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BUSINESS IN BRIEF 27/3   2011-03-27 - Viet Nam Net

Analysts call for fee on bank dollar sales

Though DongA Bank and Eximbank have announced they will sell foreign exchange without a fee to people going abroad to study or for treatment, analysts said a fee mechanism is needed to balance supply and demand.

However, many feel the maximum proposed charge of around 2 percent is too high.

On Thursday, when it started the sale, DongA Bank sold around $16,400 at the official rate of VND20,895 a dollar and other foreign currencies.

Eximbank, which began the sale on the same day, said the individual quota is $300 for a week-long trip, $600 for trips lasting longer than a week, and $1,000 for patients going for treatment lasting more than a week.

For Vietnamese students abroad, the annual ceiling is $7,000.

Though the bank is ready to sell foreign currencies, it encouraged customers to use cards abroad instead of cash for safety, Dinh Thi Thu Thao, deputy general director of the bank, said, adding the bank pays around $500,000 a month for card payments abroad.

But other banks said they must be allowed to collect a charge since they have to spend on insurance and other fees to buy the currencies.

A bank head said that the fee will enable banks to become official moneychangers, thus putting the black market out of business.

Tran Phuong Binh, general director of DongA Bank, said since the fee for making cash withdrawals using a credit card is 2.5-4 percent, the fee for selling foreign currencies should be 2 percent.

But analysts said since the 2-percent fee will increases the dollar price to VND21,313, a 1-percent fee or a flexible mechanism will be more appropriate.

Tran Hoang Ngan, a member of the National Advisory Council for Financial and Monetary Policies, told Tuoi Tre that the central bank should cap the fee and allow banks to fix it based on supply and demand.

Tran Du Lich, another member of the council, said Vietnam should follow other countries and impose a large gap between the buying and selling rates so that people will only buy what they want.

Allowing banks to charge the fee will create healthy competition, he added.

Australia to provide long-term coal to PetroVietnam

Ensham Coal Sales Company of Australia and PetroVietnam’s coal distribution and import company have reached a framework agreement on long-term coal supply for PetroVietnam’s electric power plants.

According to Vietnam National Oil and Gas Group (PetroVietnam), basing on the framework contract, the two companies will discuss ink separate contracts for coal sales and purchases in the near future.

According to PetroVietnam, Ensham Coal Sales Company owns three mining licences with a 35-year validity period and is permitted to exploit an area of 900 km2 in the state of Queensland, Australia with a total coal reserve of around 1 billion tons.

This year, PV Coal is required to sign another framework agreement on long-term coal supply or purchase at least one coal mine from foreign partners, with a minimum stake of 30 pct.

At present, PetroVietnam is investing in five coal-fired power projects with total output up to 6,000 MW.

Apart from attracting a secure investment for establishing the thermal power plants, PVN is also expected to purchase 18 million tons of coal per year (both domestic and imported) to provide fuel for these projects.

HCMC sees 10.3 pct increase in GDP

Ho Chi Minh City’s gross domestic product (GDP) in this year's first quarter is estimated at VND85.5 trillion, up 10.3 pct.

The city’s service sector rose by 10 pct, the industry and construction sector, 10.9 pct and agricultural sector, 4.2 pct.

According to Chairman of the municipal People’s Committee Le Hoang Quan, in the second quarter of this year, the city is focusing on implementing solutions to overcome difficulties caused by the fluctuation of the VND/USD exchange rate, hikes in petrol and electricity prices as well as disasters and epidemics.

However, the city still lacks a skilled labor force and has not been able to ensure food hygiene safety and traffic safety, he said, adding that administrative procedure reform remained complex.

Habubank to issue $45.71 mln bond

Habubank shareholders have approved a plan to issue VND960 billion ($45.71 million) in convertible bonds next year to raise the bank's charter capital to VND5 trillion VND ($238.1 million).

This year, the Hanoi-based bank plans to spend VND1.05 trillion ($50 million) from a convertible bond issuance in August last year to increase charter capital to VND4.05 trillion ($192.86 million) from VND3 trillion ($142.86 million). The additional charter capital will be spent on improving infrastructure and business activities.

The Hanoi Stock Exchange-listed bank (coded HBB) targets a pre-tax profit of 700-VND750 billion (33.33-$35.71 million) this year. Its shares closed flat yesterday at VND9,900.

The bank also plans to equitise in-house securities firm Habubank Securities, pending legal approval.

Habubank posted its 2010 fiscal report earlier this month, with a net profit of VND746.7 billion ($35.55 million), up 13 per cent against the previous year. The bank's service arm posted a profit of over VND114 billion ($5.43 million) while its forex business posted a loss of VND15.85 billion ($754,761).

Securities services earned only VND2.4 billion ($114,285), falling over 84 per cent year on year while securities investment earned over VND221 billion ($10.52 million) profit, a four fold increase against the previous year.

The bank's earnings from other operations hit VND243.8 billion ($11.61 million), seven times higher than in 2009.

Hanoi lures $430 million of FDI in Q1

Hanoi attracted nearly $430 million in 57 FDI projects in the first three months of the year, according to the city’s Statistics Office (HSO).

The figure represents a 19.7 time increase in term of value and an 18.8 per cent rise in term of project number year-on-year.

47 out of the total 57 projects (excluding those in the Hoa Lac high-tech zone) were newly lisenced ones with a total registered capital of $28.93 million.

According to HSO head Cong Xuan Mui, the impacts of the global financial crisis and the delay in approving a master plan for the city hindered its FDI attraction.

The city is working with foreign consultants to adjust the mater plan.

Local firms hunt for a competitive advantage

Scores of local firms expect imported material tariffs will soon drop to enhance their competitive advantages.

Viet Thang Garment Joint Stock Company director Le Nguyen Ngoc said the textile-garment sector was critically short of input materials since early 2011 with the price of domestic market raw cotton having jumped 50-60 per cent in 2011, but it could only feed half of the actual demand.

“Meanwhile, imported materials incur a high duty of 12 per cent. In this context, businesses would run out of profits if they produced items for sale on the local market,” Ngoc said.

He said in 2011 his firm mainly involved in export processing, while temporarily halting selling to the domestic market.

A Vitas representative said though the sector posted strong growth of 20 per cent in local sales in 2010, that growth was not sustainable.

This was seen through the fact that scores of firms curtailed domestic production and just focused on export processing in the face of escalating material costs.

The possibility of Chinese made textile and garment items coming back to inundate the Vietnamese market is looming large unless local firms are offered preferred imported material duties to boost domestic production.

Seafood processing and exporting firms are in the same boat.

According to VASEP deputy secretary general Nguyen Hoai Nam, seafood exporters’ prime concern now was not the lack of export orders but material scarcity which would linger until September 2011.

A number of seafood producers and exporters in the Mekong Delta such as Nam Viet Group, the Cuu Long Seafood Import Export Joint Stock Company run a perfunctory production due to lack of materials amid high import duties ranging from 10-20 per cent.

In this context, VASEP proposes tax exemption for imported seafood materials to boost export. It argued that world’s leading seafood exporters such as China, Thailand, India and Malaysia enjoyed low imported material taxes from zero to 0.5 per cent only.

Responding to businesses’ concerns, the General Department of Taxation asked competent government agencies to apply suitable tax and fee levels on some kinds of export items to help moderate businesses’ profit rates.

It also considers tariff exemption or reduction for some imported materials which cannot be sourced locally such as those of the textile-garment and seafood sectors.

Dong A Bank open to sell foreign currency

Dong A Bank has begun to sell foreign currency to individuals able to prove their legal status and purpose as per regulations of the State Bank and Dong A Bank.

Customers buying foreign currency for travel and to visit relatives can buy about $300 each for a trip of seven day duration and $600 for a trip of more than seven day duration.

For those traveling abroad for health checks and treatment, about $600 will be made available for a trip of less than seven day duration and $1,000 for any trip of more than seven day duration.

Persons traveling abroad for study will be illegible for about $100-7,000 per year.

A golden move by HAG

The first Vietnamese global depositary receipt was listed overseas today, paving the way for Vietnam companies to approach international markets.

Hoang Anh Gia Lai Joint Stock Company (HAG), the real estate developing giant in Vietnam, has just been accepted by the London Stock Exchange (LSE) to list the company’s global depositary receipts (GDRs). Deutsche Bank is the depositary bank for the GDRs.

“The listing of HAG’s GDRs on London exchange opens the door for the company as well as other big companies in Vietnam to approaching foreign investment capital,” said Deutsche Bank’s Sonali Shahpurwala.

Shahpurwala added that the listing also increase the liquidity for the company’s GDRs that were now held by foreign investors.

Deutsche Bank had tried to issue the Vietnam’s GDRs overseas two years ago. The progress had been prolonged as the nation did not have a sufficient legal framework for this kind of issue yet.

Lord Mayor of the City of London Michael Bear indicated that LSE was willing to support Vietnam’s enterprises in listing on the exchange.

BlueScope Steel opens pre-engineering building showroom


BlueScope Steel opened a showroom of its Ranbuild pre-engineering building houses in Vietnam on March 22.

Ranbuild Pvt Ltd is fully owned by BlueScope Steel, one of Australia’s largest and most respected building companies. Ranbuild specialises in building sheds on field areas such as for agriculture, aviation and construction sites of commercial buildings.

Ranbuild has developed a highly sophisticated and integrated building data processing system called Ranbuild Design System (RDS). RDS prepares customer quotations, architectural drawings and detailed engineering drawings quickly and accurately.

Chinese demand boosts cassava price

Due to demand from mainland China, traders are buying large quantities of cassava, causing the domestic price to go up 40-45 per cent compared to last year.

The export cassava price also increased during this period.

According to the Vietnam Market Analysis and Forecast Joint-Stock Company Agro-Monitor, domestic sliced cassava is now sold for VND6,300 per kilo.

The export price of tapioca starch to China has increased to $550 per tonne.

The Plant Quarantine Sub-Department of Region VIII said 350-400 tonnes of cassava were being exported to China daily through the border gate at Lao Cai.

The Chinese market has faced a large shortage, especially of the cassava varieties and sliced cassava.

Domestic traders have taken full advantage of the situation to buy up fresh, dried and sliced cassava as well as cassava varieties to transport to Quy Nhon port in central Vietnam for export to China.

However, the current cassava purchases are expected to cause a shortage of cassava varieties and affect production and long-term cassava cultivation.

According to the Customs General Office, Vietnam exported 1.6 million tonnes of cassava, earning a turnover of $556 million last year.

Sliced cassava accounted for 56.8 per cent and tapioca starch 42.9 per cent.

China remained the biggest importer of Vietnamese cassava last year, accounting for 94.8 per cent of the total export turnover.

The Ministry of Agriculture and Rural Development said this year, the areas for growing cassava was about 500,000ha, with output of about 8.9 million tonnes, higher than last year's output of 8.52 million tonnes.

According to an annual report of the cassava and tapioca starch industry and AgroMonitor's forecast, this year's total demand for fresh cassava for domestic production is about 8.12 million tonnes.

That includes 1.89 million tonnes for ethanol production; 2.67 million tonnes for foodstuff processing and animal feed production; and 3.56 million tonnes for tapioca starch production.

Thus, there is only 780,000 tonnes for export, equivalent to 355,000 tonnes of dried sliced cassava.

However, China has begun increasing its imports of sliced cassava and fresh cassava, which could increase Vietnam's exports up to 4-5 million tonnes.

As a result, the domestic tapioca starch processors and animal feed producers will face severe competition in buying raw materials.

Experts said a long-term development strategy for the industry should be created, including solutions that would balance the supply and demand for exports and raw material supply for domestic production.

US trade turnover continue rising in Jan

Two-way trade turnover between Vietnam and the US in January 2011 reached nearly $1.8 billion, an increase of $301.3 million or 21.3 per cent over the same period last year.

According to data released by the US Department of Commerce, in the first month of this year, the US imported from Vietnam $1.38 billion worth of goods, an increase of 19.53 per cent over the same period last year; while it exported goods at a total value of $334.6 million, up by 29.16 per cent from January 2010's export value.

United States International Trade Commission's data showed that among Vietnam 's exports to the US in January 2011, apparel and clothing accessories retained the first ranking with export value of $548.8 million, $89.8 million higher than January 2010.

Taking the second place was footwear with $170.9 million, an increase of $33.5 million. Furniture followed with an export value of $158.6 million, a $20.8 million rise from Jan. 2010; and electrical machinery and equipment and parts with value reaching $69.4 million, up $17,7 million from the same period last year.

Fish and aquatic invertebrates fetched an export value of $61.7 million, an increase of $18.1 million over the corresponding month of 2010.

Cotton, including yarns and woven fabrics thereof, topped US exports to Vietnam in January 2011 with value of $59.6 million, up $51.6 million over the same period last year. Coming second was machinery and mechanical appliances, parts thereof with value reaching $31.2 million, a decrease of $32.2 million.

It was followed by electrical machinery and equipment (with value of $23 million, up 161 per cent); and iron and steel (with value of $21.9 million, up 128 per cent). Vietnam's import of US vehicles and parts and accessories thereof continued decreasing, down from $23.2 million in January 2010 to $20.4 million.

Highway to link northern cities

Deputy Prime Minister Hoang Trung Hai has ordered the completion of the Hanoi – Haiphong National Highway Project by 2013.

The project, worth VND24 trillion ($1.1 billion), was being implemented under the Build-Operate-Transfer (BOT) model, and when finished would have six lanes allowing a maximum speed of 120km per hour, Hai said.

After three years, land clearance has been basically completed, and project investor Vietnam Infrastructure Development and Finance Investment Joint Stock Company has built 37 resettlement areas.

The project, one of a number of national priority constructions, was expected to reduce traffic jams among existing industrial parks on National Highway 5, and develop new ones in the northern region, Hai said.

China’s Nanning launches air route to HCM City

A direct flight service between Nanning city in China ’s southern province of Guangxi and Ho Chi Minh City will be launched on March 28.

The service, provided by the Sichuan Airlines Joint Stock Company and the Nanning Airport Management Group, will use the 160-seat aircraft Airbus 320.

Direct flights will be conducted on every Monday and Thursday.

Guangxi province has to date established ten direct flight routes to major cities in member countries of the Association of Southeast Asian Nations.

Vietnam approves EC removal of footwear tariffs

A Foreign Ministry spokesperson on March 24 described the European Commission (EC) decision to lift anti-dumping tariffs on Vietnamese leather-capped shoes from March 31 as “suitable”.

Nguyen Phuong Nga made the comment at a regular meeting of the Foreign Ministry in Hanoi on March 24, responding to queries by reporters about Vietnam’s reaction to the EU’s decision.

She said, “The EC decision to remove the anti-dumping tariffs levied on Vietnamese leather-capped shoes from March 31, 2011 is suitable to real production and exports in Vietnam”.

“The decision is also in line with the common trend towards trade liberalization and against protectionism, as well as the positive development of partnership and comprehensive cooperation between Vietnam and the European Union,” the spokeswoman said.

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