Prices of export commodities in March in particular and in 2012 in general showed a decline after a sharp increase in 2011, concluded Nguyen Nam Hai, Vice Minister of Industry and Trade at a monthly meeting held yesterday by the Ministry of Industry and Trade.
This will create a negative impact on businesses, especially those that depend on imported raw materials and equipments.
In addition, though bank interest rates have been lowered, small and medium enterprises still find it difficult to borrow.
Nguyen Nam Hai, Vice Minister of Industry and Trade also informed that in the first quarter of 2012, the trade deficit was merely US$ 251 million, lower than during the same period in 2011 ($3.3 billion).
Meanwhile, export volumes in the first quarter of 2012 reached $24.5 billion, an increase by 23.6 per cent in comparison to the same period in 2011.
Other optimistic signs expected to raise export volumes included sufficient supplies of imported products in the market.
However the report of the Ministry of Industry and Trade pointed out that the trade surplus decreased due to drop in consumer goods and the economic recession.
It is vital to find new markets for export; and state as well as the private sector must strive to maintain the export momentum, the ministry said.
When global prices fluctuate and when global raw material prices rise and fall, these enterprises would be allowed to increase prices of their products to keep up with the inflation.
Vo Van Quyen, Head of the Department of Domestic Market under the Ministry of Industry and Trade, anticipates that inflation in April is expected to rise by a one-month rate to as much as 0.5 per cent, representing an increase over last month's very gradual increase in the consumer price index of just 0.16 per cent.
The recent increase in energy prices, including petrol, is likely to lead to inflation. Higher transport and distribution costs have already led some major retailers to increase retail prices on goods by 3 to 4 per cent in recent days, and rising healthcare costs have also fueled inflation.
Only a declining trend in gas prices worldwide has allowed domestic cooking gas distributors to plan price reductions of an estimated 16 per cent this month.
At the Government monthly meeting last Saturday, the Ministry of Finance reaffirmed that goods subject to State price control or required by the State for public purposes or national programmes, would continue to be closely monitored between now and the end of the year.
Prices of other consumer products, including agricultural and food products, would continue to be set by the market, with all price control systems to be lifted gradually, according to the ministry.
Electricity rates would only be allowed to increase slightly and would not be adjusted to reflect disparities between domestic and foreign currencies or the power industries accumulated losses in 2010, the ministry said. Coal prices would also be adjusted to the equivalent of 90 per cent of the price for comparable types of coal for export.
Costs of healthcare, education and other public services would be allowed to increase according to market forces in order to ensure that providers remain solvent and provide high-quality services, the ministry said.
Confidence slips back but businesses think of efficient growth initiatives
Vietnamese business confidence has slipped back 21 Index points to 122 since September, inverting the increase recorded between March and September 2011, according to the global Regus Business Confidence Index.
Companies reporting revenue growth decreased, falling to 31 per cent compared to 65 per cent six months ago. Companies reporting profit growth also decreased to 39 per cent from 59 per cent. Mindful of the need to contain costs in the quest for sustainable growth businesses identify increasing flexible workspace, increasing cloud IT applications and sales through third parties as the most effective cost cutting measures for the coming months.
Looking back, Vietnamese firms identify difficult access to cost effective capital (57 per cent) as the main reason for corporate distress during the downturn, followed by inflexible margins paid to resellers, distributors or introducers (52 per cent).
Respondents identified reducing fixed office space (52 per cent), increasing cloud IT applications (43 per cent) and sales through third parties (38 per cent) as the areas where companies could best make savings without damaging growth prospects.
Vietnamese firms report that more flexible workspace (43 per cent), a wider distribution of customers (43 per cent) and access to cost effective capital (43 per cent) would make the greatest contribution to enhancing future business stability as a platform for growth.
Globally, the Business Confidence Index rating is lower for small businesses (107) than for large firms (124).
Wiliam Willems, regional vice pesident of te Regus Group for Australia, New Zealand and South East Asia said: “Althoughh untouched by the significant setback reported by the index in other global economies between March and September 2011, Vietnamese business confidence has now suffered a dip.
In addition to this, the proportion of companies reporting revenue and profit growth has decreased compared to six months ago so it is not surprising that in order to grasp growth opportunities in a sustainable way, businesses are still looking to cut overheads without damaging their growth prospects.”
In every edition, the Regus Business Tracker report presents an updated Business Confidence Index. This index is a measurement formed on an aggregate of positive and forward-looking statements combining year-to-date revenue and profit trends with views on the expected economic upturn in the coming months and aims to provide businesses with a single point of reference of the survey’s key findings. Its benchmark average was set at 100 in the first edition of the Regus Business tracker in September 2009.
Regus is the world’s largest provider of flexible workplaces, with products and servicesranging from fully equipped offices to professional meeting rooms, business lounges and the world’s largest network of video communication studios.
Regus enables people to work their way, whether it’s from home, on the road or from an office. Customers such as Google, GlaxoSmithKline, and Nokia join hundreds of thousands of growing small and medium businesses that benefit from outsourcing their office and workplace needs to Regus, allowing them to focus on their core activities.
Salt question leaves bitter taste
The industrial salt import issue is back under the microscope.
Ministry of Industry and Trade (MoIT) Chemical Department deputy head Luu Hoang Ngoc said Vietnam needed to import industrial salt because local firms failed to produce sufficient quality to feed the health sector and soda manufacturers.
The MoIT is considering granting quotas for first-round industrial salt imports of 53,000 tonnes.
A MoIT representative said the intended quota-based import volume was minuscule against the forecasted demand of 280,000 tonnes needed in 2012.
Besides, under World Trade Organization commitments, Vietnam’s quota-based salt import would be around 192,000 tonnes in 2012. The MoIT and the Ministry of Agriculture and Rural Development (MARD) came to a decision to issue quota for import of 102,000 tonnes of salt only in 2012.
Viet Tri Chemical Company director Dao Quang Tuyen said: “Last year through media agencies we invited local salt producers to take part in bids on industrial salt supply, but got no feedback.”
Tuyen said locally-made industrial salt was not on a par with chemical production demands and poor quality salt could drive up the cost of treating substandard products.
Some chemical firms had to import industrial salt outside the quota scheme with high import duty of 60 per cent. Besides, the MoIT argued that local salt manufacturers were invited to join MoIT and MARD meetings discussing salt import quotas.
Representative of several salt firms said they did not take part in these meetings because they were discontented with the way the MoIT and MARD handled salt imports.
“The government has aired a number of policies to support the salt industry, but the MoIT and MARD did not effectively handle supportive policies,” said Southern Salt Group general director Tran Quang Phung.
Vinafood’s Branch for Salt Experiment and Technology Transfer director Bui Son Long assumed firms wanted to import salt because importing quota-based salt would be cheaper than buying it in the domestic market.
Industry experts assumed the contradiction between firms producing and using salt could not be tackled if quota-based import management mechanism continued. Phung suggested salt imports be controlled by tax instead of quota regime to increase transparency in salt import management.
Habubank takeover awaits final okay
After recently refuting rumours of a pending merging between Habubank (HBB) and Sai Gon-Ha Noi Bank (SHB), the State Bank of Viet Nam approved the merger in principle a few days ago in an unreleased document, according to a source close to the matter who asked not to be named.
"However, the document is only a consensus opinion as a guideline for the regulators and does not mean the merger is finalised," the source said.
Habubank declined to comment.
The central bank also ordered the two commercial banks to comply with Circular No 04/2010/TT-NHNN governing mergers and acquisitions of banks and submit a feasible merger scheme.
The two listed banks signed a memorandum of understanding back on March 8, including agreements on merger terms. Specifically, if the merger occurred, Habubank would transfer all of its assets and liabilities, including labour and legal benefits and obligations, to SHB, which would therefore assume responsibility for them.
The banks also agreed on a stock-swap ratio of one SHB share exchanged for 1.34 HBB shares. SHB would be responsible for issuing an equivalent quantity of shares to Habubank shareholders.
Under the agreement, Habubank would also not be able to contract with third parties without the consent of SHB.
"The merger depends on a final decision by the State Bank," the source said. "But first, Habubank must get approval from its own shareholders during the upcoming meeting." SHB was also expected to hold its shareholder meeting no later than April 30.
High-tech to drive HCM City reforms
HCM City's economic reform would focus on improving technological capacity, the vice chairman of the municipal People's Committee, Le Manh Ha, said yesterday.
Speaking at a meeting to discuss the city's economic reform plan, Ha said the city should take advantage of its leading role in the country's high-tech industry, as it could be used as the foundation for economic restructuring.
In the last five years, HCM City has posted good economic growth, much higher than other cities and provinces.
Its average annual growth was more than 11 per cent in the last decade, 2.3 per cent higher than the national rate.
The city's economy, however, has been growing without improved quality and sustainability, according to the economic reform outline.
Labour sources have not been used effectively, which has resulted in low labour productivity and competitiveness.
Economic reform is a must for the city, especially until 2020, according to experts who attended yesterday's meeting with city leaders.
Reform would help the city maintain its leading role in economic development and realise its goal of becoming an industrialised city by 2015, five years ahead of the national target.
Reform would be focused on key and selected economic sectors and areas that have high potential to develop and take pivotal roles in the city's economic growth.
The HCM City's economic plan is based on national economic reform which is concerned mostly with the restructure of three areas: public investment, finance and banking, and State-owned enterprises.
The city is encouraging privately owned enterprises, especially larger ones, to create their own funds for high-tech development.
The city's fund for high-tech development totals VND25 billion (nearly US$1.2 million), an amount that can only support small-sized enterprises, according to Ha.
HCM City is home to the country's first high-tech complex, which has been in operation for more than nine years.
By 2015, Sai Gon High-Tech Park is expected to become a technology and science city that will greatly enhance the economic, technological and intellectual base of HCM City and the southern economic region.
The HCM City economic reform plan will be discussed by city leaders and enterprise representatives at their next meetings.
HCM City lacks realty information
The shortage of information and data is a drawback for the crisis-hit real estate market in HCMC, according to the city’s Steering Committee for Housing Policy and Real Estate Market.
With sufficient and accurate statistics reflecting the real situation of the housing and land market, State management agencies are able to make proper orientations, forecasts and policies for the development of the market.
However, each State agency has developed its own database. This explains why the relevant authorities’ quarterly reports on the realty market are based mainly on data from CB Richard Ellis Vietnam (CBRE), making it hard to offer a full picture of the market, according to the committee.
Local media is also dependent heavily on reports, analyses and market reviews by CBRE, Savills Vietnam, Colliers International and Knight Frank Vietnam.
This shows the urgency of the establishment of a database center where the local realty market can be forecast and reviewed in a more professional way.
This year the committee has told the HCMC Statistics Office to conduct a survey and collect data on the city’s housing and real estate development annually and every five years.
The city has got 163 condo projects completed so far, providing the market with about 41,400 units, 33.6% of them for low-income people.
Most successful condo transactions done in recent times are in the low-cost segment, showing strong demand for low-priced housing.
An estimated 27,700 apartments will be marketed this year, with 11,600 of them for low-income buyers, 7,500 for the medium-cost segment and 8,200 the luxury segment. The new supplies, coupled with the unsold, will put greater pressure on the dampened realty market in the coming time.
Foreign currency loan restrictions hit wood importers
The central bank’s restrictions on foreign currency loans are making life hard for local wood material importers, according to the Vietnam Timber and Forest Product Association (Vietfores).
Vietfores vice chairman Nguyen Ton Quyen said the association was seeking approval from the central bank and relevant agencies to remove the restrictions on foreign currency lending to wood material importers.
Vietnamese wood processors each year import about four million cubic meters of wood, show Vietfores figures.
Commercial banks provide local wood processors with loans in U.S. dollar with an annual interest rate of 6-7%. However, enterprises have had difficulty accessing those loans since the central bank’s Directive 01/CT-NHNN came out on February 13 this year.
Tran Thien, director of Thanh Hoa Co. Ltd., said his company won bids to import forest wood from South America and Africa but later gave up the import due to lack of foreign funds.
“Our capital costs have risen 5-7%, making it difficult to compete with foreign wood importers currently active in Vietnam,” he said.
To assist local wood importers and suppliers, Vietfores has requested the central bank, and the Ministry of Agriculture and Rural Development to consider allowing enterprises to borrow loans in foreign currency for wood material import based on the balance of the industry’s foreign currency revenues.
According to the Ministry of Industry and Trade, the export turnover of Vietnam’s wood and furniture products reached US$966 million in the first quarter this year, up 18% versus the same period last year.
Kim Eng to double chartered capital
Shareholders of Kim Eng Vietnam Securities Co. (KEVS) have agreed to double its chartered capital to VND600 billion against the current level by issuing rights for existing shareholders at the 1:1 ratio.
The move aims to help the stock brokerage finance its business, develop services to raise market share, deploy a branch and online transaction network and boost numbers of both individual and institutional clients.
KEVS general director Le Minh Tam said in a statement issued yesterday after the firm’s annual general meeting last week that the company would meet challenges in realizing the targets given the current capital scale. “KEVS must have more capital to meet the targets of 2012 and following years,” Tam said.
The firm in 2011 opened branches in Vung Tau, Can Tho and Danang cities despite the poor performance of the stock market. It also opened a branch in An Giang Province last month.
KEVS obtained VND5 billion in after-tax profit in 2011 while investor accounts and brokerage market shares rose by 46% and 1.6% against the previous year.
It plans to spend nearly US$300,000 upgrading information technology infrastructure this year to serve extended transaction time and improve system processing capability.
Kobe Steel mine needs to dig deeper
The world’s fourth largest steel maker Kobe Steel is still waiting for acquiring a stake in Vietnam’s largest iron ore deposit before it can start construction of its mega project in central Nghe An province.
“Since the $1 billion iron nugget manufacturing facility was relocated from Hoang Mai Industrial Park to Dong Hoi Industrial Park a year ago, it remains standstill,” said Phan Xuan Hoa, deputy director at Nghe An South East Economic Zone Authority.
In March 2010, Kobe Steelwas licenced to develop the 2.4 million tonne steel facility. The production at this plant would use the next-generation ITmk3 iron-making process that the firm developed. A Kobe Steel representative told VIR that: “Kobe Steel wants to use iron ores from Thach Khe deposit in central Ha Tinh province to produce nuggets. To do that, it needs to hold a stake in this deposit.”
He said Prime Minister Nguyen Tan Dung had approved Kobe Steel’s proposal to take part in Thach Khe Iron Joint Stock Company (TIC) to exploit iron ores at 544 million tonne Thach Khe deposit. “Kobe Steel is still waiting for the Ministry of Industry and Trade’s (MoIT) direction on capital contribution,” said the representative.
Established in May 2007, TIC had nine shareholders - Vinacomin (30 per cent), Mitraco (24), Vietnam Steel Corporation (20), BIDV (5), Song Da Group (5), Vinashin (5), VNPT (4), the Binh Minh Import-Export (4) and Thang Long Mineral and Metallurgy (3). Last year, Vinacomin decided to buy out Vinashin, Song Da and VNPT’s stakes while domestic steel maker Hoa Phat replaced BIDV in TIC.
A senior MoIT official told VIR that foreign investors’ participation in TIC including Kobe Steel’s would be taken into account after TIC’s restructuring plan, already submitted to the prime minister, was approved. Preparations for mining works at Thach Khe deposit stopped in mid-2011 due to this restructuring plan.
Urbanisation important for Vietnam’s future
On April 5 the World Bank (WB) released its Vietnam Urbanization Review, which underlines the key role of urbanization in the national economic development strategy.
The report is to provide a better understanding of the key dimensions and aspects of Vietnam ’s urbanisation process, as well as identifying trends, opportunities, challenges and core policy priorities for the country.
Victoria Kwakwa, Country Director for the World Bank in Vietnam , said that Vietnam is urbanising rapidly and this process is important for Vietnam ’s future. Ensuring cities are livable and can also compete regionally and globally will be an essential part of Vietnam ’s economic development strategy.
According to the Report, Vietnam is urbanising at a rate of 3.4 percent per year, most of which is in and around Ho Chi Minh City and Hanoi .
Urbanisation, especially in the two large economic centres, plays a central role in Vietnam ’s economic growth and poverty reduction strategy.
However, the existing urban systems in Ho Chi Minh City and Hanoi are seriously limiting their competitive advantages, especially regarding logistical bottlenecks, the disproportionately high transport costs, growing congestion and distortions in the land market.
The report suggests that in the largest cities, more attention should be paid to improving urban transport and infrastructure systems, as well as strengthening the competitiveness of these economic regions.
The Report argues that while Vietnam has done a relatively good job in providing basic services and the lack of large scale slums suggests that most people have access to housing, there are definitely signs that this is changing.
The reports final analysis suggests that the typical housing provided today by formal land developers is affordable to only the top 5 percent of workers in Hanoi and Ho Chi Minh.
Vietnam ’s two tiered land pricing system and lack of transparency in the land market needs to be addressed as does the extensive use of land sales and leases to finance local budgets, a practice that tends to encourage urban sprawl.
The report calls on planners to address the problem of urban mobility to improve livability in cities and provide transport options for every citizen, including the urban poor, children, the elderly and disabled.
Addressing these problems also means modernising and reforming Vietnam ’s planning systems, strengthening urban management and ensuring better coordination between different levels of government as well as between city departments.
Dean A.Cira, a leading Urban Specialist for the World Bank in Vietnam , who led the team that produced the report, said that well managed urbanisation could support Vietnam ’s economic growth and help its Socio-Economic Development Strategy objectives.
He said he hopes that this report will act as an important reference for Vietnam’s policy makers and others concerned about Vietnam’s urbanisation process.
Seafood firms yet to hook bumper deals
Seafood firms need to cast their nets wider to catch big returns.
“Our company saw a 50 per cent on-year drop in order placements in the first quarter of the year,” said Ut Xi Aquatic Products Processing Joint Stock Company general director Nguyen Tuan Anh.
In the domestic market, dwindling consumption in local and export markets and firms’ slowing capital circulation has made banks tighten the purse strings.
“Besides, banks’ lending procedures have become increasingly stringent,” said Ca Mau Seafood Joint Stock Company director Bui Nguyen Khanh.
In fact, seafood exporters are facing mounting pressures from banks and material suppliers after farmers filled a lawsuit against a leading seafood firm in the Mekong Delta Binh An Seafood Company. By mid-March, Binh An reportedly owed farmers and banks VND1,000 billion ($47.6 million) whereas its general director had left Vietnam due to health problems.
This has put the seafood sector’s proposed $6.5 billion export value in 2012 out of reach.
“Even retaining 2011’s export value of $6.1 billion will prove a big challenge to the seafood sector in 2012,” said Ut Xi Company director Tuan Anh.
“Tra and basa fish are key products of Vietnam’s seafood sector. However, scores of farmers left their ponds empty, making firms to incur material scarcity whereas shrimp areas reduced remarkably in the past two years owning to epidemic outbreaks,” Anh added.
After the notorious Binh An case, not only banks but also material suppliers have reportedly taken a more prudent approach towards businesses.
General secretary of Vietnam Association of Seafood Exporters and Producers Truong Dinh Hoe said: “Firms are trying to surpass this tough period, but it is unfair if banks stop lending to other seafood businesses.”
General Department of Customs figures show that Vietnam reaped $422 million from seafood exports in February 2012, up 16.4 per cent against January 2012, bringing total seafood export value to $775 million in the first two months of the year, surging 14.5 per cent on-year, but it was only 12 per cent of the year’s projection.
HCMC tax agency proposes higher income tax threshold
The Ho Chi Minh City Tax Agency has recently filed its feedback on the draft for a new tax law developed by the Ministry of Finance, suggesting that the personal income tax threshold be hiked to VND9 million (US$432) a month.
The figure is much higher thanthe rate set by the bill, set to take effect as of 2014, which is only VND6 million a month, an amount that has ignited a wave of objections from tax payers.
Currently, the deduction for taxpayers is VND4 million a month.
“The VND9-million threshold will receive consensus from society,” the municipal tax agency said.
The agency said the deduction calculation is based on basic wage and GDP per capita.
Under the current tax law, the deduction for taxpayer is six times higher than the basic wage. Hence, given the expected basic wage in 2014, the rate must be VND9.9 million a month.
As for GDP capita, the threshold is currently set to be 2.5 times of the current figure. The threshold in 2014 thus must be around VND8.9 – 9.1 million a month, since GDP per capita is expected to reach US$1,811-1,843 a year, or VND3.5 – 3.7 million a month.
In its feedback document, the HCMC Tax Agency also proposed cutting the tax rate at the first level of the tax ladder to 3 percent, down from the current 5 percent.
“Since taxpayers at the first level account for 73 percent of the total figure, we should slash the rate at this stage to attract their consensus,” the agency explained.
The cut will only reduce the total budget collection by VND700 billion ($33.6 million), it said, adding that this is not a big sum.
“The state budget can recoup the loss by strengthening the compliance of the remaining 27 percent of high-income taxpayers.”
Under current tax laws, level 1 for taxpayers includes those whose average monthly income is between VND1 million and VND5 million. The tax rate for this level is 5 percent.
Meanwhile, those with income from more than VND5 million to VND10 million are subject to level 2, with a 10-percent tax rate, and so on.
Made-in-Vietnam chemical equipment exported to Turkmenistan
The Chemical Processing Equipment Plant (CPE), a unit of Doosan Heavy Industries Vietnam (Doosan Vina), on April 5 exported the third batch of high-technology chemical processing equipment labelled “Made in Vietnam” to Turkmenistan.
The batch includes 6 hi-tech pressure tanks and 9 heat exchangers weighing nearly 600 tonnes. The shipment is destined for South Yoloten Gas Field projects, where CPE is scheduled to export five equipment shipments, including 38 hi-tech pressure tanks and 20 heat exchangers, under a contract signed with its partner.
The remaining two batches will be transferred in mid-April.
Since the beginning of this year, the CPE has completed exporting four batches to the international market.
CPE is one of five factories equipped with advanced machines and professional Vietnamese engineers. It also produces heavy equipment for Doosan Vina and Doosan Group of the Republic of Korea (RoK).
Headquartered in Seoul, Doosan Group of the RoK has branches in 37 countries around the world, employing over 35,000 labourers and earning US$22 billion in revenue annually.
Challenges to US$108bln export earnings target
It is no easy task to meet the ambitious target of earning US$108 billion from exports this year, given the domestic and overseas markets shrinking due to the global economic downturn.
The view was shared by experts at a forum in Hanoi on April 5 to seek ways of beating the US$100 billion mark set for this year.
To meet the target Vietnam must rake in around US$9 billion a month, while the average monthly export earnings in the first quarter of 2012 was some US$8 billion.
Deputy Minister of Industry and Trade Nguyen Thanh Bien admitted that businesses are coming under mounting pressure in the coming months.
He analysed that the export prices of most farm products (except for pepper and rice) and the volume of coffee and rice for export fell considerably in the past three months.
In addition, high interest rates affected production costs and the competitive capacity of businesses.
Experts said it is difficult to build and promote the brand names of products, especially garments and footwear, as they are mostly outsourced under contracts with foreign partners.
Businesses also find it hard to penetrate overseas markets, including traditional ones with high export earnings such as Africa, Latin America and Australasia.
Bien said the issue of high interest rates needs to be addressed soon, helping businesses access bank loans to maintain production and boost exports.
He cited difficulties seafood processors have been facing in taking out bank loans and said many exporters of other products are in similar situation.
He suggested expanding overseas outlets, boosting trade promotions, and providing market information update to support businesses.
According to the official, the Ministry of Industry and Trade will speed up bilateral and multilateral negotiations of trade agreements to expand commodity distribution networks and boost exports.
It will focus on developing exports that are highly competitive and building their brand names in key and potential markets.
Bien also suggested that businesses make full use of free trade agreements that Vietnam has signed with its partners, including the recent one with Chile, to enjoy tariff preferences in shipping their products to these markets.
Vietnam fetched US$24.52 billion from exports in the past quarter, a year on year increase of 23.6 percent.
Banks look to be global players
Local banks are displaying a growing appetite for global reach.
In late 2007, Ho Chi Minh City-based Sacombank was the first Vietnamese bank to set a foothold in a foreign market by opening a representative office in China.
In the following years, the bank launched a branch office in Laos (2008) and another in Cambodia (2009). Now local banks such as SHB, BIDV, VietinBank and Agribank followed by setting up branch offices in Laos, Cambodia, Czech, Singapore and several other countries.
Shortly after making inroads into foreign markets, banks unveiled healthy business figures. For instance, after two years operating in Cambodia, Sacombank founded a wholly owned bank in this country. As of March 20, 2012 its Cambodian affiliate reported $47 million in total deposits and $60 million in outstanding loans.
After several years in Laos and Cambodia, BIDV has been included among top performers in these markets. The bank also plans to enter Myanmar.
In February, SHB inaugurated a branch office in Cambodia and raised $2.5 million from local residents. SHB had developed a well-conceived strategy for outbound investments, said its chairman Do Quang Hien.
Maritime Bank is also looking to establish a branch office or a wholly owned affiliate abroad.
But, only VietinBank has entered a giant market Frankfurt, a leading business and financial centre in Germany.
“Europe’s biggest financial centre expresses our strategy to grow into Vietnam’s leading financial group capable to compete head-on with foreign players,” said its chairman Pham Huy Hung.
“Besides Germany, our bank set to expand footprints in other markets like Czech, Poland, the UK or France,” Hung added.
“In respect to banking operations, striving for global reach is the right move since banks need to operate in multi markets for alleviating risks,” said senior financial expert Dr. Nguyen Tri Hieu.
“However, Vietnamese bank operations abroad remain limited in scope. It does not require much money to open a branch or representative office in foreign markets. For example, it only needs $15-20 million for a representative office to enter into service in the US,” said Hieu.
Economists assumed outbound investment ventures could help local banks promote brand values, enrich experiences and uphold local import export firms.
But, banks need to scale up capital scope, technology and particularly management expertise to succeed in breaking into big world financial centres.