A local bank employee counts money. Total credit contracted 1.66 per cent in the first two months of this year. — Photo chinhphu.vn
HA NOI (VNS) — Lowering interest rates to support production and business activities will be one of State Bank of Viet Nam's priorities this year, according to Monetary Policy Department Director Nguyen Thi Hong.
Making these remarks during an interview with VnEconomy, Hong added that interest rates were declining as the banking system experienced redundant liquidity after the Tet (Lunar New Year) holidays. Many banks had cut deposit rates by 0.3-0.5 percentage points for deposits with one-to-two month tenures and by 0.1 percentage point for deposits with longer terms.
"This is an important premise for banks to reduce lending rates," she said. She remarked that the SBV would continue to ask lending institutions to adjust lending rates for existing loans to fall below a cap of 13 per cent.
The central bank will also urge lenders to slash the preferential rate applied to the VND30 trillion (US$1.43 billion) property bailout package by 1 percentage point to 5 per cent, following an SBV decision issued in January, she noted.
"Interest rates for loans in both the Vietnamese dong and the US dollar are now stable and reasonable. Many banks have offered lending rates for dong loans at below 6 per cent, even lower than [the popular] deposit rates," she said.
SBV Governor Nguyen Van Binh reported at a government meeting, on February 28, that the central bank had released VND150 trillion ($7.1 billion) in January, and this decision has helped ensure liquidity as well as add $4 billion to the nation's foreign exchange reserve.
However, while the official target for lending growth in 2013 was 12-14 per cent, total credit contracted 1.66 per cent in the first two months of the year.
Hong said the decline was normal during the Tet season, evident from the experience in the past few years, and positive developments in the macro-economy will support monetary policies.
She also remarked that brighter global prospects will benefit exports, while domestic conditions improve this year. Capital disbursement from foreign direct investment had increased 6.7 per cent, the total retail of goods and services had grown 6.2 per cent year-over-year and the consumer price index had expanded moderately by 1.24 per cent in the first two months.
The central bank has urged lenders to design schemes to ensure credit growth reached its target and has also asked fragile banks to implement their restructuring plans, she said. — VNS
A Hai Duong Pump Manufacturing Joint Stock Company worker paints a pump for the mining industry. Over 4,000 enterprises were created in February this year. — VNA/VNS Photo Hoang Hung
HA NOI (VNS) — Over 4,000 enterprises were created in February this year with a total registered capital of VND19.18 trillion (US$913.3 million), a 5.5 per cent year-on-year decrease, the Ministry of Planning and Investment stated.
The number of newly established businesses declined 42 per cent compared to January this year, and the registered capital was 56 per cent lower than the previous month, according to the Ministry of Planning and Investment's Business Registration Department.
The department said the sharp reduction was due to the long Tet holidays.
However, in the first two months of the year, the number of new enterprises and the value of the registered capital were higher than the same period last year.
More than 10,800 registrations of new firms were recorded in the country in the two-month period, with a total registered capital of VND62.9 trillion ($3 billion), an increase of 13 per cent and 28 per cent in terms of the number of enterprises and amount of capital, respectively.
In the first two months of the year, the total number of enterprises that had dissolved or halted operations was 13,124 units, an increase of 12.2 per cent compared to the same period last year.
The department said the figures showed that businesses are facing difficult conditions.— VNS
Last update 12:00 | 04/03/2014
VietNamNet Bridge – The Vietnam Asset Management Company (VAMC) has purchased 39 trillion VND (1.8 billion USD) in bad debts, of which 200 billion VND (9.4 million USD) has been recovered, said VAMC's vice president Nguyen Quoc Hung.
Further, the wholly-State-owned company plans to purchase an additional 10 trillion VND (473 million USD) during the first quarter of this year, though there will be pressure to sell the purchased debts in 2014.
VAMC is also drawing up plans to restructure purchased debts, so as to set up new rooms for companies to gain new loans.
Regarding plans on debt refinancing through special bonds issued by VAMC, the head of the State Bank of Vietnam’s Monetary Policy Department, Nguyen Thi Hong, said on February 28 that these plans have not yet been carried out.
SBV and VAMC are evaluating each case to determine the volume and time needed to refinance debts. Refinanced volume must be no more than 70 percent of the price of bonds issued by VAMC, pursuant to current laws.
The large purchase by VAMC has helped Vietnamese banks remove bad debt from their books and polish their balance sheets. Under standards set by the central bank, the bad debt ratio of the system increased from 4.08 percent in 2012 to 4.73 percent in October 2013, though the ratio was reduced to 3.63 percent in December the same year.
Including bad debt rescheduled under Decision No780/QD-NHNN dated April 23, 2012, Vietnam's bad debt ratio would rise to about 9 percent, according to the central bank’s announcement last week.
Earlier this week, the central bank issued a regulation that requires VAMC to publish information pertaining to its management policies, internal regulations on buying and selling non-performing loans, its processes and methods for calculating loan price and assets, and its processes and methods for selling loans and assets. The regulation will come into effect on June 1.
27/02/2014 11: 26
According to the General Statistics Office, as of two months, General, retail goods and consumer services revenue was estimated at 474.1 trillion, an increase of 11.6% over the same period a year ago, excluding price factors increased 6.2%.
Total retail sales of goods and services consumers two months of State sector totaled 44.4 trillion, accounted for 9.4% of the total and an increase of 6.6%; non-State sector totaled 412.3 trillion, accounting for 87 percent, up 11.4%; the area of foreign investment reached 17.4 trillion, accounting for 3.6%, an increase of 31.8%.
The total retail sales of commodities and consumer services, business, commercial reach 361.1 billion, accounting for 76.1% of the total and an increase of 9.6%; Hotel restaurant reached 58.2 trillion, accounting for 12.3% and 16.9%; the service reached 50.6 trillion, accounting for 10.7% and 20.6%; reach 4.1 trillion, accounting for 0.9% and 12.1%./.
HA NOI (VNS)— The State Bank of Viet Nam (SBV) will be supported by NEC Asia Pacific and MITEC Vietnam JSC in boosting its infrastructure and storage capacity.
This follows a contract titled "Procurement of Servers, Middleware and Database for the State Bank of Viet Nam" which was signed in Ha Noi yesterday.
The project, beginning in March, is expected to be completed in the next nine months.
With a total investment of over US$9 million, the project will equip and deploy the setup of a server system, middleware, network equipment, software and advanced databases in SBV's data and backup centre.
Speaking at the signing ceremony, SBV Deputy Governor Nguyen Toan Thang said, "I am very happy that SBV has chosen highly competent and experienced partners such as NEC Asia Pacific Pte Ltd Singapore, and Mitec Vietnam JSC. SBV hopes and believes NEC-MITEC will continue to coordinate to implement the project successfully as planned."
As part of the Financial Sector Modernisation and Information Management System (FSMIMS), a $71.83 million project financed by the World Bank, the project will provide the required infrastructure to upgrade current banking technologies, and to integrate with international banking systems.
It will strengthen the capacity to support the implementation of monetary and foreign exchange policies, as well as to enhance banking inspection processes of the bank.
The project will not only help support the operation of core banking systems but also involve training and knowledge transfer to local staff after the implementation.
Vivian Tay, Deputy Managing Director of Public Security of NEC Asia Pacific, said that the project was another milestone for them in Viet Nam.
"The FSMIMS is a key project and of paramount importance to facilitate linkages between SBV and financial intermediaries, as well as enhance domestic and cross-border exchanges within the financial markets," she said. — VNS
HA NOI (VNS)— The Viet Nam Asset Management Company (VAMC) will have to publish information about its activities and become more transparent under a new regulation issued by the State Bank of Viet Nam (SBV).
Circular No04 issued on Wednesday, required the firm to publish information pertaining to its management policies, internal regulations on buying and selling non-performing loans, its processes and methods for calculating loan price and assets, and its processes and methods for selling loans and assets.
VAMC's audited annual reports, its criteria while buying bad debts from financial institutions and its methods of selling bad debts and insured assets will also have to be disclosed.
VAMC must also follow regulations to provide statistics on its activities to SBV's Monetary Statistics and Forecasting Department. When statistics in reports are adjusted or undergo any unusual changes, the company must submit all documents required by the department.
The circular will come into effect on June 1. — VNS
Last update 12:06 | 25/02/2014
The country's consumer price index (CPI) in February inched up 0.55 per cent against the previous month due to low demand, marking the lowest price hike in the past decade.
The General Statistics Office (GSO) reported that the month-on-month CPI hike in February for the past few years was often higher than 1 per cent. The CPI rose 2.2 per cent month-on-month in February 2007; 3.56 per cent in Feb 2008; 1.17 per cent in Feb 2009; 1.96 per cent in Feb 2010; 2.09 per cent in Feb 2011; 1.37 per cent in Feb 2012 and 1.32 per cent in Feb 2013, it said.
Director of the GSO's CPI department Nguyen Duc Thang said that February, which includes the country's largest holiday of Tet (Lunar New Year), often saw the CPI rise to the highest level of the year as domestic demand is very high at the time.
However, Thang noted, February 2014 didn't follow this pattern, as local consumers had tightened their belts, choosing to buy mainly essential items, while supply sources were abundant.
This month's low CPI growth does not surprise observers as some experts had previously predicted that this month's CPI would only rise from 0.5-0.7 per cent due to low demand.
The forecast was based on releases of the February CPI in the country's two largest cities of HCM City and Ha Noi. The indexes in Ha Noi and HCM City rose 0.49 and 0.24 per cent.
As many as 9 out of the 11 baskets of goods that contributed to the calculation of the CPI data saw their prices increase this month.
Of these, the prices of food posted the highest increase, rising 1.15 per cent. Traffic and culture-entertainment-tourism came second, with 0.66 and 0.61 per cent respectively.
The prices of household appliances, garments-footwear-hats, medicine-health care and education rose between 0.01 per cent and 0.22 per cent.
On the down side, the prices of housing and construction materials slid by 0.64 per cent this month, and the prices of postal services and telecommunications eased by 0.02 per cent, the data showed.
Gold was not included in the CPI components, with prices in February rebounding to rise by 1.87 per cent month on month but still losing 22.77 per cent year on year.
The US dollar prices this month edged down by 0.03 per cent month on month but were still up 1.05 per cent year on year.
In the urban area, this month's CPI increased by 0.54 per cent month on month. The rise in the rural area was 0.56 per cent month on month.
Last update 16:00 | 26/02/2014
VietNamNet Bridge – The number of commercial banks will be cut by a half from 30 currently, the head of the State Bank of Vietnam (SBV) has confirmed.
When asked if SBV has the plan to cut down the number of Vietnamese commercial banks to 14-17 in the next three years as stated by some high ranking officials, Governor of the State Bank of Vietnam Nguyen Van Binh said the State Bank believes the number (14-17 banks) fits the Vietnam’s national economy’s scale.
However, he added that 14-17 banks is the goal Vietnam strives to, while the plan cannot be done overnight.
Economists some years ago raised a question that if Vietnam, a small economy, needed so many commercial banks and if it was necessary for the State Bank to stop licensing more banks.
However, they were told that Vietnam, which was developing rapidly and integrating more deeply into the world, needed to have more banks to serve the increasingly high demand from individual clients and businesses, especially importers and exporters.
And the issue has been put into discussion again. The State Bank has shown its strong determination to make a sharp cut on the banking system in a plan to restructure it.
Regarding the rumor about the merger of Sacombank and Southern Bank, and the merger of some medium banks in 2014, Binh said the watchdog agency needs to follow necessary procedures strictly before making decision. The most important factor for the merger deals to succeed is the high consensus of the banks’ shareholders about the merger.
Prior to that, Chief Inspector of the State Bank of Vietnam Nguyen Huu Nghia told Thoi bao Kinh te Saigon that the 2014 bank restructuring plan would focus on the stability and the safety of banks’ operation.
Nghia said merger and acquisition would still be the major tendency of the restructure program. However, the restructure would be carried out not only by the weak banks, but by the better banks as well.
“Banks should think of improving their competitiveness with voluntary merger deals,” he said.
“I have not received any official proposal so far this year, but I know banks are moving ahead with the merger and acquisition plans,” he said. “The reduction of the number of commercial banks is foreseeable.”
In the latest news, a lot of commercial banks have reported loss for 2013. The Asia Commercial Bank (ACB), one of the Vietnamese biggest banks, has reported the loss of VND293 billion in the fourth quarter of 2013.
Eximbank has for the first time since 2009, when it began listing shares on the bourse, reported the loss of VND222 billion in the fourth quarter of 2013.
Other banks luckily did not take a loss, but have reported the sharp falls in profits. Vietinbank, for example, saw the profit down by 60 percent in the fourth quarter of 2013, while the Military Bank saw the non-performing loan ratio increasing by 50 percent and the profit decreases in all types of business.
SHB’s profit in the fourth quarter decreased by 70 percent, while Techcombank has estimated the13.7 percent decrease in the 2013’s profit in comparison with the year before.
Last update 11:56 | 26/02/2014
VietNamNet Bridge – While the bitcoin price has tumbled in the world market from over $1,000 per BTC to several hundreds of dollars now, Vietnamese still make investments in bitcoins with the strong belief that bitcoin would become the next-generation payment instrument.
Le Huy Hoa, a key member of bitcoin forum in Vietnam has affirmed that the bitcoin investors’ community has been expanding rapidly.
Hoa stressed that Vietnamese still spend time and money on bitcoins, even though the bitcoin price has been dropping dramatically in the world market.
In Vietnam, the bitcoin price has fallen from VND20 million to VND6 million just over one month.
“I am not interested in the bitcoin price, because it is not a currency. However, many people consider bitcoin as the next-generation currency, a new payment instrument,” he said.
“In other words, bitcoin is considered a kind of goods, which is believed to be the valuable assets. Since people believe bitcoin would become more valuable in the future, they tend to hoard bitcoins as they hoard gold,” he continued.
An observer has noted that since the bitcoin price has depreciated, Vietnamese investors tend to “mine” other versions of virtual currency, such as litecoin, peercoin, namecoin, which prove to be cheaper and easier to be dug.
An investor has affirmed that the Vietnamese bitcoin community has been developing very strongly.
“There are numerous investors who hold billions of dong worth of bitcoins,” he said. “However, they never turn up before the public to hide themselves from the police”.
The officials of the State Bank of Vietnam have many times stated on local mass media that bitcoin is not accepted in the Vietnamese territory. This means that it is illegal to hold bitcoins and use bitcoins in payment.
The bank is going to release a legal document in some days to show its official viewpoint about bitcoin and other virtual currencies.
However, the ban by the State Bank has been ignored by Vietnamese investors. Hoa said more and more virtual currencies have been arisen. The State Bank would have to brainstorm to think of the reasons to be cited to prohibit the bitcoin circulation in Vietnam.
Therefore, Hoa said, investors still keep investing in the new currency.
To date, websosanh and lamchame, the two first Vietnamese businesses that accept the payment in bitcoin, have not made any official comments.
Opinions from the well informed circle said that the State Bank needs more time to consider the issue thoroughly. This explains why no official legal document or statement has been made.
It is highly possible that the watchdog agency is still considering the other governments’ experiences in dealing with the virtual currency.
Vietnamese bitcoin diggers have confidence in the bright future of the bitcoin. However, experts have warned that they “delude” themselves.
The bitcoin was valued at $2 only in its early days. Later, its price soared by 500 times to $1,000 in late 2013. But the price has fallen again to $300. And analysts have every reason to believe that the bitcoin price would drop to the initial value.
“No central bank dares to accept the currency. Therefore, bitcoin investors should be warned that they are facing very high risks,” said Dr. Vo Tri Thanh from the Central Institute for Economic Management CIEM.
HA NOI (VNS)— Many commercial banks are struggling with a large amount of idling capital that they are unable to disburse given the ongoing situation of stagnant domestic consumerism and weak production.
The situation raises pressing concerns related to high borrowing costs, which surpass the capacity of many enterprises. Experts argue that in order to unlock the trapped capital, banks must work to slash lending interest rates on medium- and long-term loans.
Economist Tran Du Lich said that doing so would revive domestic production and boost market demand.
The State Bank of Viet Nam gives credit priority to four sectors: agro-forestry-fishery production, small- and medium-sized enterprises, ordinary industry, and end-processing industry.
However, it is not easy to slash loan costs further; long-term deposit interest rates would have to be slashed to less than 7 per cent annually to secure the system's liquidity. Currently, banks are offering 7.9-8.4 per cent interest for long-term deposits.
Analysis based on a targeted inflation rate of 5.5-6 per cent coupled with a 2 per cent margin for forex management and the competent competition of the Vietnamese dong against the US dollar showed a vague possibility of further cuts in deposit interest rates within 10 months.
This simply means that high interest rates for long-term loans will become a thing of the past, creating a paradox: capital is abundant, but enterprises have no money.
Hoang Trong Nam, director of Dai Duong JSC, which produces brewery products, said that banks have only reduced short-term borrowing costs for one to three months, while keeping the rate afloat thereafter. Total borrowing costs were not low, and enterprises found it difficult to access capital.
According to the Viet Nam SMEs Association, these enterprises, which comprise 90 per cent of the total domestic enterprises, are practically unable to borrow money for production. — VNS