VietNamNet Bridge – The State Bank of Vietnam had kept the dong/dollar interbank exchange rate at 20,828 dong per dollar for the 39th consecutive day by late last week. The exchange rate stabilization has prompted people to sell dollars and keep dong.

Nguyen Ngoc Lan in Hoan Kiem district in Hanoi on February 16 morning came to Eximbank to ask about the dollar prices, planning to covert the dollar deposits at the bank to dong deposits.

Lan said that the central bank has been keeping the exchange rate unchanged for the last 40 days, which means that the exchange rate would be stable in the time to come. Therefore, Lan decided to sell the dollars she has to buy dong to deposit at banks. While the dollar deposit interest rates stay at two percent per annum, the dong deposit interest rate is 14 percent per annum. Therefore, it would be more profitable to deposit in dong than in dollar.

On February 16, Vietcombank quoted its buy price at 20,810 dong per dollar and sale price at 20,870 dong per dollar, a decrease of 10 dong in comparison with the prices of the day before. At Asia Commercial Bank ACB, the quoted prices were 20,800-20,860 dong per dollar (buy and sale).

On the black market, a foreign currency exchange shop on Ha Trung Street in Hanoi informed the prices at 20,800-20,830 dong per dollar, lower than the prices of the day before at 20,810-20,840 dong per dollar.

Analysts have commented that the big gap between the dong and dollar interest rates and the promise to control the exchange rate fluctuation within 2-3 percent both have encouraged people to convert dollars for dong.

On February 14, the State Bank announced that it has been buying foreign currencies, while the current favorable conditions have been facilitating the purchases.

The bank said that the foreign currency liquidity of the banking system has improved since January 2012, while banks have sold more foreign currencies to the State Bank. The foreign currency positions of commercial banks have been “slightly positive” since they came back to operation after the Tet holiday.

The purchases in large quantities by the State Bank are believed to help increase the foreign currency reserves further after the considerable increase in 2011.

Le Quang Trung, Deputy General Director of VIB, believes that the pressure on the foreign exchange rate would not be too hard. In principle, the timely and direct intervention by the State Bank has helped ease the pressure on the market and ease the price expectations.

In the past, the central bank sometimes had to devaluate the local currency by 5 percent, 7 percent or 10 percent, depending on the supply and demand. Once the supply was short, the exchange rate expectations increased.

“I believe that in 2012, the new method of market regulation would make the market go smoothly and avoid jolts,” Trung said.

He went on to say that the supply of foreign currencies would continue increasing in 2012 because the exports would continue increasing. The foreign direct investment keeps flowing to Vietnam, while overseas remittance would also increase. Besides, when the inflation is high, the gap between dollar and the dong interest rates is big, the value of the local currency would be maintained, because the depreciation would be offset by the interest rate. The factors would make people feel more optimistic about the local currency.

Especially, Deputy Governor of the State Bank Nguyen Dong Tien has committed that the central bank would keep strict control over the gold market, the market which usually has big impacts on the foreign currency market.

Source: TBKTVN

http://dongtalk.com/forums/showthread.php?t=21786

Updated : Tue, February 21, 2012,9:16 PM (GMT+0700)

The HCM Stock Exchange (HOSE) said on Feb. 21 that it will launch afternoon trading sessions from March 5.

The market will trade from 9am to 11.30am in the morning and from 1pm to 2.15pm in the afternoons, from Monday to Friday.

The new trading session will help investors closely monitor information in domestic markets as well as compare movements in regional and international markets in order to make their own investment decisions.

According to HOSE regulations, members of the stock exchange are not allowed to place new orders, change or cancel orders or make transactions during the break period from 11.30am to 1pm.

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The Ministry of Finance has decided to slash petroleum and jet fuel import taxes to between 3% and zero percent beginning February 21 in order to support domestic petrol traders.

Petroleum import tax cut aimed to support domestic traders

As a result, import tariffs on kerosene and diesel have been reduced from a previous 5% to 3%.

Import taxes on gasoline and jet fuel have been cut to zero percent, compared to a previous 4%.

The move is expected to assist local petroleum traders in their business amid rising global fuel prices in recent months.

Local market watchdogs said that the imported price of 92 octane petrol (A92) in the Singaporean market had increased to an average USD125.94 per barrel for February deliveries, up 5.18% compared to a month earlier.

This means that the retail prices of A92 should stand at VND23,332 (USD1.11) per litre instead of current VND20,800 (USD0.99).

With the rising import prices, several domestic petrol traders are bemoaning losses of over VND1,000 per litre of petrol sales.

Dang Vinh Sang, General Director of Saigon Petro Limited Company, said the firm is facing mounting difficulties.

According to him, Saigon Petro has to lower their commissions to agent to only VND350 per litre, instead of a previous VND650 per litre.

Several other traders, including the state-owned Vietnam National Petroleum Corp (Petrolimex), the country’s biggest petroleum trader, are also in the same situation with Saigon Petro.

Petrolimex Deputy General Director, Vuong Thai Dung, said the current retail prices of petroleum in the domestic market are between VND1,300 and VNDVND2,400 per litre lower than the imported prices depending on different products.

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Vietnam has been ranked seventh out of the 10 countries seen as having the best prospects for long-term growth, announced HSBC on the business and financial news website CNBC.com.

Processing seafood for export.

In HSBC’s report “The World in 2050” which forecasts how the economic landscape will change over the next 40 years, HSBC projected the country’s annual growth at 5.2 percent with its GDP rising to US$451 billion by 2050.

According to HSBC, as the world’s second-largest exporter of rice, agricultural exports has always made a major part in Vietnam’s economy. However this is rapidly changing as the government moves to liberalise and diversify the economy.

While state-owned enterprises contribute 40 percent of the country’s GDP, overseas investment has been increasing sharply since the country became part of the World Trade Organisation in 2007.

Vietnam’s low-cost manufacturing base has attracted a wave of foreign investors, particularly in the retail clothing and technology sectors, as an cheaper alternative to China.

Intel, the first international technology company to make a major investment in the country six years ago, has helped to raise Vietnam’s profile as an investment destination. A long list of companies including Samsung, Canon and Foxconn have followed, investing millions of dollars into developing manufacturing operations in the country.

Analysts say this is helping to lay the foundations for Vietnam to become Asia’s next big electronics manufacturing hub, said HSBC in its report.

VNA

http://dongtalk.com/forums/showthread.php?t=21754

VietNamNet Bridge – After receiving sky high Tet bonuses, bank officers now are going to get the 2011 income’s back pay. Analysts believe that this sum of money, in fact, is the Tet bonus. However, bank officers have to get the bonus at different moments in order to avoid criticism.

For the last several years, banks have become the object of public’s criticism. While other businesses incur loss because they have to bear overly high financial costs, banks still charge sky high interest rates and earn fat profits. Businessmen have accused banks of “living on the misery of businesses.”

“Living on salaries, getting rich on bonuses”

These are the words regularly heard among bank officers. Banks now apply a special payment mechanism. Every month, officers only get a part of he total salaries they can get. The remaining money will be given some other time, possibly at the end of the year, or early the next year.

As for joint stock banks, the monthly income given to staff is just equal to 40-50 percent of the total salary fund. The figure seems to be no higher than 70 percent at all banks.

An officer of Vietinbank revealed that like other banks, Vietinbank builds up a fixed salary fund every year based on the profits. The money bank officers get every month is the “pay in advance.”

In 2011, Vietinbank officers got the “pay in advance” equal to 50 percent of the total salary fund. For example, if an officer has the monthly income of 20 million dong a month, he would get 10 million dong every month. Besides, he would also get bonus for Tet holiday, monthly and quarterly bonuses.

If the total salaries and bonuses the officer gets by the end of the year are still lower than 20 million dong a month, the officer would get the arrears early the next year. For example, if he gets 15 million dong a month by the end of the year, he would get 60 million dong after Tet.

“In the banking circle, the concept “Tet bonus” does not exist,” the officer said. “We only know the total income we will get. And we will get the sum of money at that time, or some other time.”

The Q4 finance report of Vietinbank showed that the average salary of the bank officer is 20.27 million dong a month, while the average income is 20.76 million dong a month. The total pretax profit of Vietinbank in 2011 was 8105 billion dong, while the total wage fund was 4402 billion dong.

Asked about the expected pay arrears, bank officers believe that the sums of money would be even higher than the last year. An excellent officer of BIDV expects to receive 100 million dong in arrears.

Bank managers evade question

Asked about the special pay mechanism, Le Duc Tho, Deputy General Director of Vietinbank, denied the information.

“This is just a rumor. We pay exactly what officers deserve to get. There is no back pay mechanism,” Tho said.

Tho went on to say that banks cannot ignore the current regulations and apply a special mechanism for themselves. “The current regulations on paying salaries to workers in state owned enterprises are very strict. We always make information transparent,” he said.

Meanwhile, some analysts comment that banks cannot admit the special mechanism, or they would be criticized for this. While bank officers have sky high income, garment workers get the income which is not enough for basic needs.

Nguyen Tien Tung, Deputy Chief Inspector of the Ministry of Labor, War Invalids and Social Affairs, said that he cannot make conclusion about the issue until an inspection is carried out. However, Tung said that most of the banks propose to pay high to their officers to retain qualified workers.

Source: Infonet

http://dongtalk.com/forums/showthread.php?t=21751

Workers at a factory of garment for export in HCMC
Photo: Tuoi Tre

Vietnam has made great strides in all aspects of its economy in the five years since it became a member of the World Trade Organisation, experts told a conference in HCM City last week.

More than 200 economists, policy makers, and business executives attended the conference titled "Five years after joining WTO – integration and development of Vietnamese enterprises" organised by the Communist Party of Vietnam online newspaper and Industry and Trade newspaper.

After the country acceded to the WTO in 2007, foreign direct investments have risen dramatically as have exports.

The country's exports have virtually doubled in the period to 96.3 billion USD.

Distribution and retail services have also developed strongly, with the opening of hundreds of convenience stores changing the complexion of the country's retail sector and buying habits of Vietnamese consumers.

Former deputy prime minister Vu Khoan said the WTO membership enabled local companies to enjoy lower import tariffs on machinery, equipment and feedstock, which helps cut production costs and improve their competitiveness.

Opening up of distribution has been an important step in the country's integration into the global economy.

The attendees agreed that the penetration of foreign goods has brought great competitive pressure on local products, but on the other hand consumers can choose from a variety of high-quality products and services at competitive prices.

This has prompted local firms to improve their competitiveness, they said.

But many also pointed out the weaknesses of Vietnam in its process of integration – like the poor quality of growth, human resources, high trade deficit, and low competitiveness.

The export structure had not changed considerably, with the country still mainly shipping abroad raw materials and labor-intensive products such as garments and footwear, they said.

The Government and businesses therefore need to take better advantage of opportunities, they said.

The high bank interest rates at the moment is causing difficulties for exporters and services companies and eating into their profits, said Do Ha Nam , chairman of the Vietnam Coffee and Cocoa Association and general director of Intimex Import-Export JS Company, said.

The Government should reduce the rates, he added.

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Some big banks have started to lower interest rates and more banks are expected to follow suit to cut interest rates by around 1% in the next months.

Enterprises expected a considerable interest rate cut in the time to come

Modest lending interest rate cut

After the Bank for Investment and Development of Vietnam (BIDV) and the Bank for Foreign Trade of Vietnam (VietComBank), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) was the third institution that announced to lower lending interest rates by 0.5% per year.

Vietinbank is applying the lowest yearly lending interest rates, of 16%, for agricultural ventures, with those for production are around 17%.

Earlier, BIDV has slashed its lending interest rate to a minimum of 14.5% per year. Its lending interest rate peaked at 17.5% per year.

Vietcombank has lowered its short-term lending interest rate for exports to 16% per annum while the short-term lending interest rates for production is 16.5% per year and for trade and service reaches 17% per annum.

Despite the modest cut among a few big banks, the new lending interest rates are considerably lower than the 19.5-20% interest rate applied in late 2011.

In the next few months when the banking liquidity is heightened, more and more banks will lower their interest rates.

Deposit interest rate depends on inflation

In late 2011, Governor of the State Bank of Vietnam (SBV), Nguyen Van Binh, said that if the inflation rate is brought down from 8% to 8.5% this year, deposit interest rates could decrease to around 10%.

While the consumer price index continues to fluctuate, the way to get lower deposit interest rates is dependent on many factors, especially cooling, he added.

The inflation rate had dropped to 17.27% in January 2012 from a record high of 23.02% in August 2011.

The rate is forecast to slightly increase by 1.5% in February, and then gradually decrease to around 0.5% per month in the following months.

Many experts expect that the rate may be tamed at 12% in April and to less than 10% by the end of the second quarter of this year.

With such an expected falling trend in the inflation rate, interest rates may follow suit but at a lower pace due to the dependence on banking liquidity and level of bad debts.

According to a recent report by BIDV Securities Company, this year’s bad debts may be more serious than the 2008-2009 period as a result of the nearly frozen real estate market.

"As long as the real estate market remains in slow-motion and banking liquidity is still low, it will take time to lower interest rates. By the end of 2012 may be cool down,” BSC noted.

However, experts continue to worry about the pace of interest rates lowering, which start to wear on the psychology of people. In order to strengthen confidence, policy makers may take methods to improve the situation, including slashing the cap on deposit interest rate by 1% from current 14% per year.

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The ambassador and head of the European Union (EU) Delegation to Vietnam, Franz Jessen, believes negotiations on a free trade agreement (FTA) with Vietnam will begin soon, as the two sides have put their efforts on this and expansion of relations.

The ambassador and head of the European Union Delegation to
Vietnam, Franz Jessen (C).

Over the past year, the EU and Vietnam have had a number of discussions and tried to identify what to negotiate for the FTA, and that process was very close to completion, Jessen told reporters in HCMC on Tuesday.

Both EU and Vietnam have prepared their intensions for what to go with such negotiations.

Matthias Dühn of the European Chamber of Commence in Vietnam (EuroCham) said Vietnam had given a political signal that it was ready for launch of formal FTA negotiations with the EU as soon as the technical work had been completed.

The executive director of EuroCham said at the “Vietnam-EU Relations: Achievements and Prospects until 2015” luncheon in HCMC on Tuesday that the EU and Vietnam still needed to agree in technical talks on the common framework of the agreement before the formal launch of negotiations.

The framework involves issues including the market economy status and generalized system of preferences (GSP) for Vietnam, among others. These issues needed constructive discussions for the two sides to move forward to the FTA talks, Jessen told reporters before he dialogued with representatives of local and foreign companies at the EuroCham luncheon.

Jessen said senior officials were keen to have contacts in the next few weeks to see how they would proceed with necessary preparations. As head of the EU delegation to Vietnam, Jessen said he would do what he could to ensure EU-Vietnam trade would increase at a high rate, adding such are his priorities during his office term here in the country.

The EU is now a major export market for Vietnam and Jessen quoted Vietnamese statistics as saying that exports from Vietnam to the EU last year grew over 45% year-on-year to around US$16.5 billion. If this trend continues, the EU will surpass the United States to become the biggest export market for Vietnam.

Jessen credited the whopping export growth to the fact that the two economies were complementary, as many made-in-Vietnam goods exported to the EU were not produced in Europe, while the EU exports to Vietnam many products that are not made here.

The EU ambassador said one of the ways to accelerate the EU-Vietnam trade was to remove unnecessary market restrictions, and that the 45% rise in Vietnamese exports to the EU last year proved that this bloc was very open and a big market for Vietnamese products.

He said there had been good developments in the EU-Vietnam relations and this was one of the reasons for the two sides to kick off FTA negotiations. The FTA would benefit both sides, particularly creating more market opportunities for Vietnamese companies.

Jean Jacques Bouflet, head of the trade section at the EU Delegation to Vietnam, said the deadline for the EU-Vietnam FTA to come into force would be January 2015, when the ASEAN Economic Community is already formed as visioned.

Bouflet told reporters that the FTA meant not only the reduction in import tariffs but also the confidence of investors and therefore the FTA brings win-win benefits to both sides.

Dühn of EuroCham remarked at the luncheon opening that the EU was seeking to broaden and diversify its relationship with Vietnam, beyond development co-operation and trade, to increased political cooperation on issues of global concern.

“The EU works closely with Vietnam under the framework of the Cooperation Agreement to ensure an effective environment for trade and investment relations. Relations will soon be further strengthened through the new Partnership and Cooperation Agreement (PCA) which will extend the areas of cooperation,” Dühn said.

The EU and Vietnam were expected to sign the new PCA this year to replace the cooperation agreement signed in 1995, Jessen told reporters.

Also on Tuesday, the EU ambassador met with leaders of HCMC as part of his business trip to this economic hub of Vietnam, about four months after he came to Vietnam.

SGT

http://dongtalk.com/forums/showthread.php?t=21707

by Quynh Hoa

Crossing the Tau Hu-Ben Nghe Canal, the Calmette Bridge is one of HCM City's major infrastructure projects. — VNA/VNS Photo Kim Phuong

HCM CITY — Viet Nam needs to develop specific policies and measures that will increase investors' trust, economists said at a Super Investors Day held yesterday in HCM City.

The event attracted the participation of renowned entrepreneurs and economists to discuss macro-economic issues, investment opportunities and financial investment channels for 2012.

Nguyen Tan Thang, an economist at the HCM City Securities Corporation, said: "Viet Nam needs to stabilise the macro-economy in the long term, be consistent in policies, and create a healthy investment environment."

The country should continue to restructure its banking system so that it could deal with bad debts, he added.

Banks with weak financial health and poor management capacity should be disbanded or merged with healthier banks.

Bank liquidity would need to be improved and credit growth in the non-production sector should be limited.

"Improved liquidity is a prerequisite to revitalise the stock market," he said.

The absence of standards for releasing financial statement information has led to a lack of transparency and information about stocks in Viet Nam over the past few years, according to Thang.

As a result, companies and investors have become skeptical about the market. Companies continue to insist on listing their shares despite their weak management and lack of transparency.

Alan Phan, chairman of Viasa Fund Ltd., said that other investment channels such as gold were a good defensive channel but not particularly safe.

Investing in property, for example, depends on consumer's income, economic situation and interest rates.

Foreign currency investment is safer and more profitable.

Speaking at the event, Dang Doan Kien, representative chief of Aureos Capital Viet Nam, pointed out that M&A (mergers and acquisitions) was a popular activity to develop economies. M&A activity in Viet Nam is expected to increase sharply this year and in the future.

Recent volatility in the market has directed major investors to M&A, a new investment channel.

Under this type of investment channel, corporate infrastructure, basic technology systems and personnel are ready to use.

Investors do not have to spend time training staff or wait for the completion of construction of infrastructure to do business and begin production.

They do not have to build up their brand from the start, and the customer base and networks are already available for development.

According to research from the Nexus Group, for the first nine months of last year, the value of M&A deals in Viet Nam was recorded at $2.67 billion, an increase of 150 per cent compared to 12 months in 2010.

Consumer goods, finance and property topped the list of sectors which saw high M&A activities.

Le Thanh An, the United States consul general in HCM City, said that Viet Nam's macro-economy still faced obstacles, including inflation of 20 per cent. It needed investment strategies for the medium – and long-term.

US investors want to cooperate with Vietnamese partners in trade and investment, franchising, energy, infrastructure, and in the education and health sectors.

Difficult year

Leading economist Le Dang Doanh said according to the International Monetary Fund's forecast in January, the world economy would have a slow growth rate this year.

In the first two quarters of this year, the Vietnamese economy would have a difficult period, especially for exports to Europe.

Germany, the most stable economy in the European region, would see a growth rate of only 0.4 per cent this year, according to the Organisation for Economic Cooperation and Development.

Doanh said this year would be a difficult one for Vietnamese exports. In January, export turnover fell by 28.5 per cent compared to December last year and 11.1 per cent compared to January 2011.

Viet Nam recorded a low growth rate in January. It managed to have foreign-direct investment (FDI) worth $37.3 million, only 2.5 per cent of the figure recorded last year.

New registered enterprises fell 36 per cent in number and 56 per cent in capital volume compared to the same period last year.

"The Government aims to keep this year's inflation in single digits. However, it's a very positive sign if inflation drops to 12 per cent," he said.

He said Viet Nam should seek new export markets, such as South America and the Middle East.

"However, we also need to set a firm foothold in the domestic market, especially in rural areas for sectors such as footwear and furniture, which may see a decrease in exports," he said.

Economic restructuring is a must, offering opportunities as well as many challenges. State-owned enterprises are being compelled to slash their financial expenses by 5 per cent.

"This restructuring has occurred not only in banking and investment but also in the Government apparatus and State-run bodies, and Government's policies in particular," he noted.

For increasing efficiency of foreign investment, investors should disburse more registered capital, he said.

Agencies as well as investors should also resolve problems related to issuing of licenses and site clearance, Doanh added.

The event was co-organised by Entrepreneur Magazine in collaboration with Vinabull, Le Bros Company and Info TV Channel. — VNS

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VietNamNet Bridge – The low consumption demand and the big inventory volumes are the two biggest problems manufacturers are facing which make them worried stiff.

At Metro Binh Phu, there was no queue at noon of February 11. All buyers could make payment immediately, even though only some counters operated. There were not many visitors inside. The same situation could be seen at traditional markets in HCM City, including Tan Binh, Hoang Hoa Tham and Tan Dinh.

Purchasing power decreases

Ngo Van Hai, Director of Citimart chain, has noted that the demand is very low. “The number of buyers has decreased by 20 percent in comparison with the same period of the last year,” Hai said.

Mai Ngoc, the owner of a children’s toy shop on Hai Thuong Lan Ong Street in district 5 of HCM City, said that in previous years, the sales after Tet holiday were relatively high with the revenue of 30-40 million dong per day. Meanwhile, the sales have been going very slowly so far with the modest turnover of 15 million dong per day.

Nguyen Huu Toan, Director of Sanding Fashion Center, the sales have dropped by 30 percent in comparison with the same period of the last year.

A lot of home appliance centers in HCM City have opened again since January 30, but the salesmen have been sitting idle since then, because of very few buyers. Mobile phone distributors gather meetings every day to discuss the solutions to boost sales. However, the situation has not been improved.

According to Dinh Anh Huan, Business Director of The Gioi Di Dong, the average sales of the supermarkets of the same chain in HCM City, the strategic market of the distributor, are just 100 million dong per supermarket per day.

“In previous years, the sales were very high on the first days of the new lunar year. We could get 140 million dong a day,” he said.

HomeOne, a home appliance center in Go Vap district of HCM City, has been quiet from the morning to the afternoon; and on weekends as well. The nearby Nguyen Kim and Thien Hoa supermarkets seem to be more crowded, but most of the visitors go there just for window shopping. Very few people buy valuable things such as LCD TVs, refrigerators and air conditioners.

Computer supermarkets including Phong Vu, Hoan Long, Bach Khoa are facing the same problem.
Goods left unsold since Tet

The low demand has led to the big inventory volume. Especially, food distributors have been put on tenterhooks because of the high inventory volume, which has been left unsold since Tet.

A pork distributor has revealed that though the chain has slashed the sale price by 10,000 dong per kilo, the sale of pork has been left unsold.

Another food distributor has revealed that a big volume of poultry meat is still being kept at the company’s storehouse. The poultries were slaughtered before Tet for Tet sale, but they have not been sold out.

This explains why farmers have raised the sale prices of chicken, but the retail prices at supermarkets remain unchanged. Especially, on February 11-19, at Vinatextmart and Maximark, buyers can enjoy the price discount of 10 percent when buying leg of pork.

Hai said that the unsold products are mostly sweets, chocolate, canned tea, processed food. Manufacturers would take back sweets and chocolate to sell on Valentine Day or Women’s Day. Meanwhile, other products need to be sold as soon as possible. In some cases, the unsold products would be used as associated gifts for buyers.

Lacking cash and having big inventory volume, a mobile phone distributor has reportedly joined forces with mobile network operators to sell products at low price of 400,000 dong to workers in the Long An industrial zone.

Source: SGTT

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