The State Bank of Vietnam (SBV) has given approval in principle to Malaysia’s Public Bank Berhad (PBB) to acquire the entire stake of Vietnamese lender BIDV in their joint venture VID Public Bank.
According to a decision announced Monday on the SBV’s website, the Malaysian bank would turn the venture into a 100% foreign owned institution after the acquisition.
Last year, BIDV clinched a deal to transfer its 50% stake in VID Public Bank to PBB, the holder of the remaining stake. The move was aimed to help BIDV restructure its operations.
BIDV gave no details about the transfer contract at a press briefing after the signing ceremony on July 15. However, it is estimated that the value of the transfer deal is high.
BIDV chairman Tran Bac Ha said the bank sold its 50% stake at a price higher than the par value of VND10,000 per share.
Ha said the joint venture bank has made gains over the past 22 years and BIDV has recovered all its capital contribution. Therefore, BIDV enjoys all the proceeds from the transfer deal and will use the money to improve its financial capability.
VID Public Bank was established in 1992 as a 50:50 joint venture between BIDV and PBB. The lender, one of the two first joint venture banks in the country, now has total chartered capital of US$62.5 million.
VietNamNet Bridge - According to the General Department of Customs, by the end of February 2015, Vietnam’s four major export markets, the US, China, Japan and South Korea, brought $9.8 billion to the country.
The US is the largest export market of Vietnam, with turnover of up to $4.471 billion. In 1994, the figure was only $94.9 million.
Notably, earnings from textiles and garments from this market were the highest, with $1.57 billion, accounting for 35% of total exports.
The second export market is China, with $2.21 billion. The major export products to China are computers, electronic products and components, fiber and yarn, cameras and camcorders.
Vietnam also exported 300,000 tons of crude oil to China in the past two months, an increase of 62.5%. Machinery, equipment and spare parts also reached $94 million, up 60.4%. China is also a big market for Vietnam’s rice and footwear.
At third place is Japan, with about $2.064 billion. The major products to this market are textiles and garments ($412 million), up 9.4%, followed by vehicles, machinery and spare parts ($207 million), bags, wood and wood products, seafood, and footwear.
The fourth is South Korea with $1.087 billion, with major products consisting of machinery, electronics, computers, textiles and garment.
With a total turnover of more than $9.8 billion, these four markets accounted for 42.8% of the total export turnover of the country in the first two months of 2015.
HA NOI (VNS) — The State Bank of Viet Nam approved in principle this week the establishment of Malaysia's Public Bank Berhad (PBB) in Viet Nam.Following the approval, PBB will become the sixth wholly foreign-owned bank in Viet Nam after HSBC, Standard Chartered, ANZ, South Korea's Shinhan Bank and Malaysia's Hong Leong Bank Berhad.
As per an official order issued by SBV Governor Nguyen Van Binh, PBB would receive all the capital contributed by the Bank for Development and Investment of Viet Nam (BIDV) at the VID Public Bank–a joint venture of PBB and BIDV–before transferring the VID Public Bank's capital to PBB's wholly foreign invested bank in Viet Nam.
Last year, PBB had reached an agreement to buy shares of BIDV and established the VID Public Bank (VPB).
According to the document, VPB and PBB are required to meet all regulated conditions to be qualified for the transfer.
In case PBB failed to follow these regulations, the central bank would withdraw the licence given to VPB under the current legal regulations.
Joint venture VPB was set up in 1992, with a 50/50 capital ratio contributed by BIDV and PBB. After its capital was boosted thrice, VPB's charter capital is currently pegged at US$62.5 million.
VPB was among first two joint venture banks licensed in Viet Nam during the country's first years of economic integration during the 1990s.
Some representatives from Malaysian banks are also doing business in Viet Nam, such as Maybank and Hong Leong, of which Hong Leong became the first foreign bank in Southeast Asia to receive an investment license to run as a wholly foreign-owned bank in Viet Nam in 2009.
CIMB Group Holdings Bhd, Malaysia's second-largest lender, also plans to seek a licence for operating in Viet Nam as part of its drive to expand operations in the fast-growing Southeast Asian market, Reuters reported, adding that the fifth largest bank in Southeast Asia considered Viet Nam as one of its top priorities in its expansion strategy, with a view to taking full control of local lenders. — VNS
UPDATED : 03/18/2015 20:16 GMT + 7
The price of the greenback quoted at state-run Vietcombank, often considered the benchmark for other joint-stock commercial banks, rose VND125 per dollar to VND21,450-21,510 for bid and ask, respectively.
At other banks, the exchange rate adjustment ranged from VND100 to VND120 per dollar.
Notably, the difference between the bid and ask prices of the greenback continuously expanded, even up to VND80 per dollar, instead of the normal discrepancy of VND40-50 per dollar, an unusual signal of the domestic foreign exchange market, according to newswire Vietnamplus under the Vietnam News Agency.
Many experts told Vietnamplus that they believe that the difference in gold prices inside and outside the country is one of many reasons for the surge in foreign exchange rates.
The local price is now around VND5.4 million per tael more expensive than its world counterpart. (1 tael = 37.5 grams)
The cheaper world gold price has triggered higher local demand for gold, causing many small hoarders to grab dollars by all possible means to import gold to sell on the domestic market, Vietnamplusreported.
Currently, the U.S. dollar is at a 12-year high against a basket of currencies due to the U.S.’s economic growth exceeding expectations, coupled with the increasing possibility that the Federal Reserve will raise interest rates in the middle of this week's policy meeting.
The rise in value of the greenback has driven a series of central banks around the world to devalue their currency.
Thailand last Wednesday became at least the 23rd central bank to pull the trigger on monetary easing this year, getting its shots in before the Federal Reserve is forecast to raise interest rates, Bloombergreported.
Many Vietnamese experts have shared their opinions on a further foreign exchange rate adjustment to back local goods and support exports.
As the currencies of many other countries have depreciated, their exports to Vietnam will be relatively cheaper than their Vietnamese counterparts, thus making it hard for local goods to compete in their home market, according to a report on Vietnam’s macroeconomic situation of the Hanoi-based Vietnam Institute for Economic and Policy Research.
Moreover, Vietnamese shipments to a specific market, like the U.S., will be more expensive than goods made in a place where the currency was devalued, said the report of the institute under the University of Economics and Business – a member of the Vietnam National University system.
The State Bank of Vietnam should actively devalue the dong by 3-4 percent every year for the next two-three years, through a number of smaller steps within the 1-1.5 percent range, to help raise the competitiveness of Vietnamese goods, said the report, which was released on February 25.
Trust building needed
In early 2015, Governor of the State Bank Nguyen Van Binh confirmed that the central bank will adjust the exchange rate between the dong and the dollar flexibly, but the rate will not exceed two percent.
But Thanh Tuyen, an economics columnist of Tuoi Tre (Youth) newspaper, wrote that a promise from the chief of the central bank is not enough, and the pledge needs to be realized via concrete actions.
“The decision to hold the Vietnamese dong or U.S. dollar depends on the efforts by the SBV to strengthen confidence in the dong,” Tuyen said.
A rate adjustment will be welcomed by exporters and experts who want to promote exports, he said, adding that local people will not be happy when it happens as it devalues their currencies against the U.S. dollar, and brings in inflation.
Perhaps with the message of "allowing the rate to rise no more than two percent" of the SBV governor, and a 1-percent rate adjustment to take the initiative at the beginning of the year, the future of foreign exchange rates would be clear, the columnist commented.
Given the concerns of the market, the SBV had chosen to stay silent, Tuyen said.
It would be better if the SBV reiterates that it will keep its promises whatever happens, as doing so will definitely build more trust among the public, he suggested.
Public confidence has not been strengthened dramatically, as it will take much longer for trust to be developed, the columnist remarked, concluding that the promise is not enough to win the heart of the public, for the time being the SBV must offer timely and comprehensive information to explain what and why it has chosen to do.
UPDATED : 03/23/2015 14:25 GMT + 7
It might be too soon to say that Vietnam has become less attractive to international holidaymakers, but the decrease in tourism arrivals in the first two months of this year is worth worrying about.
The number of international tourists choosing to spend their holidays in Vietnam dropped 10.6 percent compared to the Jan-Feb period last year, according to the Vietnam National Administration of Tourism.
The old, undiversified tourism products, a polluted environment, and insufficient support information for tourists should be to blame, industry insiders argue.
Ngo Nguyen Thuy Oanh has nearly 20 years of experience in guiding tourists on river tours in the Mekong Delta province of Tien Giang, and she can clearly feel the gloomy cloud hanging over the tourism industry there.
“Japanese tourists are nowhere to be seen whereas Western visitors are even harder to find,” Oanh said as she accompanied a group of vacationers on a boat to Thoi Son Isle, a popular attraction in the southern province that is only 65km away from Ho Chi Minh City.
The boat departed from a small dock where other tour guides were seen occupying themselves with their smartphones while the attendants of a souvenir shop were leisurely fishing to kill time.
On board with Oanh on the 20-year-old boat, coded TG0058, were 11 tourists from the U.S., Australia, Switzerland, and Indonesia.
“At this time last year we were more than busy,” Oanh said while waiting for the holidaymakers to enjoy honey tea on the isle, a service she said has remained in the travel itinerary for nearly two decades.
“Then the tourists will taste some local fruits, listen to a couple of vong co [traditional southern music] pieces, and take a boat rowing tour, as it always is,” she said.
“What a poor set of tourism services we have,” she concluded.
But changing the services seems too difficult a job for the people behind them.
Thuy Linh and her husband have been running the honey tea shop on Thoi Son Isle for three years. There are four such destinations, where tourists can also tour the bee farms and buy souvenirs on the isle, all following the same business model.
“I only do what people do,” Linh said. “Making some changes? I’d love to, but I don’t know how to change [the service].”
Oanh said the situation would be much better if there were investors willing to pay for service upgrades.
“But investors are hesitant to open their pockets because it is not easy to recoup investment,” Nguyen Thanh Vu, the captain of the TG0058, explained as to why tourists still have to travel on a two-decade-old boat.
Pollution, lack of information
Carlo Campisrn, an Italian backpacker, and his girlfriend have spent four weeks traveling across Vietnam, but the two have little impression of the places they have visited, from Sapa, Hanoi and Ha Long Bay in the north, to Hue and Hoi An in the central region.
Vietnam has many attractions but their appeal is not strong enough for tourists to make a return trip, Campisrn said after touring the Saigon Central Post Office in Ho Chi Minh City.
The Italian did not conceal the fact that he has not thought of returning to Vietnam, as many of the country’s beautiful landscapes have been polluted.
Rubbish was floating on the UNESCO-recognized Ha Long Bay, and scattered around many streets in Hanoi, he elaborated.
Campisrn said he was also annoyed by street peddlers wherever he went, and using public transportation was a real challenge thanks to the lack of information for foreign travelers.
The chief executive of a Vietnamese international tour organizer said the country’s tourism products are “too outdated” compared with other Southeast Asian countries.
“Our Thai partners introduce at least five new tourism attractions on an annual basis, while the tour programs in Vietnam have been unchanged for years,” he said.
Pham Ha, founder and director of Hanoi-based Luxury Travel Co., pointed to poor marketing campaigns which have left few international tourists with knowledge of the attractions in Vietnam.
“We also pay little attention to alleviating pollution at the tourism spots,” he added.
VietNamNet Bridge - The State Bank of Vietnam (SBV) has released an ultimatum for commercial banks that they must sell all their bad debts by the end of the third quarter of 2015.
Analysts said “not many things have been done” by the Vietnam Asset Management Company (VAMC), which is in charge of buying debt.
However, they said VAMC’s process of buying bad debts from commercial banks would proceed more quickly with many new regulations and the SBV’s strong determination to settle bad debts.
SBV has asked commercial banks to sell at least 75 percent of bad debts by the end of the second quarter, and 100 percent by the end of the third quarter.
The amount of the bad debts banks have to sell will be set by the central bank.
Banks, in fact, have not neglected their task of clearing bad debts. Circular No 36 stipulates that only banks with a bad-debt ratio below 3 percent are eligible to provide credit and buy shares from other credit institutions.
Banks with high bad-debt ratios also face restrictions in opening new branches and providing new loans.
A report shows that VAMC has bought VND137 trillion worth of principal at VND108 trillion paid in special bonds.
It has permission to issue VND80 billion worth of special bonds this year, while planning to buy VND80-100 trillion worth of debts.
Of the VND137 trillion worth of bad debts purchased, only VND5.1 trillion have been settled through compulsory sale and other modes.
Nguyen Duc Kien, deputy chair of the Economics Committee, said that VAMC bought bad debts and then “put it over there”, because it does not know what to do with the debts.
Agribank’s loan worth VND400 billion provided to a three-star hotel developer in Bac Ninh province became a non-performing loan as the developer could not pay the debt.
Agribank sold the hotel to VAMC at VND360 billion, a very high price compared with the market price, estimated at VND200 billion.
However, VAMC cannot sell the hotel at VND200 billion because current laws do not allow it do this.
As such, Kien concluded, the only thing VAMC can do is to keep the hotel for five years before giving it back to the bank.
Dr. Can Van Luc from BIDV said a big gap exists between the price at which VAMC buys debts – equivalent to 80 percent of the debt value, and the price at which VAMC can sell debts – equivalent to 40-50 percent of the debt value.
Workers assemble cars at Ford Viet Nam in the northern province of Hai Duong. The Vietnam Association of Mechanical Industry (VAMI) has requested the Prime Minister and the Ministry of Finance to adjust the import tax imposed on complete built up (CBU) trucks. – VNA/VNS Photo Tran Viet
HA NOI (VNS) — The Vietnam Association of Mechanical Industry (VAMI) has requested the Prime Minister and the Ministry of Finance to adjust the import tax imposed on complete built up (CBU) trucks.
This has been requested so the revised tax is more in keeping with tax levied on trucks, which are locally-assembled with imported parts that are complete knock down (CKD).
The proposal was made after VAMI members evaluated the import tax imposed on CBU trucks and the current tariff regulated under the finance ministry's circular, which is an implementation of the ASEAN–China Free Trade Agreement (ACFTA) for the 2015 to 2018 period.
VAMI said the ministry had allowed a number of imported CBU trucks the kind of preferential tax rate, which is unfair for domestic manufacturers who have been producing and assembling trucks with CKD parts.
It added that when importing CKD parts, besides import tax, domestic firms are also burdened with many other costs, such as investment capital plugged into production and assembly lines, and costs of management and training workers.
In particular, the association's members have admitted that the price of importing a set of CKD parts is higher than that of a CBU truck because of the stringent conditions imposed by foreign suppliers. In addition, the number of locally-assembled trucks is not large, making the cost for locally-produced parts high.
VAMI pointed out that the aforementioned costs and import tax on CKD have led to local production costs for trucks increasing by 24 per cent, compared with the import of CBU parts. This has created a difference in prices between CKD and CBU imports in the domestic market.
Under the circular, the CBU import tax on a number of trucks is much lower than that of CKD parts–leading to unfair competition between auto businesses and auto manufacturers, who assemble trucks with CKD parts.
Deputy Chairman of VAMI, Dao Phan Long, told baodautu.vn that for the sake of profit, firms would have to switch to imports of CBU in the future.
"The country's truck engineering and assembling industry will be weakened, at the same time, the State budget's tax collection will also be reduced," said Long.
In the domestic market, the truck is seen as a success of the Viet Nam automobile industry.
According to the Ministry of Industry and Trade, the tax rate for locally-produced parts of trucks made by Truong Hai Automobile Company (Thaco) is 30 per cent, while that of Xuan Kien Automobile Company is about 50 per cent.
The ministry also said that it saw high potential for development in the segments of locally-assembled trucks and buses. However, with the tariff of CBU trucks imported from China, the domestic automobile assemblers' market share will be strongly affected.
Auto sales fall in February
Automobile sales reached 12,329 units in February, reflecting a 38 per cent drop from January, reported the Vietnam Automobile Manufacturers' Association (VAMA).
Despite the plunge, the figure still represented an annual leap of 69 per cent.
More than 7,900 of the cars sold were assembled in Viet Nam, down 41 per cent, while another 4,400 were foreign imports, down 32 per cent, VAMA noted.
In February, Thaco led sales with 2,965 units, followed by Toyota Motor Vietnam (2,868 units), Ford Vietnam (925 units), Honda Vietnam (505 units), and GM Vietnam (419 units).
Automobile sales during the first two months of this year soared 76 per cent from the same period in 2014. The sales of domestically assembled and imported units shot up 73 per cent and 111 per cent annually, respectively. — VNS
UPDATED : 03/16/2015 14:55 GMT + 7
Southeast Asia's major economies drew more foreign direct investment combined than China for the second straight year in 2014, as growth in their giant neighbour cooled.
But by country, inflows into the region were uneven, swayed by political change and the varying costs of doing business.
Overall FDI into Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam rose to a record $128 billion in 2014, estimates compiled by Thomson Reuters show. That surpassed the $119.56 billion that flowed into China.
FDI into the Philippines grew the fastest, at 66 percent, while in Thailand, where the military seized power last year, inflows fell. FDI into Indonesia, the region's biggest economy, rose around 10 percent even though it was an election year.
As China's troubled manufacturing sector loses momentum, Chinese businesses will be venturing abroad to cut operating costs and to search for new markets, economists say. Manufacturing powerhouses in Southeast Asia should pay heed.
"Rising wages in China are leading low-end manufacturers to look for other low-cost locations for their factories, with countries like Vietnam and the Philippines looking like attractive alternatives," said Dan Martin, Asia Economist at Capital Economics.
"ASEAN is also a large market in its own right, and one with good long-term growth prospects. Given the general slowdown in other emerging market regions in recent years, it is starting to stand out."
The Philippines, the second-fastest growing major economy in Asia, attracts investors with its strong economic fundamentals. But one concern is the continuity of economic policies following the 2016 general elections. That means some investment decisions might be postponed.
Slumping commodity prices could pinch on FDI inflows into resource-rich Indonesia and, to a lesser extent, Malaysia.
Indonesian President Joko Widodo, who took office in October, is seeking more foreign investment in manufacturing to counter the volatile resources sector. But Indonesia has many improvements to make, particularly in its business infrastructure, to successfully challenge the region's manufacturing leader - Thailand.
IDC said the promotion for laptops with Windows 8.1 Bing operating system along with the slow but steady growth of convertible laptops helped increase the number of PCs sold in the second half of 2014.
"Looking at 2015, we still expect that the number of PCs will be sold more to games stores. Although this number is quite small, it will contribute to keeping the PC market stable," said Ms. Phan Thi Hoang Yen, an analyst at IDC Vietnam.
IDC said that optimistic forecast about Vietnam's economy is one more reason to expect more positive trends of the PC market in 2015.
"If the forecast is considered as initial signs, we can expect to see a slight increase in spending by businesses thanks to active elements of Vietnam's economy," said Mr. Daniel Pang, a senior researcher of IDC ASEAN.
"There will be a number of opportunities in the retail sector with a rapid increase in the number of new stores and shopping centers, as well as in the banking sector due to an increase in mergers and acquisitions," he added
The market share of computer firms in Vietnam did not change much last year. Dell still maintained its leading position in the face of strong challenges from ASUS, while Lenovo and Acer struggled to keep up with these firms.
Nguyen Bao Hoang, general director of Good Day Hospitality, which owns McDonald's brand in Vietnam, said the fast-food business achieved positive business results in the first year in Vietnam.
One million burgers were served, including nearly 300,000 Big Macs. Hoang said McDonald's would open more new branches in the city this year.
At the opening ceremony of the fourth store in HCM City’s Go Vap District recently, Nguyen Huy Thinh, manager of McDonald's Vietnam, said the company would open five to six stores in the city this year. McDonald's is expected to move to Hanoi in the next two years.
In addition to expanding the restaurant chain, McDonald's Vietnam manager said the focus of the firm is to strengthen the supply of domestic raw materials.
McDonald's uses Da Lat vegetables and hamburger buns from ABC Bakery, a local brand. Recently, it has been using local eggs on a pilot basis.