TUOI TRE NEWS
UPDATED : 03/31/2015 12:50 GMT + 7
Vietnamese Prime Minister Nguyen Tan Dung is upbeat that his country can achieve its economic targets and plans this year, with the economy “gradually recovering” from its troubles.
“The economy is recovering, the macro-economy is stabilizing, and GDP growth is also increasing,” the premier said as he chaired a meeting to recap macro-economic management in the first quarter of 2015 in Hanoi on Monday.
PM Dung said the 6.03 percent growth in the first quarter is evidence for his remark.
He also listed many other good signs, including growing industrial production, stable foreign exchange rates, enlarged foreign reserves, and ensured public welfare and security.
The ‘victory’ gained in the first quarter adds ground to the belief that Vietnam will go on to achieve its full-year targets and plans for eco-social development in 2015, according to the premier.
The targets include a 6.2 percent growth rate, 10 percent increase in export turnover, controlled inflation, and stable foreign exchange rates, he elaborated.
The prime minister said the country can even surpass the 6.2 percent growth target.
VietNamNet Bridge – Many Japanese companies are expected to promote foreign investment. Vietnam is capable of receiving a new wave of investment from Japan.
Japanese Prime Minister Shinzo Abe has issued many new policies from defense to economics. Abenomics, his bold economic policy launched nearly two years ago to rebuild the economy of Japan, could create a war between "the money-making machines" in the world. This article introduces this policy and its impact on Vietnam.
Although Japan has regained growth momentum, the economic policies of Prime Minister Abe continue to be challenged.
Abenomics includes three main pillars: loosening monetary policy, boosting public spending, and deep and wide economic growth policy.
According to the Japanese government, in the second quarter of 2014, Japan’s GDP fell by 7.3%. The real GDP decreased 1.6% in Q3. According to experts, an economy that decreases two consecutive quarters is falling into recession.
An opposite effect of Abenomics is the implications of a cheap yen. According to the Tokyo Shoko Research Research’s research conducted late last year, 48.4% of Japanese companies said they were negatively affected by the consequences of the rapid devaluation of the yen. 22.7% said that they were under both positive and negative impacts. The particularly negative effect cited is the increase in the price of imported goods.
Among the businesses affected by the depreciation of the yen, 80.8% said they were not able to adjust the import price through product prices. When asked about measures to be taken to deal with the depreciation of the yen, 73.2% were pessimistic, saying that they did not have feasible measures.
Another consequence is the trade deficit. It is worth noting that the trade deficit of Japan has lasted for 29 consecutive months, while Japan is a country whose economy relies on exports.
The economist also pointed out that Abe’s policies have not succeeded in increasing income for the people. The average income of households fell in September 2014, marking a decline in 14 consecutive months.
The bad news about the Japanese economy has caused criticism of Abenomics, especially from Jeff Kingston, professor of politics at Temple University in Tokyo, who said bluntly: "Abenomics is a failure".
In the bleak context of 2014, comments on the outlook of the economy in 2015 of the world's third largest economy were not optimistic.
According to a 2015 survey by the leading business statistic agency of Japan - Teikoku Data Bank - conducted earlier this year, the number of companies optimistic about the prospect for the new year declined, while concerns over the cheap yen rose abnormally.
Specifically, only 13.4% of companies in the survey said that the economy will recover in 2015, nearly half compared to the survey in 2013.
In addition, the pessimistic rate increased from 16.5% of the previous year to 26.8%. The cause of concern is still ... the depreciation of the yen while it is one of the "three arrows" of Abenomics.
According to analysts, the Government of Japan has gone too far in easing monetary policy, causing the yen's exchange rate to drop too much.
In the context of Japan falling into recession, international organizations such as the Organization for Economic Cooperation and Development (OECD), the International Monetary Fund (IMF) and others lowered growth forecasts for the economy.
OECD said the third-largest economy in the world is expected to grow by 0.8% in the 2015 fiscal year, lower than the 1.1% previously announced. IMF also cut growth forecast for the Japanese economy in 2015 to 0.8%, lower than initially expected figure of 1.0%.
Will Vietnam benefit?
According to economic experts, the yen weakness will cause two main disadvantages to emerging countries in the region. There will be less need to import products from Japan, and Japan's exports will have better competitive advantage thanks to cheap prices. The worst affected economies will be South Korea, Taiwan and the Philippines.
However, with Vietnam, the impact can be much less, and could even benefit the country if it know how to take advantage of it.
In 2013, the yen depreciated by 17% against the US dollar, but Vietnam gained a trade surplus of nearly $2 billion from Japan, with export turnover of $13.65 billion.
Also in 2014, its exports to Japan reached $14.70 billion, an increase of 7.7% compared with 2013.
On the other hand, many Vietnamese companies using yen loans also significantly benefit from the rising price of the VND against the yen. It also benefits companies importing raw materials from Japan or those doing business with Japanese partners.
To reduce reliance on the US dollar as well as risks of exchange rate uncertainties, many enterprises of Vietnam and Japan have used the yen for payment. The cheap yen policy has brought about significant profits.
In addition, Japanese companies doing business in Vietnam also benefit by avoiding direct influence from Abenomics.
According to a new survey published by the Japan Trade Promotion Organization (JETRO), 60% of Japanese companies in Vietnam are profitable, and 70% of them are planning to expand business scale. In this context, many Japanese companies will promote foreign investment, and Vietnam can receive a new wave of investment from Japan.
Japan is the largest provider of official development assistance (ODA) for Vietnam. If Vietnam must pay maturing debts in this period, with the current yen exchange rate, Vietnam will save a considerable amount of the national budget.
VietNamNet Bridge – Moody's in a recent report said that enhancing merger of banks is a positive move to help eliminate small banks, including weak ones.
The majority of banks that need merger are small ones that lack capital. Reducing the number of banks will also help minimize spreading the risk to the banking system.
In addition, streamlining the number of banks will also help agencies to more easily manage the implementation of regulations and monitoring systems. According to Moody's, a number of problems in Vietnam's banking system over time is derived from the lack of strict management.
In addition, although the interbank capital, which is considered part of the total bank capital, fell from 22% at the end of 2011 to 10% -15% by the end of 2014, it remains high in some banks and continues to be a negative factor affecting market confidence.
According to Moody's, the deceleration of credit growth in recent years was thanks to the efforts to reduce debt from banks and weak domestic demand.
Therefore, strengthening bank mergers may partly help the remaining banks expand market share, and encourage them to step up lending.
In the coming time, the market is expected to witness a number of M&A affairs in the banking sector, such as the merger of VietinBank and PG Bank, Sacombank and Southern Bank.
Also, Moody's said the new rules in Circular 36, which took effect from February 2015, restricting cross-ownership between banks (a credit institution is not allowed to buy and own more than 5% of shares of other credit institutions) will accelerate the process of merger in the industry.
Accordingly, Circular 36 will screen the banks that are inconsistent with the provisions, thereby forcing them to divest, or to engage in the sale or merger process.
The purchase, sale, and merger in the banking sector is expected to create banks of larger scale, to help increase operational efficiency, but according to Moody's, the reverse of this process can also bring certain risks.
HA NOI (VNS) — The total retail sales and service revenue earned in the first quarter this year was VND790.8 trillion (US$37.13 billion), according to data from the General Statistics Office (GSO).
The figure represents a 10 per cent year-on-year rise, GSO said, adding that the increase would be 9.2 per cent if inflation was excluded.
The increase, however, is lower than the 10.7 per cent for the first two months, but it is fairly high compared to the 5-6 per cent growth in the final months of last year.
GSO statistician Vu Manh Ha attributed the high growth at the start of the year to the sliding consumer price index (CPI).
The average CPI growth for the first three months was minus 0.03 per cent.
The CPI saw four consecutive months of reduction with minus growth from November last year to February this year. It rose again by 0.15 per cent this month.
Retail sales accounted for three fourths of total revenue, reaching VND604.5 trillion ($28.38 billion) in the first quarter this year, a rise of 10 per cent compared to the same period last year, said Ha.
Meanwhile, the hotel - restaurant sector's total revenue increased by only 8.8 per cent, lower than the average. The total revenue for tourism was down by 22.8 per cent.
The gap between the increase in total revenue when inflation was included and excluded was narrowed.
The gaps between the increase in total revenue when inflation is included and excluded in the first two months were 11.4 per cent and 10.7 per cent, while that of the first three months were 10 per cent and 9.2 per cent.
The gap was often double or nearly double that of last year. The gaps between the increase in total revenue when inflation is included and excluded in 2014 were 10.6 per cent and 5.5 per cent and that for the first six months of last year were 10.7 per cent and 5.7 per cent. — VNS
HA NOI (VNS) — Chairman of the Viet Nam National Assembly (NA) Nguyen Sinh Hung, who was elected President of the 132nd Inter-PaliamentaryUnion (IPU-132), yesterday called on parliaments to make strong commitment to implementing sustainable development goals (SDGs) in the next 15 years.
Hung suggested delegates focus on the role and missions of the parliaments to turn words into action.
Vice Chairwoman of the Vietnamese NA and head of the Vietnamese delegation, Tong Thi Phong, yesterday reviewed the implementation of the eight millennium development goals (MDGs), saying that some of the poverty and inequality targets had yet to be fully addressed.
She said the gap required efforts between nations, international organisations and individuals globally for sustainable development.
She highlighted Viet Nam's determination to reach significant achievements in the field.
Phong said the NA had built policies, national targets, and legal frameworks while strengthening its supervisory role in implementing the eight MDGs.
She suggested sustainable development should be based on economic growth, protective and equal environment, and social progress.
Phong said Viet Nam agreed with the basic contents of the 17 draft SDGs from the UN.
The lawmaker also recommended increasing the role of parliaments and parliamentarians through legal documents relevant to SDG implementation, as well as in making decisions on socio-economic development agenda and through the national budget.
She suggested enhancing co-operation between the IPU and the United Nations, promoting the role played by regional economic mechanisms and international trade and finance institutions, such as the World Bank, the International Monetary Fund, and the World Trade Organisation to build and implement SDGs.
At the same time, she underlined peace and security as the prerequisite and solid foundation for building a post-2015 development agenda.
She said that resolving current conflicts and preventing imminent threats of conflict was the urgent and long-term task of all nations.
Amina Mohammed, a representative from the UN Secretary General said the IPU-132 was a special occasion in the final stage of the negotiations to define the SDGs, which will be adopted in September.
She said it was increasingly important for parliaments to realise these targets in the next 15 years.
IPU President Saber Chowhury praised Mohammed's ideas on engaging the IPU in UN affairs, including sustainable development goals, relations between the IPU and the UN, and the IPU's expectations on global common issues.
Last Saturday night, Viet Nam's NA Chairman Nguyen Sinh Hung commenced the 132nd Assembly of the Inter-Parliamentary Union (IPU-132) at the National Convention Centre in Ha Noi.
The chairman spoke at the opening ceremony that the IPU-132's theme this year, "The Sustainable Development Goals: Turning words into action," is extremely important at a time when the 15-year period, 2000-2015, for implementation of Millennium Development Goals was about to finish and the United Nations was to adopt an agenda for post-2015 development.
The IPU-132 brought together over 160 participating international delegations, including those from IPU member parliaments, associate members, and foreign organisations and scheduled to finish on April 1. — VNS
“How can we create a competitive market if the competition administration agency is put under a ministry?” asked Vu Tien Loc, chair of the Vietnam Chamber of Commerce and Industry (VCCI).
Loc said the competition administration agency must act as an independent body.
“An agency fighting for healthy competition among businesses should not belong to a governing body which has many large enterprises which enjoy a monopoly in their fields,” he noted.
The expert said that though Vietnam has had great success in reforming administration, tax and customs procedures, it still needs to speed up institutional reform.
“The government needs to act as the founder, while businesses should be the key force in building national competitiveness,” he said.
A lawyer who attended a recent workshop on upgrading Vietnam’s competitiveness said that decisions made by a competition administration agency under a ministry which has many exclusive businesses would not be unbiased.
“It is an impossible mission for any minister who has to both optimize profits for the businesses put under his ministry’s management and ensure healthy and fair competition for all businesses in the national economy,” he noted.
“The competition administration agency must be an independent body not governed by any ministry of the government,” he said.
Le Dang Doanh, a renowned economist, also said that if Vietnam wants to set up a competitive market and apply policies to encourage healthy competition, it has to have an independent unit in charge of ensuring fair competition for all businesses.
Doanh pointed out that it is unreasonable to put the Electricity of Vietnam (EVN), which enjoys a monopoly as the only electricity wholesale buyer and the only retailer, under the management of MOIT.
Vietnam is striving to build a competitive power market. However, the head of the power supply unit is under the command of a deputy minister who was the head of the power company.
Truong Dinh Tuyen, who was the Minister of Trade, also emphasized the necessity to set up an independent body to be in charge of competition administration.
Tuyen said he was aware of the problems of the competition administration agency put under the then Ministry of Trade (now MOIT). However, Tuyen said he could not relocate the agency out of the ministry because of the government’s policy to streamline state agencies and ministries.
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.