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BUSINESS IN BRIEF 22/2   2011-02-22 - Viet Nam Net

Vietnam car sales jump 48 pct y/y in Jan: Industry


Car sales in Vietnam in January rose for the first time in seven months, jumping 48 percent from a year ago to 10,424 units, the Vietnam Automobile Manufacturers' Association (VAMA) said on Wednesday.


The number of cars sold in January dropped 17 percent from December 2010, but the month represents the first annual rise since last July, data from the association showed.


Last year car sales in Vietnam fell 6 percent from 2009 to 112,224 vehicles, VAMA said.


Toyota, the largest car maker in Vietnam, sold 3,057 units in January, a rise of 29.3 percent from the same month last year, the report said.


AirAsia X connects Vietnam with Paris


AirAsia X, the low cost carrier of AirAsia Group, is offering more flights from Malaysia’s hub to Europe and connections of these services with flights from Vietnam.


AirAsia X has launched its four weekly services between Kuala Lumpur and Orly International Airport in Paris, French on Mondays, Wednesdays, Thursdays and Sundays, with links with flights that AirAsia operates from Hanoi and Ho Chi Minh City.


The carrier is selling fares across the AirAsia network, with the one-way fare from 229 euros (US$300) for the Paris-Kuala Lumpur flight and from 30 euros ($50) for the Kuala Lumpur-Vietnam route.


These promotional fares are available for booking at until February 20 and valid for flights from September 1 to November 10.


AirAsia X was founded by AirAsia Group (Malaysia) in 2007. The carrier launched its service from Kula Lumpur to Australia, China, Taiwan, Iran, South Korea, India, Japan and UK and London before.


Tien Giang province withdraws misused beach


The southern Tien Giang Province People’s Committee yesterday issued a decision to take back the Tan Thanh beach it has leased to Tien Giang Tourism JSC (TIGI Tour) for ten years.


The 148,000 square meter beach will be assigned to the Go Cong Dong District People’s Committee for management, exploitation and use for public interest and tourism development, the provincial government said.


Local authorities also ordered relevant agencies to raise the rent rates applicable to state-owned lands.


The rates have been criticized by the public as much lower than those on the market.


Nearly a month ago, the provincial Natural Resources and Environment Department proposed the local government should withdraw the beach, since TIGI Tour has misused the leased property.


According to an investigation by the department, TIGI Tour illegally re-leased some parts of the beach to some individuals, earning hundreds of millions of dong.


In August 2010, Huong Bien Restaurant, an affiliate of TIGI Tour, signed a VND200 million (US$10,250) contract to lease an area of the beach to two local men for clam breeding.


By January 2011, the men had paid VND140 million ($7,170) as rental to Huong Bien.

Three months before that, Huong Bien leased three hectares of the beach to another local resident, also for clam breeding.


The rent rate has been unknown so far since the lease was made under a verbal agreement between the two sides.


Vietnam raises refinance rate 200 bps to 11 pct


Vietnam's central bank raised its refinance rate by 200 basis points to 11 percent on Thursday, a move than comes amid calls for more decisive steps to curb double-digit inflation and nearly a week after the bank devalued the currency.


The base rate, which has served as the benchmark, was kept unchanged at 9 percent and the discount rate was also held at 7 percent.


The State Bank of Vietnam also increased the overnight rate for electronic interbank transfers and another rate for specific types of loans from the central bank to commercial banks, it said on its website,


It offered no explanation.


"This move could be aimed at two targets: helping curb inflationary pressures and pushing banks to sell dollars instead of holding onto them," said a currency trader at a bank in Vietnam who declined to be identified.


Last Friday, the bank devalued the beleaguered dong by 8.5 percent and narrowed the band in which the currency is allowed to trade against the dollar to 1 percent from 3 percent on either side of the mid-point.


Economists applauded the step after a four-month mismatch between official and unofficial exchange rates, but many had said further measures were needed to curb inflation.


Budget carrier offers cheap tickets to Danang


Budget carrier Jetstar Pacific Airlines’ Friday promotion today is offering tickets on the Ho Chi Minh City-Danang and Hanoi-Danang routes at a mere VND300,000 (US$14.4).


The cheap tickets are available for flights between April 4 and 20, and have to be booked online at between 2:00 pm and 5:00 pm today.


Jetstar is also offering tickets on the HCMC-Singapore route for flights between September and 14 October 4 at $18.


In 2008 Jetstar Pacific became the first airlines in Vietnam to sell tickets online.


Fuel fund dries up, price may rise again


A national fund earmarked for subsidizing fuel firms is running out of cash so fuel prices could be hiked again, newswire VnExpress quoted Nguyen Tien Thoa, director of the Ministry of Finance's Department of Price Management, as saying.


The Ministry of Finance reported that VND83 billion (US$4 million) is left in the fund while fuel wholesalers has claimed it is VND1.35 trillion ($65.2 million) in the red.


The Vietnamese government has set out the fund to offset losses incurred by fuel companies in a bid to control domestic prices and contain inflation.


The companies currently suffer a loss of at least VND2,000 ($0.09) on every liter of gasoline despite this financial support, Thoa admitted.


He said the government has done its best to stabilize fuel prices, exemplified by an import tax cut to 2-5 percent, so it is going to adjust the prices in the coming time.


A hike, if any, will only be implemented if all benefits of the companies, consumers and the government have been taken into account, he asserted.


The government and taxpayers have spent VND11 trillion ($531 million) on subsidizing the fuel sector, of which VND7.5 trillion ($362 million) comes from tax cuts and the rest from the aforementioned fund.


The finance ministry last Thursday allowed fuel companies to withdraw more money from the fund to make up for the discrepancy when global prices rose. But those firms still get hurt since the world’s prices increases so fast, worsened by a volatile forex rate.


Gasoline is now sold at VND16,400 ($0.79) per liter while the input cost averages a whopping VND19.177 ($0.93) a liter taking into consideration tax, storage, interest payment, commission, among other fees.


A source close to Petrolimex, or the Vietnam National Petroleum Corporation, revealed the fuel firm suffered a loss of VND2,500-3,000 ($0.12-0.14) per liter at some time during the past six months while an average loss ranges VND1,000-1,500 ($0.05-0.07).


Many accordingly reduced imports, which caused a shortage of gasoline supply and led to the closure of many gas stations last year.


The global prices have sharply risen so gasoline importers will be put under considerable pressure if the retail price is not raised, the source said.


It is now over to the authorities, it concluded.


Program succeeds in popularizing domestic products


Ho Chi Minh City-based supermarket chain Co.op Mart reported a year-on-year increase of 58 percent in sales of locally made goods last year compared to 22 percent for imported products.


This was announced Tuesday at the awards ceremony for the “Vietnamese for Vietnamese Products” national campaign that aims to raise public awareness of domestic products and boost their consumption.


Launched last year by the Ministry of Trade, it is all set to enter its second year.

Tuoi Tre, Saigon Tiep Thi, and Ho Chi Minh Television were among those receiving awards for their contribution to the campaign.


It saw organizers holding nine fairs in rural areas.


Hundreds of mobile shops were also dispatched to industrial zones to serve factory workers there.


The campaign has had a positive effect on consumers and created a favorable impression of the domestic manufacturing industry, a senior official said at the ceremony.


As part of the campaign this year, HCMC will crack down on fake and low-quality goods to preserve the image of domestically made products.


Military aircraft charter service waits on license


Military-owned air taxi service Vietstar Airlines, which applied for a license last December, will begin operations immediately after it gets it, according to the Civil Aviation Administration of Vietnam.


The license is likely to be issued this month.


The carrier has a capital of VND50 billion (US$2.4 million) and will use small and medium-sized aircraft for domestic and international charter services.


Another firm, Blue Sky Airlines, providing the same service received a license last year and plans to use helicopters when it begins operation this year.


Meanwhile, private carriers Indochina Airlines and VietJet Air have applied for extension of their license until the end of 2011. The former has been grounded for more than a year now due to financial problems while VietJet has yet to begin operations despite getting a license in 2007.


ADB pledges assistance for HCMC economy


The Asia Development Bank (ADB) will give its support to Ho Chi Minh City’s economy in the next five years with focus on the private sector development, ADB director Ayumi Konishi said Tuesday.


During a working session with HCMC leaders, the bank country’s director said, stronger financial support would be given to the private sector in 2011 – 2015, and urged the city government to work closer with ADB in defining economic sectors for cooperation.


He mentioned some private sector projects that might be entitled to ADB funding like the city’s bus system development and RMIT University Vietnam’s housing project.

Konishi added that the ADB’s capital contribution would not exceed 25 percent of the total.


At the meeting, Koshini also expressed his concern over the importance of Southern Economic Corridor project being funded by ADB’s loans to link the five countries of Vietnam, Cambodia, Thailand, Myanmar and Laos.


State groups urged to target 15 pct growth rate


Prime Minister Nguyen Tan Dung has asked State economic groups and corporations to play the core role in stabilising the country’s macro-economy, to achieve a growth rate of 7-7.5 percent in 2011.


He met in Hanoi Tuesday with representatives from the State economic groups and corporations that were established in line with the Decision 91 (called groups and corporations 91).


To play the core role required these groups and corporations 91 need to attain a growth rate of 15 percent, PM Dung emphasised.


They also need to speed up equitisation, better management and supervision mechanisms, apply cutting-edge technologies to increase labour productivity and focus on their main business line, the government leader said.


According to the Steering Committee for Renewal and Development of State Enterprises, 20 out of 21 economic groups and corporations 91 made a pre-tax profit of nearly VND70.78 trillion in 2010.


The Vietnam National Oil and Gas Group, the Military-run Telecommunication Group, the Post and Telecommunication Group and the Vietnam Rubber Group accounted up for 80 percent of the profit generated by State-owned economic groups and corporations.


For Vinashin, which was currently loss-making due to grappling with a debt crisis last year, PM Dung asked the group to continue with the restructuring scheme he endorsed in 2010.


He instructed relevant agencies to draft a decree on special mechanisms to serve the restructuring of the corporation and asked other State groups and corporations to lend a helping hand to the Government and Vinashin to promote the development of the shipbuilding industry.


The PM reiterated the Government’s resolve to make the State economic sector play the key role in stabilising the macro economy, curbing inflation, driving the economy to grow higher than in 2010 and ensuring social security.


At the working session, many representatives suggested the Government adopt more appropriate and flexible solutions in making economic policies, especially in financial and monetary fields.


They asked the Government and relevant ministries to create proper mechanisms to help State groups and corporations raise competitiveness and fulfil plans and goals set for 2011.


JOGMEC to test enhanced oil recovery in Vietnam


State-run Japan Oil, Gas and Metals National Corp, a unit of JX Nippon Oil & Gas Exploration Corp and Petrovietnam have agreed to conduct a 20-day pilot test applying enhanced oil recovery technology at a field offshore Vietnam in June, JOGMEC said.


The technology to inject liquefied carbon dioxide into a reservoir to improve production, often at mature oil fields, is less common offshore than for fields on land for economic reasons.


The test, which JOGMEC said on Tuesday would be the first offshore case in South East Asia, will be implemented in the Rang Dong oil field of Block 15-2. The unit – Japan Vietnam Petroleum Co – is an operator producing oil and gas together with partners including ConocoPhillips.


The results of a feasibility study for the application of the technology by JOGMEC, JX Nippon Oil & Gas Exploration Corp and Petrovietnam have indicated the potential to increase oil production as well as to reduce CO2 emissions, JOGMEC said in a statement.


A JOGMEC official declined to comment on how much financing it would provide for the test but said it will aim to collect and analyze data and find out the applicability to the field.


ACB launches fingerprint identification system


The Asia Commercial Bank (ACB) has started screening fingerprints to identify account owners instead of signature and identity cards as before.


It will only take two seconds to identify the account owners with this new technology but customers have to register their prints first.


This service is promising as it replaces the traditional methods which can be faked.


Vietnamese tra fish faces difficulty in Brazil


The export of Vietnamese tra fish to Brazil is being delayed as Brazilian agencies have extended the time to grant tra import certificates from three to 120 days.


This has had a negative impact on Vietnam’s tra fish exports to the Brazilian market. Duong Viet Thang, deputy general director of the Southern Seafood Industry Joint Stock Company in Can Tho, said that, after signing contracts with Vietnamese tra exporters, Brazilian businesses registered for import certificates. Vietnamese tra exporters are only allowed to ship their products once their Brazilian customers receive their import certificates.


Previously, it took only three days to get the certificates. However, four months ago, Brazil increased this time to 60 days, and most recently to 120 days which has created troubles for both importers and exporters, added Mr Thang.


Brazil has also listed Vietnamese tra fish on its “special” list which imposes an import tax of 35 percent instead of the usual 10 percent import tariff.


In another development, 20 of Vietnam’s largest tra exporters agreed to a base export price for tra fillet of US$3 per kilo. This commitment has required local businesses to increase the quality of their tra fish, thus raising the status of Vietnamese products on the world market and avoiding anti-dumping lawsuits.


Belgian-Luxemburg businesses honoured in Vietnam


The Ho Chi Minh City and the Beligian-Luxemburg Business Association in Vietnam held an award ceremony on February 18 to honour Belgian-Luxemburg businesses operating in Vietnam.


The “Beluxcham/Vietnam Awards” are divided into three categories including best business, best leader, and best public service organization.


The awards are aimed at recognizing contributions of Belgian-Luxemburg businesses and encouraging them to expand and develop in Vietnam.


Speaking at the ceremony, Belgian Ambassador to Vietnam, Hubert Cooreman, expressed his pride in the honoured businesses’ recent achievements.


After the ceremony, there was a meeting with 40 businesses from the Limburg Business Association that are interested in seeking opportunities in Vietnam.


Vietnamese made goods capture local market


The “Be Vietnamese buy Vietnamese-made goods” campaign is gaining ground as Vietnamese made goods are regaining local consumer confidence.


This fact was confirmed by participants at a seminar organized by the Vietnam Fatherland Front Central Committee on February 18 to review the one year of implementation of the Politburo’s policy on prioritizing Vietnamese-made goods.


A survey of the campaign showed that 59 percent of consumers preferred Vietnamese products, 38 percent recommended the products to relatives and friends and 36 percent who earlier bought foreign-made products had now switched to locally made goods.


Vietnamese clothes, textile products, footwear, foods, vegetables and household goods are now much more preferred by local consumers.


The survey showed that the campaign had a positive influence on all levels of society by increased consumer and organization awareness of the rights and responsibilities towards domestically made products.


The campaign helped change attitudes of people who now give priority to Vietnamese made brands.


A report released by the campaign's steering committee showed that domestic products now account for 95 percent of the product sales in supermarkets throughout Ho Chi Minh City.


The consumption of Vietnamese made products in Saigon Co-op Mart supermarkets, the largest market chain in the country, during the first half of 2010 saw an increase by 55 percent as against the same period in 2009.


It was remarkable to see Vietnamese made goods occupy most of the shelf space in supermarkets during the recent Tet festival.


More than 80-90 percent of goods sold in Co.op Mart, Big C, Metro and Fivimart supermarkets during Tet were Vietnamese made goods, while last year that figure was only around 50 percent.


Efforts to step up the promotion of Vietnamese products, included taking the goods to rural areas, selling goods at industrial parks and launching of sales every month, have now born fruit and consumer shopping habits are visibly changing.


The campaign also pushed for Vietnamese enterprises to take initiative in developing their production and business as well as upgrading their technology and management to produce products of good quality, beautiful designs, and low cost prices.


Participants at the seminar agreed that for the campaign to achieve sustainable efficiency not only do consumers need to change their awareness but enterprises also must study and meet the consumers’ demand and taste.


Addressing the seminar, Deputy Prime Minister Hoang Trung Hai said that there remained many enterprises that have yet to learn about the campaign.


Mr. Hai agreed with the measures proposed by the steering committee to bring the campaign to every single locality and residential area in the times to come.


He believed that the campaign would need to be given more attention from leaders at all levels.


The proposed measures include intensifying the advertisement of the campaign in densely-populated areas, stepping up the fight against trafficking and making recommendations to create more favorable conditions for the production, circulation and consumption of domestic products.


He said that ministries and relevant agencies need to review and supplement law documents if necessary to facilitate the development of the campaign and to make the campaign effective.


The steering board has to now focus on enterprises and consumers to join the campaign and encourage producers to upgrade production technology and management, Mr. Hai added.


He said that the campaign has great significance in the long run as it will aid sustainable growth and development in the country.


New inclusive export service debuts in Vietnam


The Vietnam National Foreign Trade Shipping and Warehousing Corporation (Vietrans) will work with the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) to provide inclusive export services for the Vietnamese market.


According to an agreement signed in Hanoi on February 18, the two businesses will meet all customers’ demands for exports with a preferential service interest.


Deputy Minister of Industry and Trade Nguyen Thanh Bien said that the new service will help businesses to speed up the transport, handling and payment of goods for export and exploit the potential of service providers, which will help to increase the country’s export turnover.


Vietrans and VietinBank have also raised funds to expand and develop their business operations in areas of mutual concern.


As one of the first companies in Vietnam to join the International Federation of Freight Forwarders Associations, Vietrans operates a wide range of services including bonded warehouses, general warehousing, forwarding freight and the transportation of all kinds of goods worldwide.


The company currently holds a 20 percent market share of Vietnam’s shipping and warehousing services.


Vietnam to import LNG from 2012


Vietnam will import 1 million tonnes of liquefied natural gas (LNG) every year from 2012 to meet the country’s demands, says the PetroVietnam (PVN).


According to PVN’s estimate of the supply-demand balance of gas until 2015, the country will face a shortage of about 1.4 billion cubic metres of gas (equivalent to 1 million tonnes of LNG) each year.


PetroVietnam Gas (PV Gas), a PVN member, is investing US$500 million to implement the project.


However, PG Gas is facing numerous difficulties as the project will need big investment and the LNG prices in the world market are three times higher than domestic gas prices.


Consumers splurge on food, fashion


Vietnam will lead the Asia-Pacific region in the top three spending categories for the first six months of this year, according to the latest MasterCard survey on Consumer Purchasing Priorities.

The top three spending categories are Dining and Entertainment, Fashion and Accessories, and Fitness and Well-being.


The survey found that well-heeled consumers across the Asia-Pacific region expect dining and entertainment to be their spending priority over the next six months.


The survey, released twice a year, measures consumer confidence on prevailing expectations in the market for the next six months. The latest release conducted from 13 September to 11 November 2010, covered 10,502 consumers from 24 markets across the Asia-Pacific and Middle East regions as well as the African continent.


The percentage of consumers in the Asia/Pacific region going to spend on fashion and accessories increased by six points to 50 percent from six months ago. A similar increase of six points to 43 percent was recorded in the consumer electronics category.


The numbers represent "the most favourable sentiment in terms of discretionary spending intentions since the survey started collecting this data", the release said.


Mainland China (31 percent), Hong Kong (29 percent) and India (26 percent) have the highest percentage of consumers planning to increase their discretionary spending in the next six months, the survey found.


The highest percentage of consumers planning to maintain their level of discretionary funding were found in Vietnam (62 percent), Australia (59 percent) and the Republic of Korea (59 percent).


With regard to resilient categories for discretionary spending, the MasterCard Worldwide Index found that private tuition and extra curricular activities for children topped the list. The highest index scores in this category for the Asia-Pacific region belong to India (95.7 percent), Vietnam (92.7 percent) and Indonesia (88.9 percent).


The index measures how resilient the categories in the survey are to unexpected cutbacks in planned expenditure. The more resilient a category is, the less likely the spending is to be reduced in the event of unexpected changes.


The release quoted group executive Yunsok Chang as saying: "Combined with the data on discretionary spending, which are at the highest levels since the survey began, the latest findings show strong consumer sentiment for private consumption over the first half of 2011".

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