BUSINESS IN BRIEF 7/10

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Troubled State firms find cause for hope



State and economic experts have suggested solutions to help state-owned enterprises grappling with business and investment problems.

According to a recent Party survey of 31 State-owned corporations, economic groups and banks, many had suffered losses but had retained high levels of investment in securities or real estate development outside of their core business.

The Party committee survey found 21 of the firms had pursued investments outside of their main portfolios, with total figures reaching VND22.59 trillion (US$1.08 billion) in the first eight months of this year.

The PetroVietnam Group had the greatest non-core investments at VND6.69 trillion ($321.6 million), accounting for 3.76 per cent of its charter capital, followed by the Rubber Industrial Group with non-core investments of VND3.7 trillion ($177.88 million), or 19.8 per cent of its charter capital.

Electricity of Viet Nam (EVN) had total investment of VND2.1 trillion ($100.9 million) in tourism, real estate, infrastructure development and industrial zones.

High-risk sectors including securities, banking and insurance also attracted significant investment from all 31 State-owned enterprises surveyed, the committee said, with thirteen of the firms having pumped VND10.7 trillion ($514.4 million) into the sectors, including VND5.6 trillion ($271 million) from PetroVietnam alone.

Total investment by the 13 firms in the securities market amounted to VND1.3 trillion ($62.5 million), while the eight firms leading investments in real estate and industrial zone development totalled VND3.75 trillion ($180.3 million).

Meanwhile, all State-owned enterprises in the survey lacked capital for key projects and many were posting losses, the committee found, with some even facing insolvency.

EVN posted losses of nearly VND31.6 trillion ($1.51 billion) in the first half of 2011 and over VND23.6 trillion ($1.14 billion) in 2010, while logistics firm Vinalines posted losses of nearly VND16.7 trillion ($801 million) in the first half of 2011, including VND16 trillion ($769.2 million) caused by ventures with insolvent shipbuilder Vinashin.

Most enterprises attributed losses to pricing mechanisms that operate on the domestic market.

Vinalines general director Nguyen Canh Viet said his corporation sustained losses due to unstable charges in container loading and unloading in the Thi Vai-Cai Mep port and suggested the state amend pricing regulations.

The losses at EVN were due to the low price of electricity and under-investment, the group claimed, and sought to increase electricity prices to avoid further losses.

Electricity prices had also caused losses for the Song Da Group who signed contracts selling electricity according to prices from seven years ago which don't reflect increasing production costs, said a representative of the group.

The Viet Nam Import Export Petroleum Corporation (Petrolimex) had total losses of VND1.45 trillion for the first seven months of the year due to higher oil prices on the world market, while the domestic market's retail price remained the same, a Petrolimex official said.

Economic expert Pham Chi Lan said these enterprises had sustained losses because of inefficient state supervision of the finance system and an absence of transparent management.

The surveyed State-owned enterprises and groups had received priority treatment and support by the State when they encountered difficult times, Lan said.

She said the enterprises had a necessary role in the development of the economy but must continue to be competitive in the market.

To deal with the non-core investment and losses, the Prime Minister asked State-owned corporations and economic groups to focus investments on main sectors and withdraw capital from non-core business which should be capped at 15 per cent of capital, half the current figure.

Speaking at a Government meeting earlier this month, he said industries should review State-owned corporations and economic groups that have shown to operate ineffectively.

Agreeing with the Prime Minister, Lan said the 15 per cent figure was still high because these businesses invest tens of trillions of dong, and would surely risk large losses in the future.

She also supported restricting the development of the economic group model, as it had developed quickly since its 2005 inception and had not been properly reviewed.

"Renovation and restructure of State-owned enterprises is necessary for both enterprises posting losses and for those making a profit, so both could improve competitiveness," said Nguyen Duc Thanh, director of the Economic and Policy Research Institute at the Economic College of the National University.

"The State should reduce its capital in State-owned enterprises and move its money into lower-risk investments in the future," Thanh said.

Rice exporters shrug off global ranking

The Viet Nam Food Association (VFA) has said it paid little attention to the country's ranking in the world rice market but only aimed to help farmers.

VFA's deputy chairman Pham Van Bay offered this clarification yesterday after former Thai finance minister Pridiyathorn Devakula warned that Viet Nam could topple Thailand from its perch as the world's largest exporter of the grain next year if the Yingluck administration went ahead with its rice subsidy scheme.

"The new Government in Thailand has its own rice export policy, and we have no comment on it," Bay told Viet Nam News yesterday.

"We don't care whether we are ranked No 1 or No 2. And neither do we have the ambition of becoming the world's largest rice exporter.

"What we care is how to help farmers get more reasonable prices and to contribute to the nation's food security."

The US Department of Agriculture has forecast shipments from Thailand, which accounts for some 31 per cent of global rice exports, to fall from an estimated 10 million tonnes this year to 8 million tonnes next year.

The VFA hoped to export more than 6 million tonnes of rice next year, Bay said.

Thailand's rice exports had jumped 55 per cent to 8.3 million tonnes this year through September 5, the Thai Rice Exporters Association said.

Bay said as of September end Viet Nam had shipped nearly 5.9 million tonnes out of an estimated whole year figure of 7 to 7.5 million tonnes. Fulfilling all export contracts was one of the VFA's biggest concerns, he said.

The high prices offered to farmers in Thailand had increased prices in Viet Nam, the Thai media said.

Thailand and Viet Nam control half of the world's rice trade estimated at 31.85 million tonnes next year, compared to 32.74 million forecast by the US Department of Agriculture.

The decrease would stem from Thai shipments falling to 7-8 million tonnes next year, down from more than 10 million tonnes this year, as a result of the subsidy plan.

The Government aims to pay 15,000 baht ($500) a tonne for paddy and 20,000 baht ($665) a tonne for Hom Mali rice, a plan that could push up white rice export prices to more than $800 a tonne from $550-560 now and make Thai rice less competitive.

"When the new crop from Viet Nam is harvested between February to March, it could affect the sale of mortgaged rice," Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, told Bangkok Post.

Paddy prices have increased by VND150 per kilo to VND6,650 - VND6,750 per kilo in the Mekong Delta since mid-September.

Price of rice sold for export rose from VND8,850 to VND9,050 in the same period.

Bay said the prices were up because of the floods threatening the summer-autumn crop.

Viet Nam has also signed another contract to export 400,000 tonnes of rice to Indonesia.

The price hikes in the global market has also had an impact on the local market. Bay said export prices of Vietnamese rice had risen by $30-50 per tonne to $540- $560 per tonne in the past few weeks.

They are expected to rise sharply in October as a result of the Yingluck government's rice mortgage scheme, he added.

Cap set on non-term deposit interest rates

Non-term deposit interest rates offered by commercial banks and other credit institutions will be capped at 6 per cent per year, effective October 1, pursuant to Circular No 30/2011/TT-NHNN issued by the State Bank of Viet Nam on Wednesday.

The cap on deposit interest rates for term deposits of one month or more remains unchanged at 14 per cent, 14.5 per cent at credit unions.

The new circular replaces Circular No 02 issued back on March 3. However, according to the State Bank, a number of commercial banks had flouted that regulation by offering higher interest or bonus interest to entice depositors. Some banks had also given depositors overnight interest of 14 per cent.

These practices cont-inued to introduce a high element of risk into the nation's banking system, the State Bank said. —

Corporate governance in focus

The International Finance Corpor-ation's Viet Nam Corporate Governance Programme, the Global Corporate Governance Forum, and the State Securities Commission of Viet Nam organised an interactive workshop on enforcement of corporate governance in Viet Nam yesterday in HCM City.

The two-day workshop aims to provide regulators and stock-exchange staff with substantive unders-tanding of corporate governance (CG) as a concept and as a basis for a company's strategy, mode of operation and reporting.

It will also help regulators better under-stand, monitor, investigate and enforce good corporate governance practices as well as improve the institutional capacity and authority for CG monitoring and enforcement.

CG is a system of principles to ensure that a company is directed and governed in an effective manner for the sake of shareholders and other stakeholders.

Companies in Viet Nam have achieved a 43.5 per cent score, less than half on the global scale based on the Organisation for Economic Co-operation and Development's (OECD) Principles of Corporate Governance. The OECD principles serve as an excellent reference point for international practices, said Anne Molyneux, director of CS International in the UK and former director for technical affairs at the Institute of Chartered Accountants in England and Wales.

A company with good corporate governance would be in a better position to attract external investment and increase profitability, she said.

Bui Hoang Hai, deputy director of the State Securities Commission of Viet Nam (SSC)'s Issuance Management Department, said it was necessary to increase awareness of good governance because most State-owned enterprises had not paid much attention to it.

Listed firms in Viet Nam had had many problems caused mainly by poor corporate governance, he said.

In addition, the country had adopted business law, legislation and institutions but had not been effective in protecting investors' rights and benefits.

Hai said SSC was compiling a draft circular on CG for public companies, expected to satisfy current pressing issues like non-transparency and violation of rights of shareholders, to ensure understanding and implementation and gradually improve standards of CG in Viet Nam.

Speakers and participants at the workshop also discussed directors' liabilities, company and board structure for good governance, shareholder rights and responsibilities, and common violations of the rights of shareholders and other related issues.

Committee reviews economic progress

Officials from the steering committee to implement Resolution 37 yesterday praised efforts being made to advance socio-economic development and maintain the security of the midland and northern region from 2005-2010.

Resolution 37 was put forward by the Communist Party Politburo to establish the direction for the region's socio-economic development in 2005.

At the meeting to review progress after six years, leaders of the committee acknowledged that the region had overcome economic hardships, increased the GDP by 11.5 percent and achieved major progresses in poverty reduction, upgrading rural transport systems and industrialisation.

Party Central Committee's permanent member of the secretariat Le Hong Anh said besides these accomplishments, the region was still falling behind in reaching many socio-economic development targets in line with the rest of the country, noting that the provinces face disadvantages including isolated terrain, unfavourable weather conditions and inadequate infrastructure systems.

He said provinces in the region were always in dire need of investment, but the government budget had not been able to cover all areas. Anh requested all ministries and agencies to continue assessing the situation in order to improve development strategies and draw further investment into the region.

Deputy Prime Minister Nguyen Xuan Phuc said information about the progresses of the past six years would be submitted to the north-west Steering Committee and then to the Politburo of the Communist Party.

The deputy PM requested all agencies and ministries to review socio-economic development models in these provinces and suggest necessary adjustments to the zoning process and policies to further develop the region.

‘Da Lat vegetable' brand introduced

Ten enterprises in the Central Highlands province of Lam Dong were granted certifications to use the "Da Lat vegetable" brand by the People's Committee of Da Lat City on Tuesday.
Six of the enterprises are located in Da Lat City, three in Don Duong District and one in Duc Trong District.

The enterprises must strictly follow food safety and quality requirements to use the label.

AmCham announces 2011 scholarships

The HCM City chapter of the American Chamber of Commerce has announced this year's AmCham scholarships for students at 10 city universities.

The annual programme offers 40 scholarships worth VND10 million ($480) each and training courses for students.

The scholarships are open to students in their third year of university or above who are dynamic, ambitious, active in school and social activities, and have shown good academic performance.

Vietnam should prioritize fighting inflation: expert

Vietnam should concentrate on curbing inflation to restore macroeconomic stability before redirecting to strategies to boost growth, said a foreign expert at a recent workshop at Ho Chi Minh City-based Vietnam-American Training College (VATC).

Richard Duncan, the author of the best-seller “The Dollar Crisis: Causes, Consequences, Cures”, told the workshop, themed “The world’s financial crisis and its impact on Vietnam”, that in the context of more emerging international uncertainties, Vietnam should consider stabilizing its macro-economy to found a sustainable foundation for future growth.

The workshop is a part of VATC’s effort in bringing practical knowledge from international scholars to its students.

Vietnam should boost trade with the US, especially in processed food, apparel and garment, footwear – the country’s advantages, in order to enrich its forex reserve, build up the capacities for domestic industries, and push up domestic demand.

It will also strengthen the bilateral diplomatic ties as well, he said.

The country should also address its infrastructure bottlenecks to boost economic efficiency and create more jobs.

“I think that the situation now in Vietnam is somehow modeling what had occurred in China in 1980s due to infrastructure gridlocks, and so, tacking the problem will help spur the growth engine of Vietnam again,” he added.

“The current crisis in EU and US now is something that can be predicted earlier, and I had done so in my best-seller book which was published in 2003, 5 years before it took place,” he said.

It is a historic cycle, and when we understand history, we can forecast what is going to happen in the future.

“Like traveling on a train, you have to look back the past tracks to have the idea of where will it lead us to in the future,” he added.

The crisis resulted from the abandonment of economic orthodoxy including balanced government budget, sound money, balanced trade and the core principles of economic orthodoxy causing the Great Depression in the 1930s of the 20th century.

The model of the new crisis seemed to mirror what occurred in the 1930s.

“In the Great Depression, we have the gold standard breakdown in 1914, the credit boom – the roaring 20s, boom then led to bust when the credit could not be repaid, which lead to banking and international trade collapses”.

“In the recent financial crisis, we have the Bretton Woods breakdown in 1971, the credit boom – the global economic bubble, and the rest just simply follow suit.”

Richard Duncan also showed his suggestion of a $3 trillion package to save the US and the whole world, $1 trillion each will be intensively invested in solar energy, biotech and genetic engineering, and nano technology.

The package will help end the US chronic trade deficit, expand US tax revenues, an unassailable US lead in the industries of the future, and US energy independence, medical miracles and technological marvels.

Richard Duncan is now chief economist at the Singapore-based Blackhorse Asset Management which is a strategic shareholder of VATC.

Since beginning his career in Hong Kong in 1986, hehas served as global head of investment strategy at ABN AMRO Asset Management in London, worked for the World Bank in Washington D.C., headed equity research departments in Bangkok and consulted for the International Monetary Fund (IMF).

Richard has appeared frequently on CNBC, CNN, BBC and Bloomberg Television and is a well-known speaker. He studied literature and economics at Vanderbilt University (1983) and international finance at Babson College (1986).

Incham launches pharmaceutical seminar

The Indian Chamber of Business in Vietnam (Incham) has organized a seminar on the pharmaceutical industry’s outlook this year with the participation of local state officials, hospital representatives, importers and their foreign partners at Sheraton Saigon Hotel.

The event, “Pharmaceutical Outlook 2011”, is a chance for Indian and Vietnamese firms operating in the field and other related sectors to bolster their partnerships, said Anand Ramesh Mokan from Canopus Co – Incham host.

It is also an opportunity for Indian pharmaceutical firms to gain more accessibility to Vietnamese hospitals in the city, he said.

Incham has 42 member companies operating in pharmaceutical manufacturing and trading among 120 Indian firms operating in the industry with over 4,500 products in Vietnam. Many of them have started their business here since 1990s.

The city authorities will help facilitate the integration of Indian medicine into around 100 hospitals in the city, said Pham Viet Thanh, director of HCMC Department of Health.

"If Indian pharmaceutical manufacturers and exporters meet all the requirements of bidding procedures at our hospitals, we believe that the integration is just a matter of time," he said.

"There is no discrimination between Indian, European and American pharmaceutical firms in applying for tender bid for medicine purchases at HCMC hospitals," he told Tuoi Tre.

Indian-made medicines can help Vietnam reduce healthcare expenditures due to increased availability of Indian products in public hospitals, which will help the Government of Vietnam to expand health insurance scheme to a larger population, said Kailash Patki, country director of Dr. Reddy's Laboratories Co Ltd in Vietnam.

They will also increase the accessibility of Vietnamese patients to newer medicines for the most fatal diseases including HIV/AIDS and cancers, he added.

Indian-made medicines, meeting any strictest international standards, can be averagely 10-times cheaper than those produced in developed world.

Many EU and US pharmaceutical firms have been outsourcing their Research and Development (R&D) work in India to cut cost and make use of its talent pool of around 11,000 post-graduates in biochemistry and chemistry passing out along with 2,500 chemical engineers and around 4,500 pursuing PhD in science annually.

India has the largest number of US Food and Drug Administration (FDA)-approved manufacturing facilities outside the US. They have been expanded overseas to US, UK, Germany, Mexico, Italy, Spain, Brazil, France, the Netherlands, Malaysia and China.

It is also the production base for world’s top companies, such as Pfizer, Astra Zeneca, Eli Lilly, GSK and Abbot. In NCE R&D, it has around 100 new molecules under different stages of development.

India is now the world’s 3rd and 14th largest producers of pharmaceuticals by volume and value respectively. It is exporting medicines to 151 countries and territories worldwide.

Its leading foreign markets last year were US, UK, and Germany with $1.8 billion, $264 million and $243 million respectively. Vietnam was ranked 12th among its top foreign markets with around $103 million.

Local airports report massive losses

Most local airports in Vietnam have reported billions of dong in loss in the first eight months of this year.

The Northern Airport Corporation (NAC) said it had had to spend VND64.4 billion (US$3.2 million) to offset for the losses of airports in the northern provinces of Quang Binh, Nghe An, Hai Phong and Dien Bien.

Meanwhile, the Southern Airport Corporation (SAC) also said 5 out of the 8 airports under its management had been operating with losses due to low flight frequency.

But a SAC official said many provinces still want to have airports despite losses.

The Mekong Delta province of An Giang, for instance, has recently sought approval to build an airport in Can Dang Commune in Chau Thanh District, which has raised concerns because this location is only 60km away from the two existing airports in Can Tho and Kien Giang provinces.

Moreover, demand for flights between Can Tho and Ho Chi Minh City have fallen sharply, even forcing Jetstar Pacific to halt services on this route after losing $2 million.

Vietnam Airlines has also had to its services on this route.

Property still sells in southern province

While the condo market nationwide remains sluggish, street houses and villas in the southern province of Binh Duong are still bustling with new products.

Becamex Urban Development Joint Stock Co., or Becamex UDJ, have recently inked a deal with Kim Oanh Real Estate Joint Stock Co. to develop the Golden City project and introduce it to buyers.

The two enterprises will invest around VND350 billion in the project, which will cover a total area of seven hectares along the My Phuoc-Tan Van Expressway, one of the most important roads in the province.

The project will offer around 460 villa and house land lots. Each one is measured from 100 to 300 square meters and priced from VND1.6-2 million each square meter.

Earlier, Kim Oanh Co. worked with Binh Duong Trade and Development Joint Stock Company, or Becamex TDC, to develop the City Garden project in Ben Cat District with the total investment of VND100 billion.

The project will cover 7.5 hectares with 339 houses priced from VND1.6-2.2 million a square meter.Kim Oanh said it sold all land lots of the project within just a month during two sales in August.

Meanwhile, Malaysia-based SP Setia Group will launch the sale of EcoXuan Lai Thieu residential area with villas and commercial areas on Friday. This investor will focus on houses and villas with the prices of VND2-4 billion each.

A market survey of Savills Vietnam shows that 10 projects with 1,800 condos and land lots were launched in Binh Duong as of the end of August. The province now has 68 projects in both primary and secondary markets, providing 22,700 condos and land lots.

Of these, land products make up 56 percent of the total market, concentrating in Thu Dau Mot, Thuan An, Di An, Ben Cat districts and Binh Duong New City. The price of houses and villas in Binh Duong averages at VND43.5 million per square meter while the average of land lots is VND3.3 million a square meter.

House prices are rising while land lot prices stay unchanged from early this year. Savills expects to see around 5,600 condos and land lots from 16 projects launched in this the market in the near future.

Japan to favor female employees from Vietnam

Among countries that have been exporting workers to Japan, the Japan International Manpower Development Organization (IM Japan) has decided to only recruit female workers from Vietnam, the Board for Management of Vietnamese Workers in Japan has said.

Nguyen Gia Liem, head of the board, said qualified candidates would be exempted from all expenses related to labor export and would be paid over US$1,000 per month under three-year labor contracts.

When their contracts are over, every worker will be given an allowance of JPY600,000 ($7,800) before they return Vietnam to help them reintegrate into their community.

The organization will also introduce these workers to Japanese-invested businesses operating in Vietnam, he said.

Currently, about 17,000 Vietnamese workers have been working in Japan with an average salary of about US$1,000 per month.

The cost for every Vietnamese worker to be sent to Japan is now about VND40 million (US$1,920), said Tran Van Thanh, deputy director of the Labor and Expert Export Company (Suleco).

This includes expenses for Japanese language training, brokerage fees and medical check-ups.

Japanese companies highly value Vietnamese workers’ work ethics as well as their sympathy with Japanese employers who have suffered difficulties after the recent disasters, said Nguyen Xuan Vui, chairman and CEO of Air Service Supply Joint Stock Company.

Kuwait gets funding for Vietnam refinery-KUNA

State-owned Kuwait Petroleum International (KPI) will receive funding from the International Finance Corporation (IFC) to build and develop Vietnam's second oil refinery, its chairman was reported as saying on Friday.

Hussein Ismail told Kuwait's state news agency KUNA that building the 200,000-bpd Nghi Son oil refinery is part of Kuwait's strategy to invest in large-scale refining and petrochemicals projects in East Asia.

No figure was given for the funding.

The refinery, situated in the northern province of Thanh Hoa, 215 km south of Hanoi, is a joint venture between KPI, Petrovietnam Construction Corp and Japan's Idemitsu Kosan Co and Mitsui Chemicals .

The project is expected to be completed and ready for operation in 2015, KUNA said.

KPI, an international unit of Kuwait Petroleum Corporation (KPC), established the joint venture in April 2008 to build the refinery, which is designed to process Kuwaiti crude.

Investment in the refinery would total $7.5 billion, Vietnam's Prime Minister Nguyen Tan Dung said in January.

Demand for construction steel rises back

Steel consumption this month is increasing compared to the last two months thanks to the higher construction tempo.

According to Phan Vu Hung, director of Sai Gon Thuong Tin Commodity Exchange (Sacom-STE), steel transactions at Sacom-STE are now 30,000 tons a day, a 40 percent increase compared to July.

“This is a good sign,” Hung said, adding that increasing consumption plus decreasing steel imports were paving the way for higher sales.

The current price of construction steel at Sacom-STE remains at VND16.3 million a ton, which is VND700,000 cheaper than the world steel price, Hung said.

This price is expected to be stable and sales may increase by 15 percent per month from now to March next year, Hung said.

He said steel enterprises would soon get back on track.

Previously, the Vietnam Steel Association (VSA) calculated the stockpiles of finished steel products at 400,000 tons and steel ingots at 520,000 tons at the end of August. This was a huge amount of steel in storage compared with the normal monthly stockpile level.

Several steel producers have decided to slash construction steel production by half amid the dreary market conditions of the past few months. However, Nguyen Tien Nghi, vice chairman of VSA, said steel sales were expected to reach 480,000 tons this month, which is 30,000 tons more than August.

Nghi said construction steel consumption has been rising these days. At present, stockpiles of finished steel products have fallen to 370,000 tons and steel ingots have fallen below 500,000 tons, which can secure the steel market in the near future, he said.

Vietnamese still doubt market economy

Vietnam’s transition to a market economy will be tougher than expected as even well-educated people still want to rely on state protection for economic security, a survey reveals.

According to the survey just released by the World Bank and the Vietnam Chamber of Commerce and Industry, the common attitudes of the majority of highly-educated Vietnamese about the role of the state in the market are mixed. Of 892 people interviewed, 93 percent are university and post-university graduates and are working for the government, private businesses, foreign-invested firms, international donors and others.

An overwhelming number of these respondents (87 percent) prefer a market economy, while 7 percent say the state-led economy is better than the market economy and 6 percent say it does not matter.

Only 1 out of 4 agrees that Vietnam has become a market economy. The majority also advocate entrepreneurship, as up to 69 percent say they believe private ownership is better than any other forms of ownership, while 13 percent say state ownership of enterprises is better.

Ironically, however, an overwhelming rate (68 percent) of respondents think prices of common items consumed by households should be determined by the state.

Meanwhile, only 29 percent of respondents believe prices should be determined by market forces with no interference from the state, and 3 percent say it does not matter.

The mixed signals from the survey make economists and experts worry that the transition to a market economy would face resistance.

Economist Pham Chi Lan, former vice chairwoman of VCCI, said the survey shows the state is still needed in determining market forces when it comes to important items like petroleum, power, and air tickets.

“People have gotten used to state monopoly, so they’ve clung to state protection,” Lan said.

Meanwhile, economist Nguyen Quang A said he felt afraid that it would be worse for Vietnam if state agencies would continue to intervene in the economy based on such findings.

The survey shows that the number of respondents dissatisfied with the current state of the economy exceeds those satisfied by two to one, at 39 percent against 19 percent.

The World Bank’s chief economist Deepak Mishra concluded that most respondents prefer market-led economy, private ownership of enterprises, and greater transparency in decision-making.

However, they still approve intervention by the state to stabilize prices. He said that the group that seems most satisfied with the status-quo are those working for the government, the National Assembly and the Party, as well as private businesses and foreign enterprises.

On the other end of the spectrum are those working with international donors, social organizations and the media.

“Those working in the government are less enthusiastic about reforms than those working outside of the government, so Vietnam’s transition to a market economy is unlikely to be fast,” he said.

The survey is to support the Vietnam Development Report 2012 to be issued late this year by international donors.

Sacombank to open subsidiary in Cambodia

Saigon Thuong Tin Commercial Joint Stock Bank, or Sacombank, has got approval from the State Bank of Cambodia to open a 100-percent foreign-invested bank subsidiary there, its Chairman Dang Van Thanh announced yesterday.

Thanh said the Sacombank Cambodia, which was upgraded from Sacombank’s Phnom Penh branch, was scheduled to officially open in October 5.

Sacombank Cambodia was licensed to operate as a commercial bank within 99 years with a chartered capital of US$38 million, he said.

He added that Sacombank Cambodia would boost gold deposit mobilization and SBJ gold bullion sales in this Indochinese country.

Sacombank Cambodia has also opened three branches in the major areas in Phnom Penh and targeted to expand the network by four more branches next year.

Sacombank is one of four Vietnamese banks to open outbound official subsidiaries.

They include the Military Commercial Joint Stock Bank, the Bank for Investment and Development of Vietnam, and the Vietnam Bank for Agriculture and Rural Development.

When ill fate sinks the titan lotus

There is nothing to be proud of US$67 million Hoa Sen (lotus) ship formerly owned by the beleaguered state-run Vinashin with its shameful history including stopping operation after a short time, getting detained in Korea and currently docking dormant in China.

Even when the ship is now doing nothing at a port in China, it still continues its loss-making saga every day by incurring massive expenses on crew wages, docking, insurance and machinery maintenance fees, and a daily depreciation of as many as $11,000.

Purchased from Italy in 2007 by troubled state-owned shipbuilder Vinashin, Hoa Sen ship soon had to go under maintenance in December 2008 after just 40 trips between northern Quang Ninh Province and southern Ho Chi Minh City due to cracks found at the bottom.

The ship’s ownership was then transferred to Vinalines, another state-run shipping firm as part of the restructure process at Vinashin as ordered by the government, following its failure in clearing the massive debt of VND86.6 trillion ($4.33 billion).

From April 2009, the ship was docked at Cam Ranh Bay in Vietnam’s Khanh Hoa Province until last February, when it left for China under a leasing contract inked between Vinalines and China-based Lianyungang CK Ferry Co Ltd with the daily rent of $16,500.

This shed a beam of hope for the revitalization of this titanic ship, but not for long.

Just three months later, the ship was detained to serve as a collateral at a port in Korea over a $4-million debt that Vinashin Lines owed to Singapore-based GMS Marine.

Vinalines said the detention came after Vinashinlines failed to clear a $4.15-million bail for a lawsuit with GMS Marine.

The Singaporean shipping company then demanded a ‘fee’ of $6.5 million to release the ship.

A Vinalines’ top official told Tuoi Tre that the company had negotiated to get the ship back, but he “did not know how much Vinalines had spent on the task.”

Yet Vinashinlines has lost more than just that $6.5 million.

The detention in Korea has caused Hoa Sen ship to lose its leasing contract with Lianyungang CK Ferry due to a clause in the contract stating that the deal could be canceled in case the ship stops operating for 15 consecutive days.

Bui Quoc Anh, Vinalines’ deputy general director, confirmed with Tuoi Tre that the contract had been canceled, adding the ship is doing nothing in China’s Lianyungang port since last May.

The lost contract dealt a loss of $2.4-million to Vinashin Lines.

Vinalines said it had been seeking the government’s approval to put the ship on sale while also searching for partners to lease it.

PV

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