extent? In
some sense continuation of the whole model where you have strong growth, that's the
main focus," said Mahajan.
Mahajan said the Vietnamese private sector needs more access to land and finance so
local companies can join the factory supply chain. They might make, for example, tires,
headlights for automotive manufacturing.
Today investors from elsewhere in Asia run most of the plants and China sells parts
and supplies. A boom in private business would also create wealth in a country where
12 percent live below the official poverty line.
Fabian Knopf, a senior associate with the Hanoi office of international business advisory Dezan Shira & Associates, said Vietnam's infrastructure now leads other developing Southeast Asian countries. He also points to a 2 percentage-point cut next year
in Vietnam's corporate income tax as another incentive for investment.
"If you compare that in Cambodia and Laos they do have lower wages for manufacturing workers, they can't provide these packaged services, if you like, on the same level as Vietnam," said Knopf.
Vietnam is also expected to finish a free-trade agreement with the European Union by
2018 and join the US-led Trans Pacific Partnership trading bloc that's on track to cover
nearly a third of the world economy. Both would cut tariffs in Vietnam's major export
8 September 2015 16 / 39
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Vietnam finance & business
8 September
markets but exclude competitors such as China and most other countries in Southeast
Asia.
http://www.voanews.com/content/vietnam-takes-steps-to-protect-against-slowingchinese-economy/2950536.html
Vietnam imports
nearly $18.8b
commodities from
Korea in Jan-Aug
Intellasia
08/SEP/2015 INTELLASIA| BAO DAU TU
Korea provided nearly $18.8 billion equipment, machinery and other raw materials to
Vietnam in the first eight months of 2015.
*Import from Korea is 3.7 times higher than export
With this import value, Vietnam overtook Japan to become the fourth largest foreign
market for Korean exports in the first eight months of 2015.
Data provided by the Korean International Trade Association (KITA) show that, in
January-August 2015, the value of Korean exports to Vietnam reached nearly $18.8 billion, exceeding the over $15 billion that Korea exported to Japan. This is the first time
that Korean's exports to Vietnam surpassed its export to Japan.
Korea continued to be the largest partner in providing computers, electronic products
and components to Vietnam with the import value of $3.89 billion, up 38.9 percent
year-on-year. Following were machinery and equipment with import value worth
$3.12 billion, up 81 percent.
Meanwhile, the import of phones and other types of components from Korea also
amounted to $1.48 billion, up 57.6 percent year-on-year. The steel imports from Korea
were $701 million, up 92.6 year-on-year. With plastics product commodity, the imports also hiked 44 percent, touching $620 million.
Meanwhile, though Vietnam's exports to Korea over the past eight months increased
over 16.5 percent, it just arrived at $5.1 billion (not equal to 1/3 of imports from this
market). Textile was the largest export commodity group to this market with an output
value of $937.7 million, reckoning for 21.3 percent of the total exports, attaining the
growth of 2.8 percent year-on-year. Next were the export of telephones and accessories
with $542.2 million, up 184.2 percent year-on-year, accounting for 12.3 percent of the
total exports to Korea. However, the telephone export was just related to processing
and assembling (most components were imported from Korea, then exported back to
this market) with very little added value.
Some other commodity groups have the export turnover to Korea to be good such as
fuel, raw materials, minerals, crude oil, transport vehicle and spare parts, marine products, wood and wood products, etc.
*Imports will increase sharply when VKFTA takes effect
Vietnam-Korea signed Vietnam-Korea Free Trade Agreement (VKFTA) since May
2015. Under the roadmap, at the beginning of 2016, VKFTA will officially take effect.
Talking with reporters of the local Newswire Bao Dau Tu, Nguyen Xuan Duong, Chair
of the Board of Hung Yen Garment Corporation (Hugaco) said, Korea is the market
that supplies quality fabrics and textile materials to Vietnam, so when tariff lines are
cut following VKFTA commitment with very low tax rate, the import of these items
from Korea will surely rise further.
Currently, Hugaco is trading with 20 Korean customers with the export value of over
$35 million. So, as exports increased, imports will rise respectively to meet production
needs.
The garment industry imported nearly $8 billion fabrics, textile and footwear materials
in seven months of 2015, in which imports from Korea was only second to China with
the value of imports amounting to $1.37 billion.
As per the Ministry of Industry and Trade (MOIT), just as VKFTA takes effect, Vietnam
cuts tariffs with 92.7 percent of import value (as per the figures of 2012), accounting for
89.2 percent of all tariff lines, mainly with industrial goods such as textile and garment
raw materials, plastic materials, electronic components, trucks and passenger cars
from 3000 cc and above, auto parts, electrical appliances, some iron and steel products,
power cables... The majority of these are raw and auxiliary materials that need to be
imported for domestic production, helping to reduce the dependence on imports from
8 September 2015 17 / 39
FINANCE
Vietnam finance & business
8 September
a few other countries.
Bui Huy Son, director of the Trade Promotion Department (MOIT) said, Korea is Vietnam's second largest import market, making up nearly 14 percent of the total import
turnover. However, the disparity in balance between exports and imports with Korea
is increasingly wide. The structural imbalance is evident in the fact that exports to Korea are mainly raw products such as oil, coal, rubber, seafood and low-value items
such as textiles, footwear but Vietnam imports high-value products from this market
including components for Korean businesses in Vietnam to assemble and cars for domestic market, machinery, equipment, etc. It is forecasted that the trade deficit with
Korea will continue rising rapidly in 2016 and the coming years.
RoK tops foreign
investors in Vietnam
Vietnam plans to drop
fines for some tax
defaulters
SME reforms vital to
progress
Intellasia
08/SEP/2015 INTELLASIA| VOV
The Foreign Investment Agency has ranked the Republic of Korea (RoK) with investment of $5.26 billion, representing 39.5 percent of the total, as the top foreign investor
among 55 counties.
The UK ranked second with investment of $1.25 billion, followed by the British Virgin
Islands with $973.6 million and Hong Kong at $867 million.
Foreign businesses have invested in 17 fields, for which the manufacturing and
processing industry led with $10.35 billion in 924 projects.
Manufacturing was followed by real estate with $1.82 billion and the retail industry in
third at $311.08 million.
http://english.vov.vn/Economy/Investment/RoK-tops-foreign-investors-in-Vietnam/
300391.vov
08/SEP/2015 INTELLASIA| THANH NIEN NEWS
The Ministry of Finance plans to forgo fines imposed on businesses which were behind
their tax due date if their partners, including state agencies, had failed to pay them on
time in accordance with contract terms.
In a draft to be submitted to the National Assembly for approval, the ministry plans to
relieve the businesses of additional tax expenses that arose before July 1, 2013, as long
as they can clear their back taxes by this December 31.
Tax agencies may also stop looking for tax defaulters who had unpaid taxes before July
2013 and have shut down their businesses since. The purpose is to avoid increasing tax
collection costs.
Pham Dinh Thi, chief of tax policies department under the finance ministry, told a local
newspaper that tax dues of companies that have shut down are around VND9 trillion
(US$394.16 million).
In July the finance ministry released a list of 600 top defaulters around the country in
an attempt to shame them into paying their back taxes estimated over VND12.65 trillion ($573.38 million) as of June 30.
The move sent many businesses rushing to make their payments. In Hanoi, for instance, 175 out of 268 listed tax defaulters have so far paid more than VND1.1 trillion
($48.17 million).
However, many others such as mobile phone retailer The Gioi Di Dong complained
that they were mistakenly shamed and later had their names cleared.
http://www.thanhniennews.com/business/vietnam-plans-to-drop-fines-for-some-taxdefaulters-51077.html
08/SEP/2015 INTELLASIA| VOV
Local small- and medium-sized enterprises (SMEs) need to reform themselves and
also need support from the State to survive and develop as further economic integration takes place once Vietnam signs free trade deals with partners, experts said.
Now, the SMEs account for 96 percent of the total number of enterprises in Vietnam
whose operations and finance are on a small scale and which have low competitive
ability, according to the General Statistical Office.
Meanwhile, economic experts said most of the SMEs did not have much knowledge
8 September 2015 18 / 39
FINANCE
Vietnam finance & business
8 September
about global economic integration and do not know how and what to do as the economy integrates further with the global structure, the Tin tuc (News) newspaper reported.
The SMEs also do not know the demand of the world market, neither do they know
the world quality standards and commercial rules, the experts said.
A representative of the HCM City Food Association said 80 percent of the members at
the association are SMEs who did not have access to information about international
economic integration.
Cao Sy Kiem, chair of the Vietnam Association of Small and Medium Enterprises, said
key issues for the SME as well as local enterprises in general include the need to improve their competitive ability by diversifying products and ensuring reasonable selling price.
To achieve the targets, he proposed that interest rates for medium- and long-term
loans should be at 7 percent per annum against 9 percent to help enterprises have attractive sale price.
Kiem said the state should come up with ways to enhance the number of skilled workers in enterprises and use of modern production technology to improve competitiveness of the enterprises. This was necessary because Vietnam lacks good managers and
policy makers as well as skilled workers.
CEO Dang Duc Thanh, head of the Vietnam Economist Club, said Vietnam has in the
past improved its business environment to integrate into the global economy but the
nation does not have many strong enterprises that are highly competitive and efficient.
To reach the targets, the State Bank should adjust credit structures to focus credit on
production, business, rural area, exports, supporting industry and SMEs, Thanh said.
The state should build and develop a system of economic policies to support the SMEs
in production and business and credit guarantee funds for SMEs, said Thanh, adding
that the state should also reform administrative procedures and complete the legal system to protect the SMEs as well as local enterprises in general.
Dau Anh Tuan, head of the Legal Department under the Vietnam Chamber of Commerce and Industry, said information, support and consulting for enterprises as they
integrate into the world economy are very important. Therefore, the state should provide information about what free trade agreements will involve. That would help local
enterprises to take appropriate steps in the areas of production and business to integrate better with global system.
http://english.vov.vn/Economy/SME-reforms-vital-to-progress/300429.vov
VN plans five IPOs
this month
Intellasia
08/SEP/2015 INTELLASIA| VIR
The Hanoi Stock Exchange (HNX) plans to organise this month five initial public offerings (IPOs) for State-owned enterprises to sell their stakes to external investors.
The Vietnam National Vegetable, Fruit and Agricultural Product Corporation (Vegetexco) has successfully sold all the shares that were offered during the company's initial public offerings (IPO) on September 4.
Six investors took part in the IPO and signed up to buy 31.25 million shares while the
company offered only 26.67 million shares through the IPO, equal to 39 per cent of the
company's capital.
The company sold its shares at an average of VND10,052 per share, bringing the worth
of the auctioned shares to a total of VND278 billion ($12.4 million).
After the IPO, Vegetexco will sell the rest of its capital to T&T Group, Sai Gon-Hanoi
Insurance Corporation and Art Export as well as the company's employees.
These investors will hold 35 per cent, 15 per cent and 10 per cent of Vegetexco, respectively, while the company's employees will hold only one per cent of the capital.
Vegetexco now has a chartered capital of VND731 billion ($32.5 million) and operates
in processing, importing and exporting vegetable and agricultural products. In the
first half of this year, the company recorded a net profit of VND19.6 billion, an increase
of 17 per cent over a year.
Beside Vegetexco, the HNX will also organise IPOs for four other State-owned compa8 September 2015 19 / 39
FINANCE
Vietnam finance & business
8 September
nies, including the Vietnam National Tea Corporation (Vinatea).
Vinatea plans to organise its IPO on September 16 to sell nearly 11.8 million shares,
equal to 31.9 per cent of the company's capital, to public investors, at a price of
VND10,000 per share.
After the IPO, Vinatea is expected to have a chartered capital of VND370 billion ($16.4
million) and will sell more than 1.6 million shares - 4.4 per cent of the capital - to its
employees and more than 23.5 million shares - 63.7 per cent of the capital - to a strategic
investor, namely Thong Nhat Production and Investment Co (GTN).
In addition, the HNX will also organise five auctions so that the State can divest capital
in five other state-owned companies.
Last month, HNX organised seven auctions, including four IPOs and three auctions,
to help the State make divestments, in which 70 per cent of a total 57 million shares offered in the auctions were sold, garnering a total return of VND518.3 billion ($23 million) for the State.
Of these seven auctions, in five the HNX sold all the shares to ensure a return of
VND516 billion ($22.9 million) for the State, including two IPOs and three auctions
held to divest the State's share in these companies.
http://www.vir.com.vn/vn-plans-five-ipos-this-month.html
Transport
infrastructure
investment should not
burden residents,
experts
Intellasia
08/SEP/2015 INTELLASIA| SGGP
Vietnam needs about VND1,015 trillion (US$45.18 billion) for traffic infrastructure development in the 2016-2020 period which the state budget can meet only 28 percent, so
social capital mobilisation is necessary, said experts at seminar hosted by the Vietnam
Institute of Economics in Hanoi on Monday. However, they added that the use of this
capital source should be careful to avoid a heavy burden on the shoulder of road users.
According to the Ministry of Transport, social investment attraction in traffic infrastructure with Public Private Partnership (PPP) form has been conducted since 2011.
Attracted fund hit the record of VND68,563 billion (US$3.05 billion) in 2013.
It was estimated to reach VND42,572 billion (US$1.89 billion) in 2014 and is expected
to touch VND45 trillion (US$2 billion) this year, taking the total number to over
VND200 trillion (US$8.9 billion).
Annual social capital source invested in this field usually double the number from the
state budget, easing pressure on the government and ensuring the progress of restructuring plans in the transport industry, the experts said.
Dr Huynh The Du, lecturer of Fulbright economic programme in Vietnam, said international experiences have showed that when GDP per capita of a country hit $3,000,
infrastructure investment will see a boom. Vietnam is going to enter this phase.
If the country continues spending 4 percent GDP on traffic infrastructure as it has done
for the last two decades and GDP growth rate reaches 7 percent a year by 2035, capital
invested in traffic infrastructure will total $350 billion.
Its investment fund is less than 2 percent GDP-a high rate compared to that in nations
with the same development level as Vietnam, the number will approximate $200 billion.
Head of PPP project management board under the Ministry of Transport Nguyen
Danh Huy said PPP model significant to nations with limited budget like Vietnam,
however, it might damage the community in case the government makes too much
concession or investors collect high toll fee in long time.
Sharing the same view, professor La Ngoc Khue, former deputy minister of Transport,
said it misunderstood to think that road construction was easy to attract social capital,
a solution for budget shortage.
For profit, investors comprising those under BOT (build-operate-transfer) form will
try to increase their works' prices and toll level and lengthen toll collection time, which
will put a heavy financial burden on road users' shoulders, hike input costs of the economy and rocket total social investment level, he added.
Therefore, experts proposed authorised agencies to consider risks from using social
capital source in this issue. They also agreed that there should have a law on PPP cre8 September 2015 20 / 39
FINANCE
Vietnam finance & business
8 September
ating legal conditions for private firms to access and use official development assistance capital.
http://www.saigon-gpdaily.com.vn/National/2015/9/115258/
Policy, financial
hurdles stymie
Vietnam auto industry
Intellasia
08/SEP/2015 INTELLASIA| THANH NIEN NEWS
Auto maker Vinaxuki recently announced plans to sell its plant in Hanoi's Me Linh
District to repay its debts amid prolonged losses.
It has laid off most of its employees leaving mainly security guards in a factory that
used to employ hundreds of workers and engineers.
It owed VND1.6 trillion ($72.7 million) to banks as of late last year and VND 17.7 billion in taxes as of late June besides VND9.8 billion for employees' social and health insurance premiums in 2014.
The company has yet to make public the reasons for its business failure, but its director, Bui Ngoc Huyen, has told reporters on several occasions that difficulties in getting
loans and high taxes imposed on domestically produced cars have stymied the development of local car makers. They can only get loans for one to three years whereas the
industry requires long-term investment.
The high taxes make locally made cars too expensive, he said.
In Vietnam, cars are subject to a slew of tariffs and fees like import, value-added and
special consumption taxes and registration fees. As a result, automobiles cost twice as
much as they do in other Southeast Asian countries like Thailand and Indonesia.
Last December the Chu Lai Open Economic Zone in the central Quang Nam Province
canceled the investment license it had issued for the country's first car engine factory
after its investor, the HCM City-based Truong Hai Automobile JSC, failed to begin
work on it.
When work began in 2012, the $185.5 million plant was to have produced several major components for car engines, including the body, and later transfer technologies to
local producers.
A lot of hopes were pinned on it for developing Vietnam's supporting industries and
increasing local content in automobile production.
But the project was delayed for years due to difficulties in meeting the emission standards set by the government.
Due to the delay, South Korean partner Hyundai Motor Corporation last January announced its withdrawal from the project. It said a technology transfer contract it had
signed with Truong Hai Automobile SJC had expired, and the delay would affect its
production and sales plans in Asean member countries.
Without Hyundai, Truong Hai could not go ahead with the plant.
The failure is a huge setback to the dream of making cars in Vietnam.
The automobile industry has been focusing mainly on assembling in the last two decades since it was established.
Its future looks even bleaker considering Vietnam is set to reduce and then eliminate
in 2018 import tariffs under its Asean Free Trade Agreement (Afta) commitments.
Vehicles are now subject to an import tax of 50-70 percent, but once the tax goes it will
be difficult for domestic manufacturers to compete with imports. Vietnam imports
most components or vehicles in knocked-down form, which are subject to a tariff of 1030 percent.
This means cars cost 20 percent more to make in Vietnam than in other Asean countries, according to the Vietnam Automobile Manufacturers' Association (VAMA).
This encourages foreign firms to shift their focus away from production to merely selling imported products.
Pham Tat Thang, an economist at the Ministry of Industry and Trade's Trade Research
Institute, said foreign auto companies invest in Vietnam partly because of the incentives offered by the government to protect local production and the country's low-cost
labour.
When the country no longer has these advantages, they would obviously wind up production here, he said.
8 September 2015 21 / 39
FINANCE
Vietnam finance & business
8 September
A similar trend is being witnessed in the electronics sector. In 2008 Sony shut down its
plant here after 18 years of operation, and switched to importing its products made in
other countries.
Others like Canon, Sharp, and LG have also started to depend on imports.
Vietnam's auto imports hit $3.8 billion in the first eight months, a five-year high and
an increase of more than 80 percent from the same period last year, according to the
General Statistical Office.
This included $1.9 billion spent on more than 74,000 imported cars, nearly double last
year's number. The rest was for auto parts and accessories.
Government to back industry
Despite being protected for the past two decades, local auto makers have not developed as strongly as had been hoped.
The industry failed to achieve the government's goal of producing 50-90 percent of engine parts by 2010.
Some 210 businesses are in supporting industries, but they are small and mediumsized enterprises that mostly produce a few simple parts.
The country's auto market remains small compared to the rest of Southeast Asia. In
2012 it was half the size of the Philippine market, a fifth of Malaysia's, and a 24th of
Thailand's.
There are opinions that Vietnam should not continue to develop the industry because
it does not benefit the economy much. Critics say the government has failed to protect
consumers' interests - by disallowing them access to cheap imports - and has instead
protected an auto industry that has been ailing for years despite many incentives.
But deputy minister of Industry and Trade Tran Tuan Anh, says: "Vietnam is a new
market, the automobile industry is still in the early stages. I respect the business ways
of both domestic and foreign invested enterprises.
"The auto industry will be developed as planned."
Economist Nguyen Mai said there is no reason for a country with a population of 90
million not to have a developed automobile industry. "The most important thing is
that we have to have a suitable development policy."
A strategy approved by prime minister Nguyen Tan Dung in July envisages production of 227,500 cars by 2020, 237,900 by 2025 and 1.5 million by 2035.
It also seeks to increase the ratio of domestically made components to 30-40 percent by
2020. The average rate now hovers at around 10 percent. Only a few manufacturers exceed 30 percent despite the fact that the industry had committed to gradually produce
cars that were 100 percent locally made.
One of the hurdles facing the industry thus far is the contradictions among local authorities in defining policies.
Le Quoc Phuong, deputy head of the Ministry of Industry and Trade's Centre of Industry and Trade Information, said the government wants to grow the automobile industry, but the Ministry of Finance slaps high taxes and fees to limit private vehicles
because of poor infrastructure.
This kind of working at cross-purposes has been one of the reasons for the industry's
sluggish development, he said.
Vietnam has 18 foreign and 38 local car makers with a total annual output of some
460,000 vehicles, according to the ministry.
http://www.thanhniennews.com/business/policy-financial-hurdles-stymie-vietnamauto-industry-51033.html
Weaker VND drives
cash to real estate
market
Intellasia
08/SEP/2015 INTELLASIA| VNN
The dong devaluation has caused changes to the cash flow: it will help heat up the real
estate market. However, the dong/dollar exchange rate adjustment will not influence
property prices.
VTC News quoted a report of CBRE, a real estate service provider, as saying that the
real estate prices would not be affected much by the dong depreciation.
The supply comes mostly from domestic investors, while foreign investors only pro8 September 2015 22 / 39
FINANCE
Vietnam finance & business
8 September
vide 10 percent of products.
However, CBRE has warned that the selling prices will be affected once the dong depreciation leads to higher inflation.
The dong has depreciated by -0.9-5.8 percent per annum, while the average apartment
price in Hanoi fluctuated by -11-13 percent per annum in the last five years.
According to the consultant, real estate prices affect supply and demand more than the
exchange rate.
To some extent, the dong price fluctuation may affect the selling prices in the future.
Only the investors who have imported materials for their projects will not be hurt by
the more expensive dollar.
Foreign investors, whose targeted profits are calculated in dollars, may have to raise
the selling price in dong, even though the exchange rate fluctuations had been considered in their investment plans.
However, as only 10 percent of projects are implemented by foreign investors, a possible rise in rice prices will not affect the market.
CBRE's analysts noted that investors will pay more attention to the real estate market
as a result of the weak dong.
The forecasts about the US FED's possible move to raise the prime interest rate has appreciated the greenback and made gold less attractive. The gold price dropped to a 5year low in early August.
Tran Thanh Hai, president of VGB, a gold & investment company, also said that the
cash would flow from bank deposits to the real estate market, and that cash flow was
'inevitable'.
Hai believes that the houses priced at around VND1.5 billion would be the best sellers
in the time to come.
Meanwhile, an analyst said he doubts the dong depreciation would warm up the real
estate market.
"The announcement on the dong devaluation was released a couple of weeks ago. The
real estate price has dropped to its deepest low as commented by analysts. Why hasn't
the price gone up yet?" he said.
According to the analyst, the Chinese yuan devaluation will in no way affect Chinese
investment in the Vietnamese real estate sector.
China has registered $8 billion worth of investment projects in Vietnam, but mostly in
the fields of manufacturing and infrastructure.
http://english.vietnamnet.vn/fms/business/140685/weaker-vnd-drives-cash-to-realestate-market.html
Revised law on
foreign property
ownership has issues
to iron out
Intellasia
08/SEP/2015 INTELLASIA| VIR
The HCM City Real Estate Association made suggestions to the Ministry of Construction and related ministries, which are currently drafting decrees to guide the recent revised Laws on Housing and Real Estate Businesses.
The association proposed easing the maximum limitation of houses owned by foreigners within a certain project. In addition, they suggested raising the ownership duration, and crucially, extended visas for foreign property owners in Vietnam.
The main concern from the HCM City Real Estate Association (HOREA) related to the
limitation of houses owned by foreigners in a certain project. The revised law stipulates that foreigners are allowed to buy a maximum of 30 per cent of total units in a
certain project, or less than 250 houses in every commune. In cases where there are a
very high number of apartment buildings in a commune, the percentage of apartments
legally available to foreigners will be decided by the government.
This limitation, HOREA said, should be eased in localities where many foreigners currently reside, such as Hanoi, HCM City, Danang, Khanh Hoa, Quang Ninh, Hai
Phong, Binh Duong, Dong Nai, Ba Ria - Vung Tau, Binh Thuan, and Kien Giang.
In a statement from HOREA, the association said, "We propose that the government
and various ministries ease this limitation to create more favourable conditions for local authorities in implementing the revised laws."
8 September 2015 23 / 39
BUSINESS
Vietnam finance & business
8 September
This limitation, it said, could be assigned to the local people's committee to decide how
many per cent of their area should be occupied by foreigners.
The revised laws also stipulate that foreigners would have ownership of their house
for a 50-year period only, and, should the house be sold on, the new owners would
only retain ownership for the remainder of the initial 50-year limit.
HOREA stated that this issue was not suitable and suggested that the time limit be renewed when the house is transferred to the new owner. In addition, HOREA requested that the government clearly point out the areas where foreigners are not allowed to
buy housing due to national security concerns.
The association also asked the Ministry of Construction and the State Bank to map out
the regulations for foreigners to transfer their money or get loans from banks to buy a
property in Vietnam. They stressed that the regulation to transfer their money to
abroad after selling the house must also be perfectly clear.
Regarding the granting of visas, the association suggested visas from one to three
years for foreigners who buy a house in Vietnam.
http://www.vir.com.vn/revised-law-on-foreign-property-ownership-has-issues-toiron-out.html
B I Z N EW S
BUSINESS
Business Brief Sep 08
08/SEP/2015 INTELLASIA
* State Capital Investment Corporation will acquire 750,000 shares ofFPT Corporation
(FPT) to raise its holding to 1.7 million shares (0.45 percent) from September 8 to October 6.
* The Southern Rubber Industry Company (CSM) has floated 6.7 million shares on the
Hochiminh Stock Exchange to raise its total outstanding volume to over 74 million
shares. The new shares will be tradable on September 11.
* Viet Fund has registered to sell 500,000 shares of Vietnam Sun Corporation (VNS) to
lower its holding by 0.7 percentage point to 8.4 percent over one month starting from
September 8. HCM City - Dry Cell and Storage Battery Company (PAC) said it would
pay a 2015 first round dividend in cash for shareholders at 8 percent within September.
* Hoang Quan Consulting - Trading - Service Real Estate Corporation (HQC) will issue
137 million shares to merge with four companies namely Hoang Quan Binh Thuan
Consulting - Trading - Service Real Estate JSC, Hoang Quan Can Tho Real Estate Investment JSC, IC Real Corporation and Binh Minh Port JSC. The share swap ratio is 1:1.
After the merger, HQC expects to raise its registered capital to VND3.37 trillion
(US$151.12 million) from the current VND2 trillion. HQC is 12.5 percent owned by
Hoang Quan Mekong Corporation, 10 percent by Bao Linh Housing Development &
Construction Investment JSC, 6.83 percent by Binh Thuan Housing Business & Construction JSC and 7.74 percent by Mutual Fund Elite. HQC's net profit jumped 10.2
folds year-on-year to VND51.14 billion in the first half of this year. Its revenue soared
to VND600.6 billion in January-June from VND5 billion in the same period of2014, Viet
Capital Securities Company reports.
* Xuyen Viet Investment Company has registered to buy 802,600 shares of Beton 6 Corporation (BT6) to scale up its ownership from 20 percent to 20.6 percent over three
weeks starting from September 10.
* Vinacontrol Group Corporation (VNC) plans to advance a 2015 first round dividend
in cash for shareholders at 7 percent on September 5.
* Vnstone Company has registered to buy 400,000 shares ofVmavico Company (CTA)
to raise its holding by four percentage points to 10.5 percent aver one month starting
from September 8.
* Vietjet Aviation Joint Stock Co. (Vietjet) will operate services from Hanoi and HCM
City to Pleiku in the Central Highlands province of Gia Lai on October 1. The no-frills
carrier's aircraft will depart from Hanoi at 2:55 p.m. and arrive in Pleiku City at 4:30
p.m. while the return flight will take off at 5:10 p.m. and arrive at 6:45 p.m. Meanwhile,
Intellasia
8 September 2015 24 / 39
BUSINESS
Vietnam finance & business
8 September
Vietjet's flights in HCM City will leave Tan Son Nhat airport at 4:35 p.m. and Pleiku at
6:10 p.m. Flying time is one hour. Pleiku Airport resumed operation over the weekend
with a runway and taxiway upgraded and new aircraft stands built after more than
five months of closure.
Brokerages forecast
continued low
liquidity this week
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
VN Realty Dealbook:
Hung Thinh Corp
buys condo project;
US firm invests $120m
in industrial park
08/SEP/2015 INTELLASIA| DEALSTREETASIA
Intellasia
Securities brokerages have predicted the stock markets in HCM City and Hanoi would
continue to experience low liquidity this week as investors could keep a wait-and-see
attitude due to a lack of supporting news.
Viet Dragon Securities Company said in a recent report that investors' cautious sentiment caused matching volumes on the two bourses to decline last week. Stock traders
continue to keep a close watch on market developments, so the markets would not rise
in the next few days.
The two markets were lackluster last week as investors were in a holiday mood for the
National Day on September 2. Closing last Friday, the main index fell 2.46 percent
against the previous week to 556.81 points and the HNX-Index shed 2.49 percent to
76.32 points.
Liquidity stayed low on both bourses as investors changed hands 85.6 million shares
on the HCM City market, down 41 percent, and 35.9 million shares on the Hanoi
bourse, a 30 percent decline.
After four straight sessions of winning, profit-taking pressure hit the markets last
Monday. However, slight slides in petroleum and bank stocks helped prevent the markets from a strong drop.
The VN Index continued to go down at the following session on September 1, one day
before the National Day holiday.
The market downtrend extended into last Thursday as demand was weak after sessions of losses. Falling oil prices on world markets sent GAS down, taking away two
points from the main index.
The HCM City bourse bounced back last Friday after three consecutive sessions closing in the red as large-cap laggards such as MSN and GAS recovered. However, liquidity hit three-month lows due to the holiday mood.
Three tickers BID, PDR and TTF are added to the FTSE Vietnam Index following the
announcement of its review results and ultimately added to exchange traded fund DB
FTSE Vietnam in the next two weeks. Therefore, it is likely that these tickers will attract
buyers this week.
Foreign investors shifted to the selling side on the HCM City market. They net sold
VND546.8 billion worth of shares, chiefly HAG, VIC and PVD, while picking BID and
DCM shares valued at VND35 billion and VND23.5 billion respectively.
Foreigners maintained their net buying position on the Hanoi bourse with a net buying
value of VND18.3 billion. They acquired NDN and VND shares and offloaded PVS
shares.
http://english.thesaigontimes.vn/42885/Brokerages-forecast-continued-low-liquiditythis-week.html
Real estate market in Vietnam has seen some investment action coming in both from
local and overseas investors. There has been an acquisition activity in a Vung Tau Citybased condo project, while US-based Trillions Enterprise, has got the approval to initially invest $120 million in the Tan Duc Industrial Park, developed and managed by
Tan Tao Investment Industrial JSC.
Hung Thinh Corp acquires Vung Tau-based Bau Sen project
HCM City-headquartered real estate company Hung Thinh Corporation has reportedly taken over the Bau Sen apartment project in the coastal city Vung Tau from Ba Ria Vung Tau Urban Development and Construction Corp (UDEC), according to local media reports.
Hung Thinh will re-brand the project as the Vung Tau Melody. UDEC invested in the
8 September 2015 25 / 39
BUSINESS
Vietnam finance & business
8 September
project in 2008.
The Bau Sen condominium project is located in a 9,600 square metre area near the sea
in Vung Tau City, south of Vietnam. UDEC intended to build two 25-storey blocks of
apartments and has finished 14 storeys with an investment of VND533 billion ($23.8
million).
However, as the company ran short of capital for the development, reported the
cafef.vn, it sold the entire project to Hung Thinh to use the proceeds to pay bank loans.
The value of the deal was not disclosed.
Hung Thinh will increase the capacity of the project to 26 storeys with a total of 840
apartments.
"Competition in the HCM City property market is increasingly fierce, while Vung Tau
City boasts a great tourism potential but the supply of apartments is very limited," the
Nhipcaudautu.vn cited Hung Thinh's CEO Nguyen Nam Hien as he spoke about the
new acquired project.
Meanwhile, in the recent M&A Forum in HCM City, Hung Thinh's chair Nguyen Dinh
Trung revealed that his company has been purchasing or forming alliance to develop
realty projects in the country in the past two years.
American firm invests $120m in Vietnam-based industrial park
The Vietnamese ministries of science and technology, and natural resources and environment, along with the Long Anh provincial committee have granted approval for a
US-based firm called Trillions Enterprise to invest in the Tan Duc Industrial Park, Tan
Tao Investment Industrial JSC - the developer of the park has announced.
The company said, the US firm will invest $120 million in a 30-hectare complex inside
the industrial park to provide products for global sports wear companies Adidas and
Nike, as well as to tap the opportunities for the industry from the Trans-Pacific Partnership (TPP). Trillions Enterprise will partner with other American firms, including
CHA Technologies Group and Cosmo Fabric, in the production.
Meanwhile, the Vietnamese company said, it had leased spaces in two industrial
parks, Tan Duc and Tan Tao, to 15 investors in the first half of 2015, representing a 1.5
time increase over the same period in 2014.
Footwear, along with garments and textiles, will enjoy the most benefits from the TPP
once Vietnam joins the partnership, due to tax incentives from the agreement. According to the Vietnam Leather, Footwear and Handbag Association, in the first half of
2014, a lot of the world's sports wear manufacturers such as Nike, Adidas and Puma
had switched their production base from China and Bangladesh to Vietnam.
http://www.dealstreetasia.com/stories/vn-realty-dealbook-hung-thinh-corp-buyscondo-project-us-firm-invests-120m-in-industrial-park-11763/
Apparel and footwear
lead surge in exports
Rice exchange
proposed for Mekong
Delta
Intellasia
08/SEP/2015 INTELLASIA| VOV
Manufacturers based out of Vietnam producing goods in the apparel/textile and footwear/leather industries led the pack in exports for the eight months leading up to September, according to Vietnam Textile and Garment Association (VITAS).
In the eight months January-August, apparel/textile exports jumped 10.9 percent yearon-year to $15 billion while leather/footwear exports surged by nearly 21 percent to
$8.1 billion.
VITAS said the recent currency devaluation by China has had little or no impact on exports to date, but in the long run will likely put increased downward pressure on export revenues.
http://english.vov.vn/Economy/Trade/Apparel-and-footwear-lead-surge-in-exports/
300393.vov
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
The Mekong Delta should open a rice exchange on a trial basis and enhance cooperation among government agencies, enterprises and farmers to promote the consumption of the staple food.
Nguyen Minh Toai, director of the Can Tho Department of Industry and Trade, pro8 September 2015 26 / 39
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8 September
posed establishing the exchange for rice in the Mekong Delta at a discussion on solutions to improve the value and spur the consumption of agricultural products as part
of the Mekong Connect CEO Forum 2015 in Can Tho City last week.
Toai said the success of the trading floor required the participation of large groups of
farmers who produce rice on hundreds of hectares in total and in accordance with the
same quality process to provide sufficient rice stock for the exchange.
He suggested that government agencies help farmers dry and store rice for free until
volume is big enough for transactions on the trading floor at prices agreed by farmers.
Via the exchange, enterprises will know the prices offered by farmers and origin of the
rice products they want to buy.
The trading floor is expected to bring about win-win deals for both farmers and enterprises. Toan said once it has become a popular venue for rice sellers and buyers, the
government could stop its huge funding for annual programmes to buy rice for temporary storage to support domestic rice prices. The funding will be used to provide
farmers with interest-free loans equivalent to 50 percent of the value of their rice for
the exchange to invest in their farming of quality paddy.
Economic expert Le Dang Doanh said the idea of setting up such a trading floor for agricultural products has been planned for years but certain conditions should be met to
translate it into reality.
The successful operation of the exchange requires products meeting safety and quality
standards and sufficient rice volumes for transactions. In addition, the exchange
should be established for domestic transactions only in the initial phase of operation
but opened for foreign firms in the long run given Vietnam's deeper international integration.
Doanh emphasized the importance of having clear rules and regulations for rice transactions at the trading floor.
According to the Ministry of Agriculture and Rural Development, the Mekong Delta
has about four million hectares under paddy (unhusked rice) production with around
24-25 million tonnes a year, accounting for 53 percent of the country's total volume.
In the past three years, Vietnam has exported 7-8 million tonnes of rice via different
channels every year and rice production in the Mekong Delta has accounted for 90 percent of the nation's total.
Data of the ministry showed Vietnam obtained a free-on-board value of $1.76 billion
for shipping abroad nearly 4.1 million tonnes of rice in the year to August, down 8.6
percent in volume and 13.1 percent in value year-on-year.
However, prices of both fresh paddy and rice have been stable in the Mekong Delta in
recent weeks. For example, a kilo of IR 50404 paddy was sold at VND4,250-4,300 over
the weekend while traders bought a kilo of rice at VND6,250-6,300, equivalent to those
early this week.
http://english.thesaigontimes.vn/42876/Rice-exchange-proposed-for-Mekong-Delta.html
Vietnam farmers'
income still too low
Intellasia
08/SEP/2015 INTELLASIA| VNN
Living conditions have improved generally but the added value in agriculture per
each labourer in Vietnam was at a standstill over the past decade, and not commensurate with economic growth, according to a survey conducted by the Central Institute
for Economic Management (CIEM).
According to the survey, poverty is still a problem in rural Vietnam, though rural areas
have changed. Many households are even poorer. Among Southeast Asian nations,
GDP per capita in rural Vietnam is only higher than Cambodia.
When will the farmer's lives get better?
The proportion of people living in rural areas account for 70 percent of Vietnam's population. The population still faces many difficulties in their daily lives.
"Forty kilogram of lemons are priced VND6,000, even less than the price of a loaf of
bread in the city; the price of 2 kilogram of sweet potatoes is enough to buy a glass of
iced tea, how can peasants live with their crops?" a reader Minh Trang said.
8 September 2015 27 / 39
BUSINESS
Vietnam finance & business
8 September
Hoang Kim from Dak Lak Province said: "The Vietnamese farmers have been struggling with the problem: which cattle and poultry should they breed and what crops
should they plant to escape from poverty. After only one poor harvest, the farmer will
almost become poor."
Many people proposed that the State should support farmers to create brands for agricultural products, to deal with falling prices for agricultural products when farmers
have a bumper crop.
Risk of lagging behind
Dr Ngo Tri Long, former deputy director of the Institute for Market Price Research,
said lagging behind was no longer a risk, and that it had already occurred.
Long said the state has realised the difficulties of agriculture and encouraged all economic sectors to create high productivity, but this policy has not been effective. The
biggest shortcoming is that the policies and plans have not been implemented,
checked and reviewed properly.
The output market is a vitally important issue and problematic in agricultural production, but it has not been solved yet. The gap between the rich and the poor is widening.
Dr Ngo Tri Long said: "GDP is low due to low productivity, efficiency and employment levels. The economic picture in rural areas is very bleak, and it has yet to reach
the set target, and is not commensurate with the potential, so the farmers are suffering."
"Lagging behind is not a risk but it exists. It's alarming!" Long said.
Economic expert Dr Huynh The Du, lecturer at the Fulbright Economics Teaching Programme, said: "The percentage of people working in agriculture is very high, but the
state's policies have not reached them or they have not fit the actual situation. The rate
of skilled labourers who are unemployed remains a serious matter in the economy."
Luu Duc Khai, Head of the Rural Development Policy Department of the CIEM, said:
"Vietnam's labour productivity is lower than other countries because of land fragmentation and poor mechanisation. The value of agricultural production is low so the income of farmers is also low."
"The rural population accounts for 2/3 of the total population of Vietnam, workers in
agriculture account for 46-47 percent, but the value of agriculture in GDP is only
around 20 percent. The data demonstrates that the agricultural labour productivity is
very low and it is lower in comparison with that of other countries in Southeast Asia,"
Khai said.
Khai pointed out two main reasons: the scale of agricultural production of Vietnamese
farmer households is too small, while mechanisation is still low; the value of agricultural products is also low. Vietnam also lacks a connection between farmers and businesses.
Economic experts Ngo Tri Long added that in the integration trend, when comparing
Vietnam with other countries, we can see that barriers from administrative formalities,
investment environment or high fees and charges are affecting investment in agriculture.
That's why part of young, healthy and skilled labourers in rural areas migrate to urban
areas, not investing in production at home. This worsens the economic situation in
these areas.
Luu Duc Khai said the satisfaction of people in rural areas has fallen compared with
previous years. When people are unhappy about life, they cannot ensure stable production.
Previously, the survey "Perception of citizens of the State and Vietnam market" in 2014
by the Vietnam Chamber of Commerce and Industry (VCCI) and the World Bank
showed that up to 81 percent of people said they were unsatisfied with the current situation of the economy.
http://english.vietnamnet.vn/fms/special-reports/140524/vietnam-farmers-incomestill-too-low.html
Intellasia
8 September 2015 28 / 39
BUSINESS
Vietnam finance & business
Mekong Delta's sugar
plants in risk of
material shortage
GE to supply steam
turbines for thermal
power plant
Intellasia
8 September
08/SEP/2015 INTELLASIA| SGGP
Sugar plants in the Mekong Delta have entered their 2015-2016 production season
amid alarming fall of sugarcane area.
The sugarcane area dropped 50 percent to only 700 hectares in Ca Mau province last
year. Similar condition has also occurred in other provinces of the delta.
Chair of the Vietnam Sugar and Sugarcane Association Nguyen Thanh Long said that
the Mekong Delta's sugar industry has faced many challenges comprising sugarcane
area drop, which require processing plants to cooperate with farmers to overcome.
The association has reported a year-on-year reduction of 6,000 hectares to only 41,880
hectares in the delta this crop.
A leader of Kien Giang sugar plant said that practical area might be lower than that.
Kien Giang province alone has less than 2,000 hectares not 4,600 hectares as per the association's report.
Plants have also faced difficulties in purchasing materials with regulations on commercial cane sugar (CCS) by the Ministry of Agriculture and Rural Development, that
rule that businesses are just allowed to buy sugarcane reaching at least nine CCS.
Representatives from Can Tho sugar company and the Department of Science and
Technology in Hau Giang province said that they had conducted many inspections but
yet to find any sample meet the requirement.
Deputy Chair of the Hau Giang province People's Committee Truong Canh Tuyen
asked sugar plants to just start the production season when sugarcane fields have been
mature enough for harvest to ensure high CCS.
Sugar plants have agreed with paying the floor price of VND860 a kilogram of 10 CCS
sugarcanes, VND119 higher than requirement by the Ministry of Agriculture and Rural Development.
However, that price is said not high enough to prevent sugarcane farmers from quitting.
Phung Hiep district, Hau Giang province is one of three largest sugarcane zones in the
delta with 11,500 hectares.
Director of the provincial Department of Agriculture and Rural Development Nguyen
Van Dong said that sugarcane growers have earned less than rice growers. The province's efforts have been able to sustain 10,000 hectares of sugarcane area, a reduction
of 1,500 hectares.
Authorised agencies should paid attention to control import sugar which has flowed
into local market and to help farmers reduce sugarcane cost prices.
http://www.saigon-gpdaily.com.vn/National/Society/2015/9/115244/
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
General Electric (GE) has announced a plan to supply two sets of steam turbines and
generators for Long Phu 1 coal-fired power plant in the Mekong Delta province of Soc
Trang.
The thermal power facility will use two GE D850 steam turbines, configured to enhance the construction timeline with pre-assembled sections and installation features
that shorten erection time. The first set of steam turbines and generators is scheduled
for delivery to the plant late this year.
Russia-based OJSC Power Machines and PetroVietnam Technical Services Corporation are involved in an EPC consortium to develop the power project of Vietnam National Oil and Gas Group (PetroVietnam).
The plant is said to be of higher efficiency and more environmentally friendly compared to conventional subcritical boiler technology, and can generate 1,200 megawatts
( MW) once fully online by the end of 2018. The 1,200 MW is equivalent power needed
for around four million Vietnamese households.
The thermal power plant will help meet growing energy demands in southern Vietnam and improve transmission efficiencies for the entire country, Nguyen Tien Vinh,
general manager of power division at PetroVietnam, said in a statement.
8 September 2015 29 / 39
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Vietnam finance & business
Self-defence measures
considered for
imported MSG
08/SEP/2015 INTELLASIA| VNA
Kien Giang's island to
access national power
grid
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
Intellasia
8 September
The Ministry of Industry and Trade (MoIT) will carry out inspections on imported
monosodium glutamate (MSG) after Taiwanese company Vedan proposed a safeguarding duty on the seasoning powder, according to the Lao Dong (Labour) newspaper.
In June 2015, the MoIT's Vietnam Competition Authority (VCA) received a full petition
from Vedan for a self-defence measure against MSG imports with the trade code
2922.42.20, said VCA deputy director general Nguyen Phuong Nam.
Vedan's move is supported by Ajinomoto, according to Nam.
Vedan said that the MSG imports have caused drastic losses to the company, including
a decline in production, a surge in inventories and flat prices.
According to the Ordinance on safeguards on importing foreign goods into Vietnam,
the investigation will last no more than six months from the date the MoIT issues the
decision and the investigation duration can be extended for two subsequent months.
Investigation questions will be sent to related sides within 30 days from the date the
MoIT issues the decision.
The MoIT is responsible for examining information and evidence before concluding
the matter.
http://english.vov.vn/Economy/Market/Selfdefence-measures-considered-for-imported-MSG/300386.vov
Southern Power Corporation (EVN SPC) and authorities of Kien Giang Province have
commenced a project to build a power transmission line to connect Lai Son Island off
the mainland province and the national power grid.
EVN SPC said the power transmission line and transformer stations cost a total of
VND468 billion (US$20.8 million) and are being constructed by Pacific Infrastructure
Project Development and Investment Corporation.
The 110-kV line stretches 43.9 kilometers from An Bien to Lai Son including a 19.4-km
inland section and a 24.5-km section above sea, the longest of its kind in Vietnam.
The line will bring electricity to over 1,950 households in Lai Son Commune in Kien
Hai District in 2015-2016.
Nguyen Van Hop, chair and general director of EVN SPC, said the power line is one
of the projects worth a combined VND1.5 trillion to provide electricity for 6,800 households in seven island communes of Kien Giang Province. The communes are Hon Heo,
Hon Nghe, Hon Doc, Lai Son, An Son, Nam Du and Hon Thom.
In 2016-2018, EVN SPC will develop a 22-kV line to supply power for households in
the communes of Hon Nghe and Son Hai in Kien Luong District, Tien Hai in Ha Tien
Town and Hon Thom in Phu Quoc District at a cost of VND514 billion.
In the 2018-2020 period, An Son and Nam Du communes will be linked to the national
power grid owing to a 22-kV undersea line costing VND623 billion.
Speaking at the ground-breaking ceremony for the power transmission line link with
Lai Son, prime minister Nguyen Tan Dung said the project would give a boost to socioeconomic development and improve the living standards of islanders and attract investors to islands. It also helps build a strong defense system to protect Vietnam's sovereignty over waters and islands in accordance with the national marine development
strategy until 2020.
The government leader said the 110-kV line is expected to supply millions of kWh per
year for local households when it is completed by April 30 next year.
Located 60 km from Rach Gia City, Lai Son, also known as Rai Islet, covers 1,095 hectares and has a population of 8,120 people. Currently, local residents have access to
electricity from diesel-fueled generators for only 12 hours per day on weekdays and
round the clock on weekends and holidays.
http://english.thesaigontimes.vn/42870/Kien-Giang percentE2 percent80 percent99sisland-to-access-national-power-grid.html
8 September 2015 30 / 39
BUSINESS
Vietnam finance & business
Dong Nai port's new
pier to handle bigger
ships
VN's fuel prices
cheaper than in
neighbouring
countries
Wholesale, retail trade
attractive to small
businesses
Intellasia
8 September
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
Dong Nai Port Joint Stock Co. looks set to put into operation a new pier designed to
handle vessels of 30,000 dwt at Go Dau Port in Long Thanh District in the southern
province of Dong Nai at the end of this month after one year of construction.
The 250-metre-long, 22-metre-wide pier is one of the components of a project worth
VND187 billion (US$8.3 million) invested by the company. The project also comprises
an approach bridge of 32 meters in length and 12 meters in width, and an onshore 36metre-long rail and a crane with a lifting capacity of 40 tonnes.
The pier has been constructed since September last year and is the first phase of Go
Dau B Port project. The port currently handles vessels of 15,000 dwt.
According to Dong Nai Port Joint Stock Co., the new facility will meet increasing demand of enterprises in nearby industrial parks including Go Dau Industrial Zone. It
will speed up export of alumina produced at Tan Rai facility in the Central Highlands
province of Lam Dong as the port is where the aluminum oxide is shipped abroad.
Currently, Dong Nai port complex has nine piers, two barge berths and two warehouses with a total area of 47.85 hectares. The complex will be developed into a nationallevel general port as approved by the prime minister.
http://english.thesaigontimes.vn/42883/Dong-Nai-port percentE2 percent80
percent99s-new-pier-to-handle-bigger-ships.html
08/SEP/2015 INTELLASIA| VGP
Petroleum prices in Vietnam are lower than those in its neighbouring countries like Laos, Cambodia, and even China, according to the Ministry of Industry and Trade
(MoIT).
Petrol prices were cut five times in succession due to declining costs of crude oil and
petrol in the global market.
So far, domestic oil prices are kept in line with market fluctuations and Decree 83/2014/
ND-CP on petrol and oil trading.
Especially, retail oil prices in Vietnam are not high in comparison with those in neighbouring countries.
Statistics before September 3 showed that Vietnam ranked 47th in terms of retail oil
prices out of 174 countries and territories, behind Laos, Cambodia, and China.
The MoIT assessed that oil price adjustments to global fluctuations are needed.
It, however, warned that if domestic prices fall extremely low, more illegal trading of
petrol is likely to occur.
http://english.vietnamnet.vn/fms/business/140755/vn-s-fuel-prices-cheaper-than-inneighbouring-countries.html
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
Wholesale and retail trade accounted for 39.8 percent of total active micro, small, and
medium enterprises (MSMEs) in Vietnam as shown in a report released by the Asian
Development Bank (ADB) last week.
The proportions were 20.5 percent for the service sector and 15.7 percent for the manufacturing sector, according to the Asia SME Finance Monitor 2014 report covering 20
developing countries in Asia.
The report said Vietnam had had a total of 359,794 MSMEs as of the end of 2013, making up 96.4 percent of total enterprises in the country. MSMEs employed 5.1 million
workers, or 46.8 percent of Vietnam's workforce.
Privately owned firms account for 97.2 percent of the total in Vietnam, foreign-invested companies for 2.7 percent and state-owned enterprises the remainder.
According to the report, regional integration and trade offers opportunities for smaller
firms to explore offshore markets but also expose them to tougher competition.
The report stressed the need to provide financial support for Asia's small- and medium-sized enterprises (SMEs) to grow into dynamic, internationally competitive companies. This is key to strong, sustainable growth in Asia as the world recovers from the
recent global economic slowdown.
8 September 2015 31 / 39
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8 September
"Asia has millions of SMEs but few of them are able to grow to the point where they
can innovate or be part of the global supply chain. To do this, they need more growth
capital and opportunities to access various financing channels," said Noritaka Akamatsu, senior advisor in ADB's Sustainable Development and Climate Change Department, which produced the report.
SMEs take an average of 96 percent of all registered firms and employ 62 percent of the
labour force, according to the report. However, they contribute only 42 percent of economic output.
Governments in the region need to help SMEs become more competitive and participate in global value chains. This requires governments to facilitate SMEs to access new
financing, such as supply chain finance.
Limited access to bank credit is a persistent problem in Asia and the Pacific, the report
pointed out. Lending to SMEs has declined over the course of the global financial crisis
and in 2014, they got only 18.7 percent of total bank loans.
http://english.thesaigontimes.vn/42882/Wholesale-retail-trade-attractive-to-smallbusinesses.html
Work starts on major
resort on Phu Quoc
Intellasia
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
Sun Group last Friday broke ground for a multi million-dollar resort comprising a cable car system and recreational facilities on Phu Quoc Island off mainland Kien Giang
Province. prime minister Nguyen Tan Dung attended the groundbreaking ceremony.
The three-wire cable car system is designed to stretch nearly eight kilometers connecting An Thoi Town of Phu Quoc and Thom Islet. The system is touted as the longest of
its kind in the world and much longer than the 1.5-kilometer-long cable car system
linking Fansipan Mountain and Sapa Town in the northern upland province of Lao
Cai.
The cable car system will go through Dua and Roi islets in Phu Quoc District and be
supported by six pillars with the tallest measuring 160 meters. There are 70 cabins with
each able to accommodate 30 people at a time.
Sun Group uses Doppelmayr technology for the cable car system on Phu Quoc. The
world-known Austrian firm has provided technology for many cable car systems
around the globe.
The cable car system costs VND4.9 trillion (US$218 million) for phase one and can
move at a speed of 8.5 meters per second and transport 3,500 passengers per hour, according to a report on the government's portal chinhphu.vn.
The cable car system is scheduled to come online in April 2017, according to Dang
Minh Truong, vice chair and general director of Sun Group.
Apart from the cable car system, Sun Group will invest in resort and recreational facilities for hiking, scuba diving and other water sports with an aim to turn Thom Islet into
a major tourist destination in the southwestern part of the country. A marina will also
be built and seaplane service made available for visitors to explore the resort island of
Phu Quoc when the complex is opened to tourists.
On the same day, the Bank for Investment and Development of Vietnam (BIDV) announced agreements to arrange loans and banking services for the Thom Islet recreational complex and the Vinpearl Phu Quoc hotel and villa project invested by Phu
Quoc Vinpearl Co. Ltd
The Vinpearl Phu Quoc hotel and villa project in the Dai Beach area has an investment
of at least VND2 trillion with bank loans accounting for 80 percent of the project's total
capital. As many as 500 villas and over 1,000 five-star hotel rooms with modern facilities will be built to meet increasing demand for quality tourism services on Phu Quoc.
The recreational complex covering land in An Thoi Town and Hon Thom Commune
is estimated to cost VND10 trillion with more than VND7 trillion sourced from bank
loans.
Earlier this year, the prime minister approved the revised master zoning plan for the
island until 2030. In the plan around 4,300 hectares would be reserved for tourism
projects, 3,325 hectares for tourism and residential areas, and 1,234 hectares for forests.
8 September 2015 32 / 39
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8 September
The island would have an international passenger seaport and a square in Duong
Dong Town, a general port in Dat Do Bay and a casino in Dai Beach.
http://english.thesaigontimes.vn/42867/Work-starts-on-major-resort-on-PhuQuoc.html
Phu Quoc island
draws 164 investment
projects
City taxi firms to
lower fares
Intellasia
08/SEP/2015 INTELLASIA| VNA
The Mekong Delta province of Kien Giang's Phu Quoc island district is hosting 164 licensed projects worth nearly 169 trillion VND (7.52 billion USD), according to a working group for Phu Quoc island development.
The projects, including 21 foreign invested ones, covers 5,630 hectares in the island district, said the group, adding that the supervision of the projects will be strengthened
in the near future.
Licences of projects lagging behind scheduled will be withdrawn, while stronger
measures will be rolled out to support investors during the projects' implementation.
Phu Quoc island, dubbed Perl Island, has a total area of 589.23 square kilometres and
a population of about 97,000. It is one of the tourism hubs of Kien Giang and the southern region as well.
http://www.dtinews.vn/en/news/018/41708/phu-quoc-island-draws-164-investmentprojects.html
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
Several taxi enterprises in HCM City will finally cut fares by VND500 per kilometer
this week after a couple of fuel price reductions, according to the chair of the HCM City
Taxi Association.
Ta Long Hy told the Daily after local fuel trading enterprises cut the retail price of
gasoline by around VND1,200 a litre last week, Mai Linh and Vinasun would charge
lower fares from tomorrow. However, other members of the associations have not
made a move.
Asked whether the fare cut is too meager compared to a sharp decline in fuel prices
this year, Hy said a VND500 reduction is acceptable as from May 12 the retail price of
gasoline picked up by a total of VND1,480 per litre before falling a combined
VND3,380 per litre last week, leaving a price differential of VND1,900 per litre.
A number of coach operators have adjusted down fares by VND10,000-20,000 for their
services between HCM City and the Mekong delta. This fare reduction is confirmed by
Thuong Thanh Hai, deputy director of Mien Dong Coach Station.
Hai told the Daily that around ten passenger transport companies have informed the
station of fare cuts by 4-10 percent. For example, Kim Hoang Company now sells oneway fares for its service between HCM City and Tra Vinh Province at VND100,000 instead of VND120,000.
However, many coach operators have not brought down fares for their inter-provincial services, especially those from HCM City to the Central Highlands provinces of
Dak Lak and Gia Lai and Ba Ria-Vung Tau Province.
Airlines asked to sell more low fares
* The Civil Aviation Authority of Vietnam (CAAV) has requested local airlines to sell
more low and promotional fares for their domestic services in line with the world oil
price plunge.
CAAV under the Ministry of Transport said the transport sector in general and airlines
in particular have benefited much from a significant reduction in jet fuel this year and
carriers have registered to offer different types of fare to meet demands of various
groups of passengers. Airlines have sold more low and promotional fares in recent
times.
Therefore, CAAV has asked domestic airlines to sell more discount fares to enable
more passengers to travel by air when the price of jet fuel has dipped further in recent
months.
A barrel of jet fuel was quoted at less than $60 over the weekend, down over 13 percent
versus a month ago and more than 51 percent against the same period a year earlier,
8 September 2015 33 / 39
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8 September
according to global fuel suppliers.
http://english.thesaigontimes.vn/42880/City-taxi-firms-to-lower-fares.html
Oman's sovereign
fund scores over home
bidders in Vietnam's
Hai Phong Port stake
sale
Oman eyes highway,
water projects in
Vietnam
Intellasia
08/SEP/2015 INTELLASIA| DEAL STREET ASIA
Oman's State general Reserve Fund (SGRF) has earned an advantage over Vietnamese
property giant Vingroup and Vietinbank to become the strategic investor in Hai Phong
Port, the largest port operator in northern Vietnam, according to transport ministry's
publication Baogiaothong.vn.
"The criteria for picking a strategic shareholder comprises not only the investor's financial ability (which does not include loans used to finance the investment), but also the
investor's experience of at least three years in managing seaports," the publication said,
citing Nguyen Canh Tinh, deputy CEO of the Vietnam National Shipping Lines (Vinalines), the parent of Hai Phong Port.
The disinvestment of state stake in Hai Phong Port, which got listed last month, is slated for the fourth quarter.
According to Vinalines, apart from the Oman sovereign fund, Vietinbank and Vingroup are also in the race for large stakes in the northern port. Both Vietinbank and
Vingroup earlier submitted to be strategic investors at HCM City-based Saigon Port
but the latter had dropped the bid.
The two Vietnamese entities have not run any port operating businesses, while the
SGRF has promised the Vietnamese government that it will invest around $2 million
in capacity building programmes for Hai Phong Port's executives.
Besides, the $35 billion Oman fund has been actively investing in a spate of major ports
in Turkey, the Netherlands, Belgium and Brazil. At Turkey's Kumport, the cargo volume increased by three times to make it the country's largest port within three years
of the Omanese fund investment, the Vietnamese publication stated.
The Vietnam Oman Investments (VOI Fund), a joint venture between the SGRF and
Vietnam's State Capital Investment Corporation, was granted in-principle approval to
acquire 29.68 per cent in Hai Phong Port, from the 94.68 per cent held by the state. Earlier this year, the Oman fund expressed interest in acquiring additional stake if the
government intended to divest further. The port is attracting increased investor interest given the government's proposal to reduce state ownership from the originally intended 75 per cent to 65 per cent.
Meanwhile, Vingroup had earlier eyed up to 80 per cent holding in the port. As per
Vietinbank, the Vietnamese central bank has allowed it to swap the debt owed by Vinalines for equity stake.
During the port's IPO auction in May 2014, less than half of the shares offered were
purchased on account of the perceived unattractiveness of a business with significant
state ownership.
Since being listed on August 12, 2015, Hai Phong Port's market capitalisation on the
Hanoi Stock Exchange has reached VND5.4 trillion ($241 million). As a result of the restructuring process, Hai Phong Port's profit in the first half of 2015 climbed 11 per cent
to reach VND191 billion. Hai Phong Port's stock price closed at VND16,600 during
Monday trade, up 9.2 per cent.
http://www.dealstreetasia.com/stories/omans-sovereign-fund-scores-over-home-bidders-in-vietnams-hai-phong-port-stake-sale-11695/
08/SEP/2015 INTELLASIA| VNS
Oman plans to increase investment in highway and water supply projects in Vietnam,
the Middle Eastern emirate's sovereign wealth fund said.
The State general Reserve Fund of Oman signed an agreement of strategic cooperation
for water infrastructure investment in Vietnam on August 31 between the fund's Vietnam-Oman Investments JSC (VOI), Manila Water Company (MWC) and Saigon Water
Infrastructure Corporation (SII) - a subsidiary of HCM City Infrastructure Investment
JSC (CII).
Most of the projects will be in or around HCM City.
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8 September
Under the agreements, VOI is committed to invest in a number of SII's joint projects
such as highway projects or safe water supply projects.
Meanwhile, the Manila Water Company, a leading private company of the Philippines
with a total capital of around $10 billion, committed to support SII in technical areas
and management, particularly in water supply network management.
VOI Chair Abdullah Al-Harthy said: "The State government Reserve Fund of Oman is
very keen to enhance and extract value from sectors that play a vital role in Vietnam's
growth story."
"We have been confidently working with CII on a number of projects with high impact
on the economic and social development of Vietnam. In particular, CII, MWC and we
all find that there is an urgent need and a huge economic value for the new water network development in areas that the people of Vietnam have limited access to clean water", he said.
VOI was founded in 2009 as a joint venture between the two sovereign wealth funds
of Oman and Vietnam: the State general Reserve Fund of Oman (SGRF) and the State
Capital Investment Corporation of Vietnam (SCIC).
VOI mainly focuses in long term and value investments in growth sectors such as power plants, toll roads, water supply, ports and logistics, consumer goods, health care, agriculture, and manufacturing.
The HCM City Infrastructure Investment JSC (CII) is the leading infrastructure developer and operator in HCM City and in the south of Vietnam with market capitalisation
of $220 million and a portfolio of strategic infrastructure assets of around $1.5 billion
diversified in bridges and roads, water supply and distribution, industrial zones and
property development.
http://bizhub.vn/news/12857/oman-eyes-highway-water-projects-in-viet-nam.html
First low-cost airline
provides Hanoi-HK
service
08/SEP/2015 INTELLASIA| VNA
Low-cost airline Jetstar Pacific announced on September 7 the operation of a new air
route linking Hanoi and Hong Kong (China) using the 180-seat Airbus A320 plane,
which is expected to boost tourism between the two sides.
So far, Jetstar Pacific is the only low-cost airline to provide the service with four weekly
return flights on Monday, Tuesday, Saturday and Sunday.
The two-hour flight will take off at 16:15 from Hanoi and 19:55 from Hong Kong.
According to Jetstar Pacific general director Le Hong Ha, the number of customers
booking tickets for the service has been rising since the tickets went on sale in April
this year.
Tickets are available at www.jetstar.com with fares from 590,000 VND (28 USD) for a
one-way trip.
http://en.vietnamplus.vn/first-lowcost-airline-provides-hanoihong-kong-service/
81298.vnp
Vietnam Airlines
launches special offer
on Hanoi-Paris route
08/SEP/2015 INTELLASIA| VNA
Vietjet launches new
domestic routes
08/SEP/2015 INTELLASIA| VNS
Intellasia
Vietnam Airlines launched a promotion on the Hanoi-Paris route on its new Airbus
A350 airplane on September 7 with a special offer of only 7.599 million VND (350 USD)
for a return trip.
The special offer will last from September 7-21, during which return tickets, excluding
fees and charges, for seats in economy class will cost 16.9 million VND (787 USD) and
38.499 million VND (1,787 USD) for business class on flights from October 1-22.
The national flag carrier Vietnam Airlines is currently operating 12-13 weekly flights
to France, including 6-7 flights between Hanoi and Paris.
http://en.vietnamplus.vn/vietnam-airlines-launches-special-offer-on-hanoiparisroute/81300.vnp
Vietjet has announced the launch of its latest domestic routes connecting the Central
Highlands city of Pleiku with Hanoi and HCM City.
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8 September
The flying time between Hanoi and Pleiku is approximately one hour and 35 minutes,
while it is only one hour between HCM City and Pleiku. Flights from Hanoi will depart at 2.55pm and arrive at Pleiku at 4.30pm. Return flights will depart Pleiku at
5.10pm and arrive in Hanoi at 6.45pm.
Flights from HCM City will depart at 4.35pm and arrive in Pleiku at 5.35pm. The return flight will depart Pleiku at 6.10pm and arrive in HCM City at 7.10pm.
"The new routes are expected to boost travel between this city in the Central Highlands
and Vietnam's two most dynamic and developed cities as well as neighbouring regions," Vietjet's business development director Desmond Lin said.
Special 'early bird' promotion for forthcoming Tet holidays
In addition to the new routes, the airline has launched a massive promotional campaign on all domestic and international routes from Vietnam to Thailand, Singapore,
Taiwan, South Korea and Myanmar to meet the surge in demand for air travel before,
during and after Tet in early 2016.
"With this campaign, Vietjet offers a wide range of low-cost fares so the sooner our customers buy a ticket, the cheaper price they will get. Moreover, early booking can ensure passengers don't miss out altogether as all flights during the Tet period will be
sold out," Lin said.
Furthermore, the airline will increase the frequency of high-demand routes, such as
HCM City - Hanoi (with more than 20 round trips per day for the holiday period),
HCM City - Da Nang (10 round trips per day), HCM City - Hue (four round trips),
HCM City - Vinh (four round trips) and HCM City - Hai Phong (six round trips).
This increase in services aims to facilitate passengers' travel plans for tourism, business
and/or family reunions during what is considered peak season for air travel in Vietnam, the carrier said.
http://bizhub.vn/corporate-news/12858/vietjet-launches-new-domestic-routes.html
Danang airport
planned to handle 13m
passengers by 2020
Vinaland sells stake
and partners Chow Tai
Fook
Intellasia
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
Danang airport in the city of the same name will be expanded to serve 11-13 million
passengers and 50,000 tonnes of cargo by 2020 as envisaged in a revised master plan
approved by the Ministry of Transport.
According to the ministry's Decision 3066, the international airport will meet 4E standards of the International Civil Aviation Organisation (ICAO). It would be able to handle big jets like Boeing B747, Boeing B777 and Boeing B787, Airbus A320, A321 and
A350.
The airport in the economic centre of central Vietnam would have its existing passenger terminal expanded to serve nine million passengers a year. Besides a VIP lounge
covering 4,200 square meters, a new international terminal would go up to enable the
airport to handle an additional 2-4 million passengers per year.
The Ministry of Transport expects the new international facility at Danang airport will
get off the ground early next year and be finished in June 2017.
Earlier, TAH consortium comprising Thang Long Airport Services Corporation (TASECO), AOV Investment Corporation and Hanoi Construction Corporation (HANCORP) proposed building the new terminal to serve four million passengers per year
under the build-operate-transfer format.
The current passenger terminal at Danang airport with an annual capacity of six million passengers was put into operation in late 2011. Last year, five million passengers
went through the airport, up 16 percent compared to 2013.
Three local and eight international airlines conduct flights to and from Danang. The
airport handles around 100 takeoffs and landings and some 10,000 passengers a day.
http://english.thesaigontimes.vn/42881/Danang-airport-planned-to-handle-13 million-passengers-by-2020.html
08/SEP/2015 INTELLASIA| BIZHUB
VinaLand Limited, a part of VinaCapital, sold its stake in the $4 billion Nam Hoi An
casino resort to Gold Yield Enterprises Limited, a unit of Hong Kong based Chow Tai
8 September 2015 36 / 39
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Vietnam finance & business
8 September
Fook, on September 4.
The transaction turned Vinaland from the largest shareholder of a project developing
a mixed-use township incorporating homes, shops, leisure facilities and gaming over
more than 100ha in the Chu Lai Economic Zone, become the strategic investor.
It also gives Chow Tai Fook, owned by Hong Kong's fourth richest person, Cheng Yu
Tung, control of the project.
The Hong Kong enterprise will inject equity and expertise into developing and operating the large scale entertainment development in Quang Nam Province.
After Vinaland acquired the project in 2007, it firstly partnered Malaysia Genting,
which contributed 20 per cent. However, the Malaysian partner withdrew from the
project in 2012.
"Vinaland had completed initial investment in the project, however long term development would require significant future capital", said managing director of VinaCapital, David Blackhall.
Under the divestment, VinaLand has disposed its entire stake. This transaction, according to VinaCapital, will result in net proceeds of $10.5 million for VinaLand.
However, given the complexity of the project and the ongoing challenges it faces, the
buyer has requested that VinaCapital continue to be involved in the project," VinaCapital said.
This led to Vinaland purchasing an additional stake of 9.36 per cent in the project. It
will also receive an equity interest of 22.55 per cent in return for the transfer of certain
economic rights to gaming it had secured.
In March, Quang Nam Province granted a new investment certification in the project
for Chow Tai Fook, Vinaland and Macau's Sun City, which 70 per cent was bought by
Chow Tai Fook's owner Cheng Yu Tung last year.
Chow Tai Fook is involved in property development, hotels, casinos, transportation,
jewellery, port and telecommunications businesses.
In Vietnam, it operates two large hotels in HCM City known as the New World and
the Renaissance Riverside.
Hai Quan (Customs) newspaper reported that phase one of the project, including resorts, amusement park, golf course and premium villas and apartments, would start
next year.
http://bizhub.vn/markets/12865/vinaland-sells-stake-and-partners-chow-taifook.html
Construction of Long
Phu 1 thermo-power
plant in progress
Intellasia
08/SEP/2015 INTELLASIA| VNA
Stakes are being planted as part of the construction of the Long Phu 1 thermo-power
plant in Long Duc commune, Long Phu district in the southern province of Soc Trang.
A ceremony was held on September 7 to kick-start the phase, which is important to the
quality and progress of the project invested by the Vietnam National Oil and Gas
Group (PetroVietnam).
Included in the Long Phu Power Centre, the 1,200 MW plant is one of the nation's key
projects. It comprises two turbines with the first scheduled to be operational in 2018
and the second to go into service a year later.
The Long Phu Power Centre was approved by the Ministry of Industry and Trade in
2007 with a total capacity of 4,400 MW. Once in operation, the centre is expected to
contribute to ensuring national energy security and economic transfer of Soc Trang
province and the Southwest region in general.
Nguyen Hung Dung, PetroVietnam deputy general director, promised optimal conditions and sufficient capital for the construction while asking the project's contractors
to ensure its progress and safety as well as protect the environment around the plant
during both construction and operation.
en.vietnamplus.vn/construction-of-long-phu-1-thermopower-plant-in-progress/
81295.vnp
8 September 2015 37 / 39
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Vietnam finance & business
Saigon Co.op among
top 500 Asia-Pacific
retailers
Samsung agrees to
take domestic parts
suppliers
Intellasia
8 September
08/SEP/2015 INTELLASIA| VOV
Supermarket chain Saigon Co.op has been listed among top 500 Asia-Pacific retailers
in 2015, according to Retail Asia Publishing and Euromonitor International.
Saigon Co.op is also among top five retailers in Vietnam.
This is the 12th year the ranking results have been announced and Saigon Co.op has
successfully won the title for 12 consecutive years.
Saigon Co.op owns a far-reaching retail system across the country, including Co.opmart supermarket chain, Co.op Food store chain, Ben Thanh Store, Co.op store network, Sense City trade centre, Co.opXtraplus Thu Duc and SC Vivo City. It also
launches a TV shopping channel named HTV Co.op and an online shopping website
known as Co.ophomeshopping.
The Retail Asia Pacific Top 500 awards are made basing on a survey of retailers in 14
economies in the region, namely Australia, China, Hong Kong, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, Taiwan, and Vietnam.
Selection criteria include retail sales of goods, growth rate, business areas and the
number of stores.
The awards will be presented at a ceremony in the Philippines in October.
http://english.vov.vn/Economy/Trade/Saigon-Coop-among-top-500-AsiaPacific-retailers/300445.vov
08/SEP/2015 INTELLASIA| VIETNAMNET
More Vietnamese manufacturers who found it difficult to become part of Samsung's
global supply chain, are becoming component suppliers for Samsung.
Vietnam, Samsung, supporting industries, MOIT
Nhip Cau Dau Tu quotes an article published in Business Korea as saying that South
Korean investors in Vietnam are worried about the slow product localisation process
in Vietnam, and attributed it to low technologies used by domestic enterprises.
Some sources quoted in Business Korea said that Samsung has been in Vietnam for
seven years, but only 36 percent of parts suppliers are from Vietnam. Most of the enterprises are foreign invested enterprises (FIEs), not Vietnamese-owned.
Thirty-two enterprises owned by Vietnamese now provide components and accessories to Samsung. Only four of them are major suppliers, a modest figure compared
with the total number of 90 major suppliers.
The remaining 28 enterprises work as secondary subcontractors which provide components through FIEs.
The slow product localisation process in Vietnam has caused concerns to Samsung and
forced the electronics manufacturer to import components to run its factories in Vietnam.
In 2013, Samsung Vietnam exported $23 billion worth of mobile phones, while the figure rose to $32 billion in 2014.
However, the manufacturer had to import $15 billion and $20 billion in 2013 and 2014,
respectively, to make exports.
The newspaper reported LG Electronics as also having the same problem. The group
announced it would raise the locally made content in products to 50 percent when
kicking off investment in a manufacturing complex in Hai Phong City.
However, only one Vietnamese-owned company now provides components to LG.
Meanwhile, though admitting that it is difficult to find Vietnamese enterprises capable
enough to join the South Korean supply chains, State officials are optimistic about the
future.
Dat Viet quoted a report as saying that 41 Vietnamese enterprises now cooperate with
Samsung. These include two first-class vendors and 28 second-class. The figure is
much higher than that of last year.
The Thang Long Packaging Production and Import/Export JSC is one of them. After
becoming Samsung's first-class vendor, Thang Long, with 490 workers, has prospered
with turnover increasing by 3.8 times in 2009-2014, from $3.41 million to $12 million, a
8 September 2015 38 / 39
BUSINESS
Vietnam finance & business
8 September
very good result for any small and medium enterprise in Vietnam.
Viet Hung, a packaging manufacturer, began cooperating with Samsung in April 2009.
It now employs 1,400 workers and made out $13 million worth of products in 2010 and
$42 million in 2014.
After Samsung Electronics said it was looking for Vietnamese manufacturers which
could supply 200 different kinds of components, many analysts said Samsung tried to
place difficulties on Vietnamese enterprises.
http://english.vietnamnet.vn/fms/business/140687/samsung-agrees-to-take-domesticparts-suppliers.html
Vietnam network
operators to provide
4G broadband service
this year: media
Export tax on sliced
cassava cut to 0pct
08/SEP/2015 INTELLASIA| TUOITRE NEWS
Vietnamese mobile service providers last week announced that they would offer 4G
mobile broadband technology on a trial basis soon, local media reported.
After military-run Viettel Telecom said that it will launch 4G mobile broadband services on a pilot basis next month, state-run VinaPhone followed suit by saying it will
offer the same services within the next two months.
Viettel Telecom will start offering the trial 4G services at rates no higher than what its
3G service users are paying, news website VnEconomy reported on September 3.
One day later, tinhte.vn, a technology news website like engadget.com, and zing.vn reported that VinaPhone will make a similar move in October or November.
4G is short for the fourth-generation of wireless communication technology that allows transmission of data at the maximum speed in ideal conditions of up to 1-1.5GB
per second, many times higher than what is offered by the current 3G technology,
VnEconomy reported.
Viettel Telecom said the immediate coverage of its 4G network will be in the biggest
towns, districts, provinces and cities nationwide.
By the end of 2015, or in the first quarter of 2016 at the latest, the firm will finish installing 12,000 4G stations.
According to the mobile network operator, subscribers who want to use 4G services
must change their SIM cards, but they can maintain their phone numbers.
Meanwhile, VinaPhone said its 3G service subscribers do not need to change their SIM
cards when registering to use the new 4G service.
As of June 2015, Viettel Telecom held the biggest share of the Vietnamese telecom market with 52 percent, followed by VinaPhone and MobiFone with 18 percent each.
In September 2010, the Ministry of Information and Communications issued five permits for testing 4G technology to Viettel Telecom, VinaPhone, CMC, FPT and VTC.
Those telecom enterprises were then allowed to test 4G technology within one or two
years to assess the technology and need of users in Vietnam.
http://tuoitrenews.vn/business/30262/vietnam-network-operators-to-provide-4gbroadband-service-this-year-media
08/SEP/2015 INTELLASIA| THE SAIGON TIMES
The Ministry of Finance has announced to lower the export tax on sliced cassava to the
old rate of 0 percent from 5 percent last Saturday after it issued Circular 141/2015/TTBTC to replace Circular 63/2015/TT-BTC and revise export tariffs on cassava products.
The ministry said it would coordinate with relevant agencies to adjust the duty on cassava products next year and prepare an appropriate road map for this in line with a
road map for the biofuel as well as cassava production and consumption in the country.
In July, the ministry proposed the government stop the implementation of Circular 63/
2015/TT-BTC issued on May 6 imposing the export duty of 5 percent on sliced cassava
after exporters bemoaned that they would incur losses and even go bust if such a tax
rate was applied.
End
Intellasia
8 September 2015 39 / 39