HCM City benefits from trade pact
HCM City’s bilateral trade with Australia and New Zealand has increased significantly, after more than two years of implementation of the ASEAN Australia New Zealand Free Trade Agreement, according to the Department of Industry and Trade.
Many Vietnamese exports to the two countries recorded high growth after the two countries reduced import taxes to zero per cent in 2010 under the trade agreement, according to the department.
Total import-export value between HCM City and Australia reached US$840.2 million last year, a surge of 59 per cent compared with $529 million in 2009.
In particular, exports of cashew nuts reached $22.7 million, an increase of 25.9 per cent; textiles and garments, $22.4 million, a jump of 19.2 per cent; and footwear, $19.9 million, an increase of 36.1 per cent.
Seafood reached $18.9 million, an 18.7 per cent increase; and wood and products made of wood, $16.7 million, a 37.7 per cent increase.
Meanwhile, total import-export value between the city and New Zealand reached $182.8 million, more than double of $87.6 million in 2009.
In particular, exports of cashew nuts to New Zealand reached $25.49 million, a rise of 245 per cent; footwear, $3.8 million, an increase of11.1 per cent; garments and textiles, $3.2 million, an increase of 40.8 per cent; plastics, $2.03 million, a jump of 509.6 per cent; wood and products made of wood, $1.97 million, 62.5 per cent.
Speaking at the workshop about the impact of the agreement, Huynh Khanh Hiep, deputy director of the Department of Industry and Trade, said despite the global economic turbulence, Australia and New Zealand had remained the two most important partners of trade and investment for Viet Nam in general and HCM City in particular.
Many Vietnamese exports have become more popular with Australian and New Zealand consumers.
However, challenges remain for Vietnamese exporters. Many companies, especially small- and medium-sized ones, lack information about Australia and New Zealand markets.
They are facing difficulties in promoting trade and seeking experiences in working with overseas businesses, according to Hiep.
The competition with Chinese and Indian exports to these two markets has increased.
In addition, fruits and vegetables and other farm produce from Viet Nam face strict entry standards from other foreign countries.
Due to the strict requirements of export markets like Australia and New Zealand, Vietnamese exporters must improve the quality of products, including design and technology as well as transportation, which increases production costs.
Hiep recommended that Vietnamese export firms be patient and try to create trust with Australian and New Zealand businesses.
He said that exporters should always keep in mind that the quality of products must be a top priority in order to maintain a good business relationship with overseas businesses.
He also recommended that Vietnamese businesses learn the business customs of Australian and New Zealand companies and information about their markets, importers and distributors.
Export enterprises should also contact the Asia-Pacific Market Department, the Ministry of Industry and Trade’s Import and Export Department, Viet Nam offices for Commercial Affairs in Australia and New Zealand for help and support in approaching these export markets.
They should also contact local trade promotion agencies and associations for help and support.
Australia and New Zealand are now among the leading export markets of Viet Nam.
Last year, bilateral trade between Viet Nam and Australia reached $4.64 billion, and between Viet Nam and New Zealand more than $535 million, according to statistics from the General Department of Customs.
The trade agreement is a comprehensive economic agreement that opens up and creates new opportunities for the 600 million people of ASEAN, Australia and New Zealand. This area has a combined economic output of $2.65 trillion. The agreement was signed on February 27, 2009 in Thailand and became effective on January 1, 2010.
Rubber producers face losses ‘due to export tax’
Domestic latex and compound rubber producers said they were making losses and on the brink of shutting down their facilities after being hit hard by a hefty 3 per cent export tax.
The export price for Vietnamese-made latex and compound rubber was usually US$100-200 a tonne lower than rubber from Malaysia, Indonesia, and Thailand.
However, with the 3 per cent export tax levied on the shipments, Vietnamese rubber prices increase by at least $80 a tonne, making Vietnamese rubber lose its competitive edge in overseas markets.
The Ministry of Finance decided to raise the export tax on natural and compound rubbers from zero to 3 per cent as of December 8, 2011. The duty was imposed in a bid to “encourage the domestic rubber manufacturing sector, rather than focusing only on exporting natural rubber,” the ministry said.
The tax rate was considered reasonable last year when rubber export prices peaked at $6,000 a tonne, allowing rubber exporters to initially enjoy profits despite the 3 per cent tax. However, exporters said they suffered big losses this year as rubber prices fell to only $2,700 a tonne.
Nguyen Quang Hop, a representative for Hung Thinh Rubber Co, told Tuoi Tre (Youth) newspaper that rubber producers will suffer losses if they continue production and sell the products at old prices to clients. He said new machinery worth $400,000 that his company had imported from Sweden in late 2011 was now idle, as the 3 per cent export tax forced his company to shut down the facility.
Le Ba Tho, a sales executive from the Tay Ninh Rubber Co, said his company has to switch to producing other rubber products to avoid the tax, although its export staple is latex, which accounts for 70 per cent of total production.
Latex export turnover for his company thus dropped to only 30 ‘ 40 per cent in the first half of this year, said Tho.
However, he said, the new products have few markets, and his company has planned to return to latex production.
Rubber producers said it was unreasonable that only compound and latex rubber were subject to the export tax while many other kinds of export rubber were not.
Moreover, while 70 per cent of Vietnamese rubber, mainly unprocessed types, were exported to China, the Government should apply incentive policies for exports of latex and compound rubber to avoid the risk of depending too much on the Chinese market for latex and compound rubber exports, Hop said.
HCM City plugs into electrical exhibition
Companies from Viet Nam, Japan, Korea, China, and Singapore are showcasing their technologies and products at an exhibition of electrical products, which focuses on green energy.
Exhibits at the four-day event that opened yesterday include equipment and know-how for hydro, solar, wind, and nuclear power plants, power transmission, automation systems, and energy saving solutions and products.
Also on show are design and construction services for wind energy projects and technical consultancy, inspection, and repair services.
Deputy Minister of Industry and Trade Nguyen Thanh Bien said traditional energy resources are gradually depleting and fuel costs keep rising, which have direct impacts on industry and people’s lives.
“The best solution for ensuring energy security and sustainable development is to use energy economically and efficiently and utilise renewable energy sources,” he said, adding that the event enabled businesses to showcase technologies for sustainable growth.
On the sidelines of the event yesterday the event organisers ‘ exhibition company C.I.S Vietnam and Vietnam Electrotechnical Industry Association ‘ held a seminar to discuss Viet Nam’s strategy for developing renewable energy and policies to stimulate energy saving and solutions.
Furniture firms open more stores
Furniture companies are expanding their chains by opening new stores in the country, even though the domestic furniture market’s sales growth is expected to fall 15-20 per cent for 2012 compared to last year.
Two big furniture companies in HCM City, for example, have opened two stores this month despite the recession.
In addition, Index Living Mall, a one-stop shopping mall selling Thai furniture and home appliances, will open three more branches in HCM City, following the successful opening of its first 7,000-sq.m store in District 4.
“In the first two quarters of this year, we reached our growth targets. In the last month of the second quarter, which was the difficult time for the furniture market, we also exceeded the target,” Nguyen Viet Linh, the company’s marketing director told Viet Nam News.
With this growth, the company plans to open 10,000 sq.m-stores in the northern and central regions, and is currently seeking a land lot to open one store.
Other companies such as Chi Lai and Klassy also have plans to expand.
Late last week, Klassy Company opened a store in District 1 in HCM City, bringing its total number of stores to five. Covering an area of 2,000sq.m, the store displays furniture imported from Italy, Hong Kong and England.
Although the market faces difficulties, Klassy decided to expand its business to take advantage of opportunities before the economic recovery, Le Thi Thanh Hai, general director of Klassy was quoted as saying in Saigon Times.
Hai said that to maintain the company’s growth of 40 per cent per year, the company would open a 5,000-sq.m store in Dong Da District in Ha Noi this year. In 2013, more stores will open in Ha Noi, Da Nang and Hai Phong.
All of these companies are following the same trend of opening large stores.
“Our aim is to open large stores so that our customers can choose from many kinds of home appliances and furniture,” said Linh.
Le Duc Nghia, director of An Cuong Trade Company Ltd, said that customers had become more fastidious about their purchases.
Because customers want to see and sample before making a final decision, it is important to have impressive store displays, Nghia said.
Big stores save customers time because they can buy many things in one place, he added.
Although companies might face losses in the beginning, the trend of opening big stores will continue, according to Nghia.
Hai of Klassy Company said that opening stores was easier now because good sites were available for cheaper prices.
To successfully develop their chains, the companies have created clear business plans and set up strong design and marketing teams to provide full services to customers.
Cashew industry lowers export targets
Viet Nam hopes to ship 61,468 tonnes of cashew in the second half of the year, bringing the year’s total to 150,000 tonnes for an export turnover of US$1 billion, according to the Viet Nam Cashew Association (Vinacas).
Speaking at a review conference held in HCM City yesterday, Dang Hoang Giang, Vinacas general secretary, said 88,532 tonnes of cahew worth $602.1 million had been exported in the first half of the year. This marked a year-on-year increase of 28.2 per cent in volume and nearly 14 per cent in value, he said.
However, average export price for the period was $6,826 per tonne, down 8.1 per cent against the same period last year, he said.
The US remained the largest buyer of Vietnamese cashew, followed by China.
Given current market difficulties and a shortage of raw material, the association has lowered its export target for this year, Giang said. This is a reduction of 9.7 per cent in volume and 24.3 per cent in value over 2011, he added.
Delegates at the conference said cashew businesses have encountered many difficulties in the first half of the year, including shrinking output, a shortage of working capital, and falling overseas demand as a result of the ongoing economic crisis.
These difficulties will continue in the second half, they said, adding that exports will become more difficult since importing countries will raise technical barriers.
Firms must be prepared to face the tougher situation, they warned.
The Chinese market, for instance, has strengthened quality checks on imported food items, as well as imposed different tariffs on border trade, said Nguyen Duc Thanh, Vinacas deputy chairman.
Giang said reduced cashew cultivation area and output will be a big challenge to the industry in the coming time. He said it was time for the Government, various localities, the association, businesses, scientists and farmers to work together and work out measures to develop the cashew industry in a sustainable manner.
Cashew output this year was 264,810 tonnes compared to 301,730 tonnes in the last crop, Giang said.
Delegates also complained about many small businesses taking part in cashew exports, making oversight of the industry more difficult. The small firms usually slashed prices to boost export, adversely affecting the whole industry, they said.
Nguyen Thai Hoc, Vinacas chairman, said the association will petition relevant agencies to address this problem. He suggested that the Ministry of Industry and Trade grants export permits only to enterprises that meet hygiene and food safety standards.
In the long run, the ministry should impose more eligibility conditions on cashew exporters, he said.
Nguyen Van Chieu, general director of Long An Food Processing Export JS Company, said the Government should increase funding to support the industry in adopting advanced technology to reduce costs.
Conference delegates also asked banks to create conditions for enterprises to access bank loans at lower interest rates so that they can maintain operations in the remaining months of the year.
Vinacas, meanwhile, should provide updated market and pricing information to its members in a timely manner, they said.
With a fall in cashew output in many producing countries including Viet Nam, India and Brazil, supply will fall short of demand in the later months of the year, and prices will go up, said Ta Quang Huyen, general director of the Hoang Son 1 Company.
Last year, Viet Nam exported 166,109 tonnes of cashew, earning $1.35 billion, a drop of 16.46 per cent in volume but an increase of 20.13 per cent in value over 2010.
Viet Nam, Ecuador stage joint expo in China
The ninth China International Small and Medium Enterprises Fair will be co-hosted by Viet Nam and Ecuador in Guangzhou September 20-25. This is the first time a South American nation will co-host the fair and the second time for Viet Nam. Last year’s fair was co-hosted by Thailand. The fair will feature 5,000 booths, including 4,000 for food products, electronic components, energy saving goods and environmentally friendly products.
Gaming industry revenue expected to soar
Revenue from the computer games industry is expected to reach VND4.6 trillion (US$219 million) this year.
The money comes from the nation’s 15 million daily players on mobile phones, “tablets”, personal computers and internet shops, said Le Hong Minh, chief executive of VinaGame Corporation.
The on-line game industry in Viet Nam is becoming more diverse with many special categories and new genres of games on social networks, such as Social Network Service (SNS) and mobile games.
Traders stock up on cooking gas
Cooking gas prices are forecast to pick up strongly next month, prompting traders to scale up their stockpiles.
Do Trung Thanh at the sales department of Saigon Petro told the Daily that cooking gas prices are predicted to rise by US$150 a ton in August. In response, sales agents are rushing to increase orders.
The sales manager of a gas trading company said his firm had sold out the volume bought from PV Gas a few days ago. Therefore, the company has to buy cooking gas on FOB terms, so the price is higher than in the contract.
According to representatives of several traders, there is a local undersupply now because Dung Quat Oil Refinery has not been running at full capacity since it resumed operation on July 19, while consumption is rising as gas prices have steadily dropped over the past few months.
A general sales agent in Danang told the Daily that he had learned of the possible gas price rise for August, so his firm had bought more gas from wholesalers and restricted supply for sales agents to increase its stockpile. Meanwhile, wholesalers do not sell the exact quantities that general agents order.
Wholesalers said that if the increase level of US$150 a ton was maintained until the Saudi Arabian Oil Company (Saudi Aramco) quoted the August contract price, the local retail gas prices would tick up by around VND40,000 per 12-kilo container against July, or the common retail prices would range from VND355,000 to VND360,000 a container.
Delta provinces call for guidance
While there are policies in place for agricultural administration in the Cuu Long (Mekong) Delta, specific guidance is required for their implementation, delta authorities told a seminar in An Giang Province on Tuesday.
Nguyen Thanh Nguyen, deputy chairman of the Long An Province People’s Committee, said implementation of many policies remained difficult in the absence of such guidelines.
He gave the example of a proposed rice irrigation project. The province did not know which agency or agencies would fund the works required to pump water into irrigation canals, he said.
There were also other demands as raised by the delegates.
Mai Thi Anh Tuyet, director of the An Giang Department of Industry and Trade, said the Government should soon create mechanisms and policies to support tra fish farmers and processors most of whom cannot get bank credit.
A roadmap was needed for developing high-quality rice and eliminating low-quality strains to avoid any risk for farmers, she said.
Many of the attendees also called for policies to strengthen co-operation between industry and farmers growing rice and farming other major agriculture and aquatic produce.
To bolster the farming of rice, one of the region’s major products, they called for resolving problems related to irrigation. They include lack of funds for upgrading dykes ahead of the autumn-winter crop to begin soon and pumping water for the winter-spring crop.
Speaking about the programme to develop large-scale rice fields, they wanted the Government to help with irrigation, seeds, funds to buy machinery, and training farmers.
Deputy Prime Minister Vu Van Ninh called on relevant ministries and sectors to consider the recommendations made by the delta authorities.
He urged delta authorities to identify some major products and draft zoning plans to develop them.
He ordered the Ministry of Agriculture and Rural Development to review models of co-operation between tra farmers and enterprises, for the large-scale rice programme, adopt effective ones, and create mechanisms to develop them.
The conference was attended by officials from Can Tho city and the delta’s 12 provinces, HCM City, and the ministry.
HOSE’s capital requirement lifted to VND120 bil.
Enterprises having demand to list on the Hochiminh Stock Exchange (HOSE) are required to have minimum charter capital of VND120 billion from September 15, instead of the current VND80 billion.
Under Government Decree 58/2012/ND-CP, enterprises must have at least two years operating as joint stock companies by the time they ask HOSE for permission to list. Besides, they must have a return on equity (ROE) ratio of at least 5% in the latest year and have been profitable in the two proceeding years. Overdue debts over one year and accumulated debts are disqualifiers for listing.
In addition, at least 20% of shares with voting rights in a company must be held by at least 300 shareholders who are not majority shareholders, except for State-owned enterprises transformed into joint-stock firms given the Government’s direction.
Meanwhile, the minimum chartered capital of listed firms on the Hanoi Stock Exchange will be VND30 billion. Qualified enterprises on this exchange are joint stock companies having been active for one year while at least 15% of shares with voting rights must be held by 100 shareholders.
However, unqualified firms having listed before September 15 are allowed to continue listing. They will not transfer to the other bourse given the new listing regulations.
The decree also requires ineligible enterprises on the two exchanges and unlisted public companies offering shares to the public to trade on the UPCoM, the market for unlisted public companies, within one year from the offering day.
Besides, a voluntary delisting of enterprises will need approval from 50% of shareholders who are not majority shareholders instead of 65% as before. However, enterprises are not allowed to delist within two years from the date of bourse debut.
Foreign institutions are permitted to own 100% of securities firms or establish a new company but they have to follow rules on capital of securities enterprises.
Plastic firms report earnings despite economic slump
Though the property market and many other sectors are struggling with the current economic slump, large numbers of listed plastic companies have reported hefty first-half earnings.
A report by the parent company of Binh Minh Plastic JSC shows the subsidiary in January-June earned VND163.7 billion in after-tax profit, up nearly 38% year-on-year. The after-tax profit of the company in the second quarter also rose 26.5% from the year-ago period as its input costs were lower as explained by the firm.
According to the Vietnam Plastics Association, Binh Minh and Tien Phong plastic companies now are the two major firms in the construction plastics industry, with Binh Minh holding around 50% market share in the country’s south and about 30% countrywide.
Similarly, a financial report by Vegetable Oil Package JSC indicates the firm also earned a profit of VND23.8 billion in the first six months, a year-on-year increase of some 60%.
Meanwhile, the company fetched VND166.4 billion in net sales, up by over VND22 billion from the same period last year. Thanks to the widening gap between the shrinking lending rates and rising prices and sales volumes, sales and profits of the business went up 16% and 64% respectively against last year.
Rang Dong Plastics, which specializes in producing PVC and packaging for animal and fish feed, also netted VND456.6 billion in sales, up by VND37 billion from 2011, while its after-tax profit amounted to VND12.3 billion, far exceeding the VND10.8 billion recorded in the year-ago period.
Bien Hoa Package JSC reaped VND32.9 billion in after-tax profit, a pickup of around 35% year-on-year, with its sales increasing by more than 30% against 2011. The reason is its production output surged while its borrowing costs tumbled and management fees were lower than in the previous year.
Tan Dai Hung and Tan Tien Plastics companies reported profits for the year’s first half as well.
US firm wants to develop restaurant chain in Vietnam
The Johnny Rockets Group from the U.S. is looking for opportunities to develop the fast food chain in Vietnam as part of its strategy to expand its brand to potential markets in Southeast Asia.
Steve Devine, president of International Development at The Johnny Rockets Group, said that the firm was seeking partners to franchise its fast food restaurant chain in Vietnam.
‘”Vietnam is full of potentials, and we are seeking locations for our very first restaurants here,’” Devine said. Before deciding to enter Vietnam, the firm has spent nearly four years studying the market, he added.
Hamburgers, French fries and beverages are what will be served at The Johnny Rockets restaurants in the coming time.
To penetrate the market, The Johnny Rockets on Tuesday signed a contract with CB Richard Ellis Vietnam (CBRE) to have CBRE as its property consulting firm in Asia and find suitable locations to open fast food restaurants in Vietnam.
Besides, this US firm will expand to Hanoi and Danang City after opening its first restaurants in Ho Chi Minh City next year. Under the development plan, the firm will open ten fast food restaurants in Vietnam in the next ten years.
The Johnny Rockets has opened 300 restaurants in 16 countries, including ten restaurants in the Philippines, South Korea and Indonesia.
Fortis Healthcare, Hoan My hospitals start Vietnam exchange programme
Fortis Healthcare launched its medical talent exchange programme in Vietnam on July 24 at Fortis Hoan My Saigon Premier Hospital.
Cardiac surgeon Dr Krishna Iyer, executive director at Fortis – Escorts Heart Institute Fortis – a premier cardiac hospital in India, kicked-off the programme in Ho Chi Minh City.
Iyer also examined patients with complex congenital heart defects and conducted a cardiology medical education (CME) session for a team of 45 doctors, including Hoan My doctors and ones from other private and public hospitals.
‘”The scope of the collaboration includes training of doctors in new techniques and complex surgeries, training of nurses and paramedics, intensive care unit protocols for improved post-operative care, chest pain pathway for urgent care, acute stroke treatment guidelines in the golden hour to improve clinical outcomes,’” he said.
Fortis Hoan My Medical CEO Dr Colin Koh said: ‘”This collaboration will help improve the quality and complexity of cardiac work done across all hospitals in the Ho Chi Minh City network.’”
‘”This will also upgrade clinical services in Vietnam,’” he added.
A World Health Organisation report published in 2011 said 39.4 per cent of deaths recorded in Vietnam in 2008 were caused by cardiovascular diseases.
Fortis Hoan My is the first medical corporation to run a private hospital chain in Vietnam with nine facilities nationwide in Ho Chi Minh City, Dalat, Danang, Hue, Can Tho and Ca Mau, with more than 800 beds altogether.
Fortis Healthcare is the majority stakeholder in Fortis Hoan My.
Cement plan’s speed bumps
Building concrete cement roading proposal in Vietnam is facing a bumpy pathway.
As cement production and consumption in 2012′s first half shed 10 per cent against 2011′s same period on the back of falling public investment and a stagnant realty market, the signing of a cooperative agreement between Ministry of Transport (MoT) and Ministry of Construction (MoC) to boost cement usage in building transport infrastructure in Vietnam was expected to be a life saver.
However, since the signing ceremony in mid March, the proposal has sat on the drawing board and is unlikely to take shape this year.
According to a state cement conglomerate Vicem representative, it would be hard for local cement firms to scale up consumption through putting cement into transport infrastructure projects.
The timeframe for building a roadmap on cement usage at road projects including high-grade motorways to road in rural areas, together with associated parking lots, toll stations and stop-overs shall be completed by December 31, 2012.
Besides, construction experts supposed hiking cement usage in transport infrastructure would face difficulties since its investment ratio is two to three-fold higher than that of asphalt concrete investment. In addition, capital mobilising scheme and incentive policies promoting cement usage in transport infrastructure projects are not yet in place.
Earlier, Vicem proposed building the Ninh Binh-Thanh Hoa (Nghi Son) road section giving priority to using cement concrete structure. The proposal later dropped due to high investment costs.
Vietnam Building Materials Society chairman Tran Van Huynh said building roads paved with cement concrete would be a righteous decision given the country’s current total cement production capacity of around 70 million tonnes per year. Roads made of cement concrete could be used in 30 years against 10 years for roads paved with asphalt concrete, said Huynh.
MoT’s Science and Technology Council deputy chairman Tong Tran Tung said initial investment cost of cement concrete roads would be 2-2.5 times higher than that of asphalt roads. However, clear payment methods as well as actual unit rates referring to cement concrete investments are not available.
In early 2012 the gap between cement production and consumption has surpassed 10 million tonnes per year, but when cement could be used in transport infrastructure projects remains unknown.
Travelers to be banned from carrying gold bars
Individuals may be banned from taking gold bullion with them when they leave the country, the State Bank of Vietnam said Wednesday in a draft circular on which it is collecting feedback from relevant agencies.
The regulation also targets raw gold materials and includes an exception for those who wish to settle down in other countries, the central bank said.
In the abroad settlement case, travelers are allowed to carry only 1 kilogram of gold, instead of the current 3kg limit.
The SBV also aims at taking control over gold jewelry and fine arts through a tax policy. Specifically, local and international travelers wearing gold jewelry weighing at least 300g when leaving Vietnam will have to declare with the customs agency and pay taxes.
Last year the central bank also reduced the amount of foreign currency that can be taken out of the country without customs declaration from US$7,000 to $5,000.
The regulation took effect from September 1, while the limit for the dong was maintained at VND15 million.
Japan helps improve public finance management in Vietnam
Vietnam and Japan recently discussed good methods to tackle challenges in public finance management at a seminar organized Tuesday in Hanoi.
The event was held to mark the first activity of the renewed Memorandum of Understanding between the Vietnam Ministry of Finance (MoF) and the Japan International Cooperation Agency (JICA) on capacity development in public finance management for this year.
A wide range of topics were talked over at the meeting, including the liberalization of the capital account and the financial system, and lessons learnt from the global crisis in the 2000s.
Japanese college professors provided valuable advice on international practices in public finance management and Japan’s own experience in strengthening its financial system as well as controlling the bubble economy.
Japan would like to help address some urgent needs in public investment and public finance management in Vietnam through sharing its own knowledge and international practices, said Motonori Tsuno, chief representative of the JICA Vietnam Office.
‘”It is getting harder to provide macro-economic response policies adequately and timely due to the complexity and fluctuation of international and local situations,’” he noted.
MoF and JICA jointly provided training for over 110 local officials in Vietnam, the Philippines, and Singapore during the 2011 financial year.
The two bodies have also decided to extend their cooperation until next March in a bid to support Vietnam in coping with such issues as macro-economic stability, state-owned enterprise reform, and project/program management, among others.
Local banks resume gold mobilizing
Many credit institutions have resumed mobilizing gold with an annual interest rate of around 1 percent from nearly 0 percent since July 24.
DongA Commercial Joint Stock Bank was the first to cancel gold mobilization in early July by charging a fee of 0.05 percent of gold value for gold custody services, newswire Vnexpress reported.
However, the bank has recently resumed gold mobilization at the interest rate of 1 percent per annum for all gold deposits, and these deposits must mature by November 25, 2012.
Similarly, Asia Commercial Joint Stock Bank (ACB) issued gold deposit certificates on one-month, two-month and three-month terms at an interest rate of 0.8 percent which must reach maturity before 25 November, 2012.
The date is the State Bank of Vietnam’s deadline for putting an end to gold mobilization via gold certificate issuance by the local banking system.
In addition, the owners of ACB gold certificates that have yet to mature may still enjoy the preset interest rates. Those who own the certificates which will mature after 25 November, 2012 and don’t want to withdraw the gold deposited at the bank will receive no interest.
About 10 days earlier, the bank stopped issuing gold certificates, and indicated that the gold custody services would be applied for gold depositors having not withdrawn their gold before July 4, 2012.
Some other banks are now also receiving termed gold deposits beyond the date of November 25, 2012.
A client who has sent 10 taels of gold to Viet A Commercial Joint Stock Bank said the bank’s deposit rate applied for gold was 0.6 percent per year for all maturities. But the bank will not issue any more gold certificates to mobilize gold in accordance with the central bank’s regulation.
Normally, only banks suffering a negative gold position would be allowed by SBV to mobilize gold, said Nguyen Thanh Toai, deputy general director of ACB.
‘”Previously, we were forced to postpone gold mobilization, yet now the central bank gave a nod to our issuance of short-term gold certificates which is a normal banking activity’”, he added.
In addition, there have not been any regulations on the gold mobilization ceiling rate so far, which would enable lenders to make flexible adjustments according to their own situations.
Another manager of a joint stock commercial bank said that gold mobilization would end once the gold position returned to positive on customers’ repayment of existing outstanding gold loans which have not yet been repaid.
In all likelihood, gold has now been mobilized at higher interest rates than before so as to be converted into Vietnam dong for lending. Even gold depositing at 1 percent or 2 percent would be much more beneficial than attracting the dong at 9 percent, according to a banking expert.
Earlier, gold interest rates at many banks jumped from 3-4.6 percent per year after the implementation of Circular No.12 of the SBV giving the extension for gold mobilizing via short-term gold certificates until November 25, 2012 instead of May 1, 2012 as specified in Circular No.11, dating back to April 29, 2011.
The newly emerged situation forced the SBV to issue Document No. 3854 requiring credit institutions to terminate gold lending and depositing on June 25, 2012.
Following the new rule, gold depositing interest rates have fallen sharply again, down close to 0 percent, and banks have even stopped mobilizing in order to turn to custody services to charge fees on depositors.
Good signs for farm product exports
Despite facing shrinking global markets, agro-forestry and fishery exports rose 12.4 percent in the past seven months to reach US$15.9 billion, according to the Ministry of Agriculture and Rural Development (MARD).
Most key farm products benefitted from steady growth in exports, except for rice and rubber.
Coffee exports hit 1.2 million tonnes and generated US$2.5 billion, up 31.6 percent in volume and 25.4 percent in value.
Germany and the US remain Vietnam’s biggest coffee consumers, making up 12.9 and 12.4 percent of the total, respectively.
Cashewnut and pepper producers saw the highest growth in exports over the period.
Vietnam shipped 120,000 tonnes of cashewnuts abroad, earning US$828 million, up 36.5 percent in volume and 19.2 percent in value from a year ago. The country maintained its position as the world’s largest cashew producer.
Pepper and tea exports also rose more than 20 percent and 4.2 percent in value to fetch US$546 million and US$108 million respectively.
However, rice exports fell considerably, generating US$2.1 billion from 4.6 million tonnes delivered. The average export price tumbled 6.6 percent to US$458 per tonne.
Seafood exports increased 6.5 percent to gross US$3.4 billion in the year to July. The US is Vietnam’s leading seafood importer, consuming 19.5 percent of the total. It was followed by Japan at 17.6 percent and the Republic of Korea at 8.3 percent.
The MARD is helping businesses and farmers expand outlets for several farm products in difficulty such as cassava, sweet potatoes, and coconuts.
MARD experts say exports of farm product are likely to increase in the remainder of the year as the global economy is expected to ride out the recession period, driving up consumer demand.
Vietnam aims to earn US$26.5 percent from agro-forestry and fishery exports in 2012.
Milan to boost cooperation with Vietnam
Milan will facilitate preparations for activities and events to mark the 40th anniversary of Vietnam-Italy diplomatic ties in 2013.
Milan’s Mayor, Giuliano Pisapia, confirmed this at a meeting with Vietnamese Ambassador to Italy Nguyen Hoang Long on July 25.
At the meeting, the mayor said the city’s people always support and wish to further develop cooperative ties in economics, culture and education with Vietnam.
Representatives from local economic groups expressed keen interest in Vietnam’s investment policy.
Ambassador Long said on the basis of positive developments in bilateral ties, the two countries are determined to develop long-term cooperation in the areas of economics, trade and investment, education and training, and culture.
The organisation of Vietnam Year in Italy and Italy Year in Vietnam in 2013 is aimed at increasing mutual understanding in all aspects between the two countries, he added.
WB continues assisting Vietnam reform
Vietnam wants to receive technical and financial assistance from the World Bank, especially in settling bad debts among businesses.
The statement was made by Finance Minister Vuong Dinh Hue at a working session with Pamela Cox, visiting Vice President for East Asia and Pacific region of the World Bank (WB) in Hanoi on July 26.
Hue also suggested the WB extend Vietnam’s access to the International Development Association (IDA)’s preferential loan facility, which is of importance to Vietnam, especially at time when Vietnam is making efforts to reduce poverty in 63 poorest districts nationwide and cope with climate change.
The Vietnamese Government is currently focusing on building new rural areas in line with sustainable development, Hue said.
He also asked the WB to assist the Vietnamese Government in its restructuring of State-owned businesses, including building a legal framework and policies regarding governance and supervision in particular, and working out a draft law on the investment and trade of the State capital for submission to the National Assembly.
For his part, Cox said Vietnam should receive both loans from the International Bank for Restructuring and Development (IBRD) and other preferential loans in order to access IDA capital for a longer time.
The WB is scheduled to work with foreign donors next month to further support the country during its business restructuring process.
Vietnam’s business potential introduced in Thailand
An exhibition to promote Vietnam’s tourism potential and opportunities for business cooperation opened in Bangkok on July 26.
Various products of Vietnam ranging from textiles and garments, and information about its people and landscape drew the special attention of attendees.
Nguyen Thanh Hung, Vietnamese Trade Counselor to Thailand, said the exhibition offers an opportunity for visitors to learn more about the country and its preparation to join the ASEAN Economic Community (AEC) in 2015.
‘”We aim to introduce the benefits of developing travel products to Vietnam to our neighbouring countries, especially Thailand’”, Hung said.
The event, jointly held by Vietnamese Trade Bureau and the Vietnamese Embassy in Thailand, marks the 70th anniversary of the Department of Foreign Trade under the Thai Ministry of Commerce.
Thailand hopes that the event will help boost investment cooperation among ASEAN nations.
VND9,000 billion for tra fish breeding sector
The Prime Minister has approved a VND9,000-billion rescue package for farmers and businesses operating in the tra fish sector.
According to Duong Ngoc Minh, Vice President of the Vietnam Association of Seafood Exporters and Producers (VASEP), the funds will be channeled through the Bank for Investment and Development of Vietnam (BIDV).
However, local businesses are finding it hard to access the incentive loans with the lowered interest rate of 11.4 percent/year, even though they are facing numerous financial difficulties, he said.
VASEP will continue working with the BIDV and the General Department of Fisheries to use the rescue package effectively and ease difficulties for producers and exporters, Minh stated.
The funding aims to help local farmers and businesses realise the target of producing and processing 800,000 tonnes of fish by the end of this year.
Nation attracts US$8.03 bln in FDI
Since early this year, Vietnam has attracted US$8.03 billion in foreign direct investment (FDI), announced the Foreign Investment Agency (FIA).
Accordingly, by July 20, the country had 584 newly-licensed projects with a total registered capitalization of US$5.2 billion that is just 55.9 percent of the figure recorded a year earlier.
So far, the FDI projects have disbursed US$6.25 billion, 0.8 percent lower than the same period last year.
Most of foreign investment went to the processing, real estate, retail and wholesale trade, transportation and healthcare sectors.
Japan tops the list of countries and territories investing in Vietnam with US$4.29 billion.