The Ministry of Finance has sought permission from the government to amend Decree No 84 on the management of the fuel trading activities, in a bid to increase the transparency of wholesalers’ financial states, and reducing disadvantages for consumers.
The adjustments focus on changing the cost price calculation, commission granting, and the deduction for the price stabilization fund, in a way that matches the real market development, the ministry said.
It demanded that the ‘fixed profit’ be removed from the fuel cost price calculation, to increase the transparency of the losses and profitable states of the fuel wholesalers.
Currently, a set profit of VND300 is allowed to be included in fuel retail prices, which means wholesalers will always enjoy at least VND300 in profits on every liter of fuel, regardless of the selling prices.
While fuel retail prices are currently adjusted based on the average import prices within 30 days, the ministry said it is seeking to cut the period down to 10 days, to make sure domestic prices will not lag behind world trend.
In the regard to the fuel price stabilization fund, the ministry demanded that the fund be kept in the state treasury, rather than being put in the hands of wholesalers as the current regulation.
This is to avoid the fund from being misused by the fuel companies, the ministry explained.
Joint VN-Thai committee examines trade ties
The first session of the Vietnam-Thailand Joint Committee on Trade Cooperation got underway in Hanoi on July 12.
During their session, the committee assessed two-way trade ties and measures to strengthen cooperation on a bilateral basis, as part of ASEAN cooperation frameworks while supporting each other at international economic forums.
A consensus was reached on a number of areas of cooperation, including trade policy, trade and investment promotions, agricultural cooperation and closer links between both private sectors.
They also agreed to step up the exchange of market information, increase trade visits to promote trade and encourage closer cooperation and connectivity between the business communities of both countries.
According to Minister of Industry and Trade Vu Huy Hoang, Thailand is Vietnam ’s second largest trading and investment partner while Vietnam is Thailand ’s fourth largest partner.
In 2011, two-way trade between both countries reached $8.8 billion, up by 20.5 percent against the previous year. In the first five months of this year, the figure was $3.8 billion, a year on year increase of only 2.1 percent.
Vietnam mainly imports petrol, plastics, machinery, various kinds of equipment, cars and parts from Thailand while it exports steel and agricultural and aquatic products to Thailand .
To date, Thai companies have invested around $6.7 billion in 257 projects across Vietnam.
Central bank says bad debt 8.6 pct at end-March
This file photo shows a bank's employee counting local bank notes, the dong, in Hanoi, in 2011.
Vietnam's bad debt rose to 8.6 percent of total loans in the banking system at the end of March, doubling the previously published figures, as businesses faced many difficulties in a slowing economy, the central bank said on Thursday.
The value of the bad debt amounted to 202 trillion dong (US$9.69 billion), the State Bank of Vietnam said in a statement, citing investigative results by its inspectors.
The central bank estimates were far higher than those it had issued earlier based on banks' estimates, which had put the ratio of bad debts to outstanding loans at 4.47 percent at the end of May.
The ratio and the value of non-performing loans in Vietnam's banking system have been fraught with uncertainty, with several different figures so far this year.
Governor Nguyen Van Binh had been previously reported as saying non-performing loans had risen to 10 percent from 6 percent of total loans, without giving a timeframe for the figure.
Non-performing loans stood at 3.07 percent at the end of last year, the central bank said.
The central bank said that by the end of March, 84 percent of non-performing loans were mortgage-based and the value of the mortgages was equivalent to 135 percent of the bad debts.
Lenders had set aside provisions worth 67.3 trillion dong ($3.23 billion), or 57.2 percent of the bad debt value, by the end of May to deal with the debts, the statement said.
The reason for the large gap between the central bank inspectorate's figures and banks' data was that lenders tended to report bad debt at a lower ratio, it said.
"Several banks did not comply with the regulations about debt classification, recording non-performing loans below the actual figure to reduce their provisions," the statement said.
This is the first time Vietnam's central bank acknowledged the actual non-performing loans were higher than previously reported figures.
Analysts have said Vietnam banking system's real bad debt ratio could be two to three times the official figure while Fitch Ratings has put it at 13 percent.
Vietnam recorded an average credit growth at 26.56 percent a year in the 2008-2011 period while non-performing loans expanded at an average 51 percent a year, the central bank said.
Bad debt rose swiftly in the past few years due to the economic instability, high inventories, rapid credit expansion, risk management weakness and poor supervision of lenders, the statement said.
The central bank unveiled banking reforms in March that envisaged the sale of mortgaged bad debts to the Finance Ministry's Debt and Asset Trading Co and would allow banks to convert loans into stakes in borrowers' firms.
The government will consider buying property projects which were used as the mortgages for loans and use them for social welfare purposes and state agencies' use, the plan said.
The central bank also aims to establish a national asset management firm to speed up resolution of bad debts, state media has reported. ($1=20,850 dong)
SHB’s credit outlook downgraded on HBB’s acquisition
Moody’s Investors Service Inc has downgraded the credit outlook of Sai Gon-Hanoi Commercial Joint Stock Bank (SHB) due to its recent acquisition of Hanoi Building Commercial Joint Stock Bank (Habubank).
SHB’s credit rating has still been maintained at B2 for deposit and issuer ratings and E+ for its standalone bank financial strength rating.
Moody’s said the rating reflects its view on the merged entity’s plan on tackling and making provisions for bad debts particularly those incurred by the troubled Vietnam Shipping Industry Group (Vinashin) following SHB’s recent merger with of Habubank, coded HBB.
The rating agency said its downgrade decision also came from said the negligible amount of cash for the acquisition that would be carried out by a share swap agreement, and the funding improvement of the combined entity observed as yet.
It also reckoned further possible downgrades in the time to come on uncertainties associated with the merger with HBB in terms of the post-merger entity’s asset quality and profitability.
Though the current ratings incorporate, to some extent, the likely degree of deterioration of SHB’s financial figures and business environment, assessment of actual post-merger financial health would require a monitoring period of between 12 months and 18 months.
Moody’s said the credit outlook was negative primarily due to the weak credit profile of HBB, larger scale of the deal compared to SHB’s which would place pressures on credit quality of this bank and ultimately the merged one.
SHB saw non-performing loan ratio as of end-2011 staying at 2.2 percent compared with its partner’s rate of 4.4 percent which could jump to 16.7 percent with loans to Vinashin included.
However, the merged bank’s risk exposure to bad debts could be partly mitigated by making full provisions over a five-year period, said Moody’s.
Notably, all of this giant’s loans have been secured against collateral, part of which could be recovered in 6-12 months to come.
However, it remains unknown whether the merged entity will be able to generate sufficient net income for 2012 to cover the potential worst scenario provisions of around VND1.8 trillion including provisions for Vinashin’s debts (amortized over five years), and other distressed loans.
Also, what concerns this rating agency is Habubank’s poorer profitability compared to SHB’s with the net income-to-average risk weighted assets ratio of less than 1 percent versus 2.3 percent of SHB.
Since the deal will be carried out through a share swap agreement, SHB will issue 405 million new shares at par value of VND10, 000 per share totaling Tier 1 capital of VND4.05 trillion.
The combined Tier 1 capital ratio of the merged bank is estimated to be around 13.3 percent that is very much similar to SHB’s end-2011 rate of 13.2 percent.
Additionally, Moody’s revealed much lower liquidity ratio of Habubank versus SHB’s with the former’s loan-to-deposit ratio of 120 percent and the latter’s 84 percent in the end of 2011.
However, the above ratios are likely to drop to 90 percent for Habubank and 75 percent for SHB on slower credit growth.
Rapid growth of convenience food stores in HCMC
After the success of its first convenience food store at the Phan Van Tri apartment building in District 5, Saigon Co-op has expanded to 44 more food stores. Now many convenience food stores owned by other investors have sprung up throughout Ho Chi Minh City.
These convenience food stores provide green, clean, fresh and high-quality food for working housewives who are too busy at work and have to also manage a household.
Saigon Trading Group (SATRA) has opened 10 convenience food stores and the Vissan food processing company owns a chain of 87 mini supermarkets.
Additionally, many convenience food stores and showrooms of businesses likely Phu An Sinh, CP and Sagrifood are popping up all over the city.
Vietnam's retail market holds many opportunities for both foreign and domestic investors. Shop & Go is the leading foreign retail business with nearly 70 convenience stores. Circle K invested in 30 stores and Family Mart opened eight mini supermarkets.
Guardian Life Care Private Limited, a retail chain of health and wellness stores has just appeared and become a competitor of Medicare stores, a leading health and beauty products retailer in the city.
Japanese convenience store operator Ministop, a member of AEON Group has cooperated with G7 Service and Trading Joint Stock Company, known as G7Mart under Vietnam’s Trung Nguyen Group to open hundreds of stores in Vietnam.
Japan’s FamilyMart signed a strategic cooperation agreement with Phu Thai distribution group to open 300 stores from now until 2015.
According to Nguyen Thanh Nhan, deputy director general of Saigon Co-op, the concept of convenience stores has developed suddenly because it does not need a large area or capital investment and is easily accessible to consumers in every nook and corner of the city.
Businesses should invest in the logistics of distribution and provide commodities, as looking for the right premise is also not easy, Mr.Nhan added.
Saigon Co-op plans to open 150 stores by 2015. Vissan and SatraFoods expect to develop their stores into supermarkets providing diversified goods.
Ministry optimistic with export turnover of first six months
According to the Ministry of Industry and Trade, the country’s export turnover reached US$53 billion in the first six months of the year, showing a year-on-year increase of 22.2 percent and a 48.5 percent increase in this year’s target.
Export turnover hit US$8.85 billion per month in the first six months, up by $1.6 billion over last year.
Among the commodities, export of agricultural products declined by US$900 million and the growth rate of textile and garments touched 8.7 percent.
This year’s export turnover can reach US$109.5 billion in the last six months, the ministry said.
According to a survey on the Business Confidence Index (BCI) by the Vietnam World Vest Base Financial Intelligence Services Company Limited (WVB FISL), 71.43 percent of the surveyed enterprises said Vietnam’s economy will fare better in the next 12 months; only 3.09 percent of businesses seemed anxious for the economy in 2012.
Experts say many firms unaware of risk management
Experts from State and corporate organizations are of the opinion that many local enterprises have not fully attended to risk management and this makes them vulnerable to negative impact of business environment changes and economic uncertainties.
A number of listed and securities companies had seen a sharp reduction in profit and had struggled with liquidity as their risk management was not effective, said Nguyen Doan Hung, vice chairman of State Securities Commission.
Hung told a function held by Ernst & Young Vietnam Limited in HCMC on Monday for introduction of an enterprise risk management book that Vietnam’s economy was facing a host of difficulties and enterprises were among the first suffering from economic slowdown.
Tran Dinh Cuong, country managing partner of Ernst & Young Vietnam Limited, told the Daily that almost none of the local businesses had worked out an overall risk management framework though a number of leading enterprises in the country had risk management approaches for their certain areas.
A survey conducted by Ernst & Young among companies in finance, real estate and construction, consumer’s products, agriculture and other sectors from May till mid-June this year shows that more than half of respondents admitted that they had not had an official risk management mechanism.
However, the survey indicated that up to 78% of respondents said they had plans to improve their risk management approaches in the next two years as they had recognized benefits of this.
Respondents also pointed out the Government’s regulations and policies, competition and market; personnel administration and business efficiency; changes to interest rate, foreign exchange between Vietnam dong and U.S. dollar and inflation; credit and liquidity as among the top contributors to their business risk.
Respondents also named the risk linked to business strategy as top concern in the coming years. This strategy involves merger and acquisition as well as business opportunities due to market changes.
Banks to give city firms preferential loans
BIDV, Vietcombank, Vietinbank and Agribank will provide over VND92 billion worth of loans with preferential interest rates of 12-13% per year to 11 small and medium enterprises (SME) in HCMC’s Tan Binh District.
This is the content of credit support contracts signed on Monday at the ceremony held by the HCMC government and the central bank’s HCMC branch.
Nguyen Hoang Minh, deputy director of the central bank’s branch in HCMC, said this was one of the first steps in a series of activities to connect the HCMC-based SMEs and lenders in order to remove difficulties for enterprises. After Tan Binh District, Phu Nhuan District will be the next to receive credit support, he added.
The statistics of the central bank’s HCMC branch show that over VND20 trillion was disbursed to some 4,200 enterprises in June, with lending rates of 12-12.5% per annum.
HCMC vice chairwoman Nguyen Thi Hong said the city would continue to take measures to help enterprises access bank loans in the rest of the year. She asked enterprises in need of loans to contact professional associations, where their names will be listed and sent to the HCMC Department of Industry and Trade, before transferred to commercial banks.
However, Hong stressed enterprises must operate properly and try to timely repay their debts so that they will not become bad debts, affecting the operations of banks.
Meanwhile, Minh said the central bank’s branch would urge lenders in HCMC to restructure old debts as it was requested that interest rates for old loans must be brought down to below 15% before July 15.
Credit growth remains negative in city
Contrary to the positive growth trend of the national credits, the Jan-Jun credit growth in HCMC stands at minus 0.04%, showing the poor capital absorption capacity of businesses in the Southern Key Economic Zone.
This was revealed at a meeting between HCMC leaders and representatives of 16 banks last weekend.
A press release of the central bank last Saturday shows that the system’s credits had inched up slightly. As of end-June, credits grew 0.76% against late 2011, or 1.4% with investment capital balance in corporate bonds and treasury notes included.
According to the meeting, bad debts are rising in HCMC. Several banks see their profits dwindling and many bank’s branches have reported losses.
Both banks and enterprises remain cautious with bad debts.
However, the good news is capital is flowing into businesses, albeit slowly. The outstanding loans for production and business accounted for 85% of the total outstanding loans in the city in the first six months.
Notably, small and medium enterprises made up the largest portion of those provided with credit capital. The total number of businesses receiving Vietnam dong loans with preferential interest rates was over 4,200.
Some HCMC-based banks directly signed preferential credit contracts with small and medium businesses.
A banker in HCMC said small and medium enterprises ran into the most troubles. They do not have enough assets to secure loans, and even if they do, their assets are of low liquidity and low market values and very difficult to transfer.
In addition, their financial statements are not audited; financial data are not transparent and healthy enough, while evidences for borrowing purposes are insufficient. Most small and medium businesses do not receive guarantees from credit guarantee funds.
In its press release, the central bank said the chance of credit expansion in the coming time was small. The banking system is basically secure, but capital balance has not improved, while bad debts are picking up and some institutions still breach the regulated capital adequate ratio.
“Capital balance is still unstable as medium- and long-term loans still account for 42% of the total credits, same as the end of 2011, while most capital is mobilized from short-term deposits.
“As of end-May, as reported by the credit institutions, the total bad debts of the whole system accounted for 4.47% of the total outstanding loans of the economy (versus 3.07% at end-2011).”
“Dong lending rates have been cut but still stay at high, especially the proportion of high-interest loans remains large,” said the press release of the central bank.
The central bank requested commercial banks to closely supervise the operations of their corporate clients to timely propose measures on currency and credit. In addition, they are asked to coordinate with borrowers to review and assess repayment capacity of the latter, and then revise repayment schedules, offer interest exemption or reduction, and give out new loans to pay back old debts.
The central bank also required lenders to work with ministerial agencies and industry associations to seek solutions to handle inventory, remove difficulties for businesses and promote production and consumption.
A report of Vietcombank Securities Co. (VCBS) said: “We think interest rate reduction and credit growth will continue and become clearer from the end of the third quarter, as the banking system expects to inject VND50 trillion per month in the last six months to boost economic growth. Although credit growth has shown more optimistic signs, the bad debt ratio will likely surge further in the coming time.”
Craft products development in Quang Nam
The UNESCO office in Hanoi in collaboration with Quang Nam Province’s authorities have organized a seminar to kick off the project ‘Supporting hallmark craft products development at the world cultural heritages’ planned for the 2012-2013 period.
At the seminar, related sides and UNESCO agreed on the main activities of the project and methods to develop craft products and heritage tourism at Hoi An and My Son.
The seminar also introduced craft products of the five local craft villages chosen for the project. Requiring US$100,000 investment, the project has been sponsored by the South Korean trust fund since February this year via the UNESCO office. It also aims to help local management authorities set up a database on the craft industry in the province, especially in Hoi An City and Duy Xuyen and Dien Ban districts.
The project has attracted the participation of many members of the Quang Nam Province Tourism Association in craft products distribution. Meanwhile, the non-profit organization Craft Link is in charge of technical issues of the scheme.
SMEs may get $58 million in aid
About US$58.3 million will be spent supporting small-and medium-sized enterprises (SMEs) between 2011-15, according to a plan expected to get Prime Minister Nguyen Tan Dung's approval later this month.
Funding for the plan made by the Viet Nam Chamber of Commerce and Industry and the Ministry of Planning and Investment will come from the State Budget, local budgets and official development assistance (ODA).
The 2011-15 SME development plan targets 350,000 new SMEs established during the period, generating 3.5-4 million new jobs.
Also according to the plan, the country will have 600,000 SMEs by the end of 2015, a 30 per cent increase against the current number of 460,000.
The export value of the sector will account for one fourth of the country's total, and SMEs are expected to make up two fifths of Viet Nam's gross domestic product (GDP).
Addressing a workshop yesterday organised by the chamber, the ministry and the International Labour Organisation, the chamber's secretary general, Pham Thi Thu Hang, said these targets were "not big goals" and the ongoing credit crunch had been taken into account.
However, she raised concerns over the resources to support SMEs because "our support mechanism has by chance mainly focused on big companies".
Many representatives from SMEs at the workshop complained that they had to pay bank interest rates of 15-17 per cent per year, while the State Bank of Viet Nam has already reduced the maximum rate to 12 per cent.
Apart from difficulties in accessing capital, SMEs in Viet Nam also used out of date technologies and an unskilled workforce, according to the VCCI SMEs Support Centre deputy director, Le Thi Thu Thuy.
Hang said support measures for SMEs were much different from large companies because their difficulties were mainly traced back to their small scale. Continued reform of the business environment and administrative procedures would be a must to help SMEs access resources at a minimal cost.
"A big enterprise has enough resources in terms of workforce, technology and financial capacity to access resources, which allows them to move fast and make huge breakthroughs," said Hang. "But SMEs lack everything, so we need to improve our policies to support their development."
Local media last week reported that some loss-making SMEs and those on the verge of bankruptcy even had to pay bribes just to shut down, a story Hang described as "showing the problematic nature of the country's business environment".
Nguyen Hoa Cuong, deputy director general of the MPI's Enterprise Development Agency, said investment in science and technology played a leading role in supporting SMEs.
A number of Government policies would be amended by the end of next year to help SMEs upgrade and adopt new technology to improve business efficiency and reduce environmental pollution.
Land policies should also be improved in favour of smaller enterprises. According to the head of the VCCI, Viet Nam had yet to issue any land policies for SMEs. Some 70 per cent of these enterprises used their owners' land in residential areas for production, which had a bad impact on the environment, she said.
Representing the International Labour Organisation in Ha Noi at the workshop, Maria Luisa Rodriguez said SMEs had a great potential for contributing to economic growth and job creation.
"The SMEs contribute not only to economic growth but also to social development thanks to the development of its communities," she said.
While the national SMEs development plan is awaiting a green light, more than ten cities and provinces across the country have already approved their own plans to support SMEs in the same period (2011-15), and many others are going to finish this important blueprint.
Following their introduction in Viet Nam about two decades ago, the country's SMEs have developed rapidly. The number of these enterprises increased at the rate of about 22 per cent a year between 2006 and 2010, when a total of 370,000 new SMEs and 2.7 million new jobs recorded.
About 95 per cent of enterprises in Viet Nam are small-sized with less than 200 employees, and 2 per cent are medium-sized with between 200 and 300 workers.
Slight increase in business optimism
Vietnamese businesses have had higher hopes for national economic recovery as the Business Confidence Index (BCI) reflected an increase of 7 points in the second quarter against the previous one.
The survey was carried out among 154 leading businesses operating in core business activities at all large, medium and small scales across Viet Nam from June 15 to July 7, said Viet Nam World Vest Base (WVB) Financial Intelligence Services Limited Company.
According to the WVB Viet Nam, 44 per cent of surveyed businesses said Viet Nam's overall economic panorama had shown better signs while 36 per cent saw Viet Nam's economic conditions having remained the same. Only 20 per cent of businesses said Viet Nam's economic conditions had worsened since a year ago.
Predicting Viet Nam's economic situation in the next 12 months, 71 per cent of businesses expressed a positive view, while only 3 per cent worried about Viet Nam's economic future. 25 per cent of surveyed businesses saw their profits remaining the same and only 4.5 per cent of businesses said their economic profits would face the risk of loss next year.
As a result, 51 per cent of questioned businesses would maintain their workforce, 35 per cent planned to recruit more employees, and 14 per cent of businesses said they would cut down their labour force in the time to come.
The majority of businesses defined credit loan procedures and tax policy as their biggest challenges for the time being. Besides these, the fake good issue sparked great concern among businesses as it has damaged the quality of goods and their reputations.
Most businesses in the survey agreed that the best solution to tackle difficulties was to demand the stimulation of goods consumption and services. As a result, banks have to cut down lending interest rates, debt restructuring and improve accessible capital for businesses.
Hundreds lose billions in online pyramid scheme
A company in Binh Duong Province was prosecuted for setting up an online commercial transaction market to cheat hundreds of people, appropriating billions of VND.
After hearing of a job in Binh Duong Province, Truong Thi Huong, 23, living in Nghe An Province applied for a job in D.H.P Company with an initial salary of VND5 million (USD240) per month.
When Huong met the director of the company, she was introduced of an online commercial market project with registered capital of VND10 billion (USD479 million).
The director had set up a website located in the famous online commercial transaction platform Gobay.com. He said his company would work as a bridge to connect producers and customers.
To become a staff member of D.H.P, Huong had to pay VND2.8 million (USD134) as a deposit in advance to set up her own online shop. The director promised if she wanted to leave her job, she would be paid back the VND2.7 million (USD129). They asked for VND100,000 (USD5) to make a staff card for her.
“If you can introduce other staff to the company, you will receive VND600,000 (USD29) per person as commission. If that person decides to set up an online shop worth VND6 million (USD287), then you will receive VND1.5 million (USD72)”, the director said.
He also promised that the company would give her a multifunction ATM card, a shopping card with a discount of 20% for every item she buys, a travel card with a 100% discount for a once a month visit to Dalat. If she received a best salesperson award three times, she would be given VND16 million (USD765) to buy a laptop. If she managed to win the award eight times, the company would give her VND50 million (USD2,390) to buy motorcycle and if 12 times, she would be loaned VND500 million (USD23,900) at 0% interest rate to buy an apartment.
Huong immediately paid VND2.8 million (USD134) to set up her online shop. From February to July, the only job she carried out was to persuade other people join the company. She introduced 20 people to the company.
She also set up four online shops and paid another VND20 million (USD956) to be a shareholder in the company, but she has yet to receive a salary.
The 20 people she ‘hired’ convinced other 28 people to join.
Another case like Huong is Lam Van Hop, who persuaded 14 people join the company with him. Le Van Quy was the biggest cases with 50 people.
On the morning of July 9, dozens of the company’s staff deposited letters of denunciation to Thuan An Commune’s Police Station. That afternoon, the local police began to summon people involved with the company.
Lieutenant-colonel Vo Van Hong said, “Local people still have little knowledge of trading laws and online commercial transactions, so they become easy prey for cheats."
An official of Binh Duong Province’s Department of Industry and Trade said that D.H.P Company showed all the signs of fraudulent behaviour.
Stated-owned groups to divest from non-core investments by 2015
The Government officially fixed the deadline for state-owned corporations and groups’ non-core withdrawal on July 9. This is considered an important step towards the restructuring of State-owned enterprises, particularly those that have invested in the risky sectors such real estate, banking, finance and insurance.
State-owned corporations and groups have been requested to withdraw from their non-core investments before 2015.
The corporations and groups this will apply to have been required to design restructuring plans which include divestment from their non-core activities. They have also been required to withdraw from investments in joint ventures and associated companies which are not related to their main areas of business. Those organisations involved in these risky ventures are required to promptly submit their plans for consideration. Organisations involved in less risky investments will be allowed to divest in a more gradual way.
Ministries and provincial people’s committees have been assigned to consider, approve or deny the capital removal plans after receiving permission from the Ministry of Finance.
The Ministry of Finance has been asked to send supervisors to State-owned corporations and groups to check their use of State capital and their capital withdrawal processes during their restructuring.
According to a report by the Party Committee for Central Businesses Bloc, currently 21 out of 31 State-owned corporations and groups have expanded to non-core business areas, using a total of VND22.6 trillion (USD1 billion). Among those, Song Da Holdings invested VND6.94 trillion (USD330.47 million), PetroVietnam around VND5.4 trillion (USD257 million) and EVN with nearly VND2.1 trillion (USD100 million).
However, most of the groups said that their non-core investments helped to ensure that they maintain an acceptable rate of 30% lower than their charter capital. The non-core investments of PetroVietam account for 3.76% of its charter capital, while the rate is 2.8% for EVN.
Vinacomin recently decided to withdraw from its non-core investments, which equal VND115.8 billion (USD5.5 million). The four companies from which they divested were Vietnam National aviation insurance Company, BIDV Expressway Development Company, Hai Ha Economic Zone Development and Investment Company and Long Thanh Development and Investment Joint Stock Company.
Da Nang seeks more US investment
At a conference in Houston city, Texas , Chien introduced Da Nang ’s investment incentives with priority given to high-tech sectors that are of US companies’ strength.
Da Nang hopes to see more US companies to invest in the city in the coming time, especially in its information technology park, Chien said.
The Da Nang official also met with Houston ’s Mayor Annis Parker, during which the two sides discussed cooperative opportunities between the two cities.
They signed a letter of intent with the hope that the two localities will soon strike up a twinning relationship.
Houston is the US fourth largest city with a population of more than 2.1 million and a GDP of nearly 400 billion USD per year.
Apart from Texas, the Vietnamese delegation also toured California , San Francisco , Washington and New York.
More domestic flights to meet public demand
The national flag carrier Vietnam Airlines plans to increase its flights on 16 domestic routes from July to August 5, announced the carrier on July 12.
On peak days, the airline will operate 68 flights from or to Da Nang, 28 flights from or to Nha Trang, 20 from or to Phu Quoc and 16 to Da Lat. Over the summer season the Hanoi - Da Nang route will have 210 extra flights laid on.
Budget carriers Jetstar Pacific and Air Mekong are also adding more flights from HCM City and Hanoi to tourist destinations around the country, meeting the surge in demand for air travel, particularly on weekends.
Jetstar Pacific announced on July 12 that it will operate 48 extra flights to Da Nang from the country’s two major cities in July, the peak month in the holiday season, with the additional services running from Thursdays through to Sundays.
With these extra flights, Jetstar Pacific will now have five daily flights between HCM City and Da Nang , one more than its normal schedule. The frequency of the Hanoi to Da Nang flights will double to twice daily.
Air Mekong has increased its weekly flights between Hanoi and Phu Quoc to 10 and between HCM City and Con Dao to 12. It will now also operate three flights daily from HCM City to Phu Quoc.
PM allows EVN to offset previous losses
Prime Minister Nguyen Tan Dung has asked the Electricity of Vietnam (EVN) to adhere to a recently approved plan through 2015 that would make the group profitable.
EVN will be allowed to offset losses from previous years by increasing prices until 2013. The company will also be allowed to include losses due to the disparity in currency exchange rates until 2015.
EVN claimed that by the end of 2011 they had lost over VND10 trillion (USD476 million) in its power business and VND15 trillion (USD714.2 million) due to exchange rate disparity. The group also also saw a power loss rate of 9-10% per year.
With the PM’s permission, VND10 trillion of these losses will be included in the group’s power prices between 2012 and 2013.
According to the plan, electricity prices will gradually be increased and, in 2013, prices will become market-based. EVN will have the responsibility of providing electricity to all communes and 98% of rural households in the country.
They were also urged to put 42 turbines in 20 power projects into operation, with a total capacity of 11,600 MW between 2012 and 2015. Plans for 14 power plants are already underway with a combined capacity of 12,410 MW, which should come into operation between 2016 and 2020.
EVN will also continue upgrading rural power grids, particularly in mountainous areas and on islands.
During a recent online meeting held on the Government’s website, Deputy General Director of EVN, Duong Quang Thanh said that the group plans to invest over VND500 trillion (USD23.8 billion), VND315 trillion of which has already been secured.
SBV to ease banking system crisis
An official from the State Bank of Vietnam said that they will not need VND100 trillion (USD4.8 billion) to deal with the bad debts at local banks.
Nguyen Huu Nghia, head of banking inspection and supervision at SBV, said at the meeting to address bad debts on held on July 12, that they have not yet decided on the establishment of a bad debt trading company and have not yet officially reported to the Prime Minister. "But we will not need VND100 trillion in capital." he said.
If the company is established, SBV will use financial instruments such as stocks, bonds, short-term loans deal with the problems. The value of bad debts may be VND100 trillion, but the money can be acquired through other various means at better rates.
In answer to the question as to why there has been such an increase in the ratio of bad debt, Nghia said that one of the reasons is that the credit institutions attempted to achieve high growth without sufficient risk mitigation, especially commercial banks that changed from rural to urban markets.
Many credit institutions made risky investments in sectors such as real estate, and when the market went into a slump, bad debts soared, he said, adding that the regulatory process has not been thorough enough.
To clear bad debts and prevent the same situation from occurring in the future, the SBV has asked banks to restructure loans to borrowers, extend repayment deadlines and lower interest rates to make it possible for the loans to be repaid.
The SBV will review and classify debts and adjust banking regulations to be more in line with international regulations as well as the economic realities of the country.
Millions of pre-paid subscribers face risk of information re-registration
Millions of pre-paid mobile phone subscribers belonging to the Viettel, MobiFone and VinaPhone networks in HCM City may have to re-register their personal information.
The Ministry of Information and Communications has transferred the personal information of five million pre-paid subscribers to the Ho Chi Minh City Police who will be checking to see if the information submitted is correct. Those who are found to have supplied incorrect information will be required to re-register. The work will be carried out by the police over three months.
Checks have already been carried on pre-paid subscribers of Viettel, MobiFone and VinaPhone in Hanoi and Danang which found that around 1.3 million or 25% of all those checked had provided inaccurate personal information.
A representative from a large mobile phone operator said that getting subscribers in Hanoi and Danang to re-register had been difficult. Despite being urged many times and even threatened with disconnection, they still ignored the requests. As a result, many of them are ready to stop using the service.
Last September, Vice Chairman of the municipal People’s Committee Le Manh Ha instructed mobile operators to use technical measures to control their pre-paid subscribers’ information.
The Ministry of Information and Communications started checking subscribers’ personal information in 2010, but the work has been carried out very slowly.
Major-general Nguyen Cong Son, Deputy Head of Vietnam’s General Police Department for Administrative Management for Social Order and Safety, said that criminals use pre-paid SIMs for illegal activities such as harassment and stealing telecommunication charges.
The ministry will tighten control over personal information of subscribers by introducing identification cards issued by the Hanoi Police, before expanding the scheme to Danang and HCM City.