Can Tho Business|Resources for starting a business in Vietnam

Viet Nam has completed pre-feasibility research in the southern central province of Ninh Thuan’s Phuoc Dinh and Vinh Hai districts, which have been selected as locations for the nation’s first nuclear power facility.

According to Deputy Minister of Industry and Trade Do Huu Hao, Viet Nam has planned to have its first nuclear power operational by 2020. Also, as part of its nuclear power strategy, 15 to 20% of the trading powder in the country would be nuclear by 2050.

Speaking at an international workshop on France’s experience in building nuclear power plants, in the capital on Wednesday, Didier Kechemain, Deputy Executive Director of the International Co-operation Department at France’s Nuclear Power Committee, said that the demand for more power in a developing country like Viet Nam was obvious.

Motivation

He said the Viet Nam Government’s policy of achieving independence and self-control in producing and providing power in the country in the near future was a great motivation for building its nuclear power system.

At the moment, the two areas of Phuoc Dinh and Vinh Hai in Ninh Thuan province have been proven appropriate to build a nuclear power factory, after completion of the location pre-feasibility research. These two areas have good geology, seismic activity and tectonics, with a low population density and large areas available.

According to Bernard Sentex, the Asia and Pacific Regional Director of Electricity de France (EDF), it will take two years to go from feasibility research to kick-starting the project, and another five years to plan it, bid it, design it and analyse safety methods. Then it will come to the final five years, building and experimenting before official operations to join the national grid.

The French specialists emphasised developing human resources for the work. Phillippe Pallier, director of Agency France Nuclear International, encouraged Viet Nam to plan domestic education and training for its nuclear human resources.

France is one of the four most powerful nuclear countries in the world, with a total of 58 factories and 80 per cent of the country’s power being nuclear. French Ambassador to Viet Nam Herve Bolot said Prance would assist Viet Nam in training nuclear specialists.

France’s experience would be useful to Viet Nam’s preparations for nuclear power in the country, said Deputy Minister Hao. (VNS)

Consumer credit is rapidly growing after escaping interest rate cap constraints, triggering regulators’ concerns about banks’ risk management.

The State Bank last week sent a directive asking commercial lenders to assess their consumer lending systems to ensure loans have been used for the right purposes and report back by July 15.

The banking system’s outstanding consumer credit had climbed by 11.6 per cent this year to reach VND85 trillion ($4.8 billion), a growth rate that was “worth noticing”, said State Bank governor Nguyen Van Giau.

“Now that the 150 per cent interest rate cap on consumer lending has been removed, it is understandable why banks are so eager to develop this type of service. However, consumer lending will be a very lucrative business only if banks can manage credit risks properly,” said Giau.

While the lending rate for trading and manufacturing was capped at 10.5 per cent per annum, consumer credit such as loans for buying homes and cars and financing overseas studies were subject to negotiable rates, which were now ranging from 12-16.5 per cent per annum on the market.

On the other hand, a brighter outlook on economic recovery had prompted consumer demand and investment in the real estate and stock markets, thus spurring consumer credit demand, said Eximbank general director Truong Van Phuoc.

VPBank’s general director Nguyen Hung said consumption loans, which were mainly for financing house and car purchases, had increased by 20 per cent since late 2008.

Meanwhile, Dam The Thai, ABBank’s individual customer division head, also reported a 15 per cent increase in the bank’s consumption loans this year.
However, Thai said that consumer credit accounted for about 20 per cent of the bank’s total lending, which could not be said to be “too high” and the bank was confident of its risk management.

Although trying to avert an economic slowdown, the State Bank has shown efforts in tightening credit growth, as banking system bad debts had risen to 2.62 per cent from 2.17 per cent in early 2009.

Giau said that the central bank aimed to keep credit growth lower than 30 per cent this year. (Dau Tu)

Joint-stock banks have been following each other to raise deposit interest rates sharply since mid June, a move which has been explained as indicating they are short of capital.

Deposit interest rates have been raised continuously every week. However, banks recently have focused on adjusting interest rates on short-term deposits (less than 12-month term deposits).

Right in the first week of June, 6-month term deposit’s interest rates were raised by joint-stock banks to over 8%, while the previous rate was just 7-7.5%. In late June, some banks also raised the interest rate for 3-month term deposit to over 8%.

Dai A Bank is now leading the banks as it is offering the highest deposit interest rates for short-term deposits. The bank offers 8.6% for 6-month term deposits. Four other banks are now applying the rates of 8.5-8.55%, while Lien Viet Bank is now offering 8.1%.

What is happening now may recall the liquidity crisis which occurred in the second and third quarters of 2008, when commercial banks rushed to raise interest rates, offering higher interest rates for shorter-term loans, not long-term loans. Meanwhile, in a stable monetary market, interest rates for long-term deposits are always higher than those for short-term deposits.

Cao Sy Kiem, Member of the National Advisory Council for Monetary Policy, in a recent interview given to a local newspaper, said that the only thing that forces banks into this behaviour is that they lack capital.

The story about the lack of capital of commercial banks has been bolstered by the rumour about the marketing activities of Standard Chartered Bank. The story is that as stock prices have been decreasing, a lot of investors have withdrawn money from their accounts. Standard Chartered Bank has asked brokers at securities companies to persuade investors who have withdrawn capital from accounts to deposit at the bank.

General Director of Standard Chartered Bank Ashok Sud has denied the information. However, he said that every bank has its own way of accessing clients, and it would not be surprising if banks sent staffs to persuade clients and give advice on cash management.

The general director said that the raising of interest rates for short-term deposits of joint-stock banks is just taking place on a small scale, depending on the liquidity of banks, while it does not reflect the overall picture of the whole banking system.

General Director of Lien Viet Bank Nguyen Duc Huong said that banks are pushing up loaning and there are signs of capital shortage.

Huong said that the demand for working capital to serve production and short-term investments is increasing sharply, while it is now not easy to mobilise capital.

In the first six months of the year, the capital mobilised by the banking system just increased by 16.2%, while the loans have increased by 17%. At many banks, the credit growth rate has reached some 50%, which is much higher than the mobilised capital growth rate. (VNE)

Fruit exports to China are running smoothly after a new quality assurance program obligated growers and packagers to register with the northern neighbor this week, officials said.

According to a bilateral trade agreement effective Wednesday, watermelon, longan, lychee, banana, cassava and dragon fruit grown in Vietnam for export to China must be harvested and packed by registered orchards and packaging facilities.

China must also provide the Vietnamese government with a list of its registered orchards and fruit packing factories that export to Vietnam.

Early Wednesday morning, hundreds of fruit-filled Vietnamese container trucks lined up at the Tan Thanh Border Gate in the northern province of Lang Son.

The same was true on the other side of the gate, where Chinese trucks waited to enter Vietnam.

There were worries that the new origins-tracing requirements would slow down customs clearance procedures, but Vietnamese truckers said everything went very well.

“Though today is the first day the new program is effective, everything was still very convenient,” said Phan Van Giau, who drove a container truck carrying more than 20 tons of dragon fruit to China from the south-central province of Binh Thuan.

He said he didn’t have any trouble crossing the border as his shipments were packed in cartons with the appropriate labels.

According to Tan Thanh Customs Bureau, nearly 100 trucks transported fruit from Vietnam to China on Wednesday. The trucks carried an average 15 tons of produce each.

Meanwhile, about 70 trucks transported various fruits from China to Vietnam on the same day, the bureau said.

The transfer of fruit through the Lao Cai Border Gate in the eponymous province and the Mong Cai Border Gate in Quang Ninh Province also ran smoothly, officials say.

Tran Van Nghia, deputy head of the Tan Thanh Customs Bureau, said the origins-tracing agreement was a good chance to boost Vietnamese fruit brands. He said it would help assure Chinese consumers that it was safe to eat Vietnamese fruits.

Forty-three provinces and cities in Vietnam have registered their fruit orchards and packaging facilities for the right to export to China, said Phung Huu Hao, deputy head of the National Agriculture, Forestry and Fisheries Quality Administrative Directorate.

The lists of registered farms and facilities, which were sent to China on Monday, will be updated in case of any changes or new information, online news service VietNamNet reported.

Pham Thanh Binh, deputy head of Tan Thanh Plant Quarantine Station, said Chinese customs officials were not just concerned with fruits’ origins. He said they also checked for chemical residues and the presence of insects or pests in fruit and agricultural produce.

China is the biggest buyer of Vietnamese produce. The country imported Vietnamese agricultural products worth US$1.9 billion last year, mainly latex, cashew, cassava, coffee, fruits and vegetables.

The Vietnam Fruit and Vegetables Association said export numbers in first months of this year showed “optimistic signs” and that the sector could earn a total export turnover of $400-450 million on the year, according to a statement posted on the government website Thursday.

Vietnam exported $127.8 million worth of fruit and vegetables in the first four months of this year, 8.2% more than the same period last year, the statement said. (TN)

More than 100 overseas Vietnamese business people from many countries in the world will take part in a congress on establishing the Overseas Vietnamese Business Association, to be held in Hanoi on August 9-10.

Representatives from domestic financial organisations and economic groups will also attend the event, the State Committee for Overseas Vietnamese said.

The congress will be a forum for businesses to share experiences and to discuss investment, production and trade opportunities in Vietnam and abroad.

It will also allow businesses to hold dialogues with relevant authorities and local experts relating to issues of mutual concern.

The Overseas Vietnamese Business Association aims to assist and create favourable conditions for its members to undertake investment, production and trade activities in and outside the country.

At present, more than 200 expatriate businessmen and businesses have registered to be members of the association. (VNA)

The UN World Tourism Organization revised its 2009 global tourism forecast sharply down Thursday due to a worsening economic outlook and uncertainty over the impact of the H1N1 flu pandemic.

In the June edition of its “World Tourism Barometer,” the Madrid-based body forecast international tourism would decrease between 4 and 6% this year. In January it had predicted a decline of between 0 and 2%.

“The negative trend in international tourism that emerged during the second half of 2008 intensified in 2009,” it said in a statement, adding that economic growth prospects have been adjusted downwards repeatedly in recent months.

“There is additional uncertainty regarding the future of the influenza A (H1N1) virus and its effect on demand in the short to medium term,” the statement added.

The International Monetary Fund (IMF) was forecasting growth of over 2% for the world economy when the UN body issued its tourism forecast in January. The IMF is now forecasting a global economic contraction of 1.3%.

During the first four months of 2009, global tourism declined by 8% from the same year-ago period to 247 million international tourism arrivals, the UN body said in the statement.

Europe posted a decline of 10% between January and April while Asia and the Pacific region saw a decline of 6% during the period.

Africa and South America were the only regions to buck the downward trend, posting increases of 3% and 0.2% respectively.

“The positive results in Africa reflect the strength of North African destinations around the Mediterranean and the recovery of Kenya as one of leading Sub-Saharan destinations,” the statement said.

International tourism arrivals rose 1.9% in 2008 over the previous year to 922 million. (AFP)

Gold may reach US$1,200 an ounce in two years, Feng Zhijian, honorary chairman of the Chinese Gold & Silver Exchange Society, said Friday.

The price of the precious metal may rise as the global recession and political instability in some parts of the world sustain its appeal as a haven investment, said Feng, who was speaking at a conference in Shanghai Friday.

Gold for immediate delivery has gained 6 percent this year as the worst global recession since World War II increased its investment appeal. The metal touched a record 1,032.70 in March last year.

“The recession caused a reassessment of the world’s currency system and expectations of central banks diversifying foreign currency reserves into gold should fan demand for gold,” Peggy Ye, an analyst at Shenyin & Wanguo Securities Co., said at the conference.

China, the world’s biggest gold producer, has increased reserves of the metal by 76 percent to 1,054 metric tons since 2003 and has the world’s fifth-biggest holdings by country, Hu Xiaolian, head of the State Administration of Foreign Exchange, said in April.

Bullion for immediate delivery gained $2.83, or 0.3%, to $932.63 an ounce at 11:48 a.m. in London. August gold futures added 0.2% to $932.40 an ounce on the New York Mercantile Exchange’s Comex division. Most US markets are closed Friday for the Independence Day holiday. (Bloomberg)

Economists have criticised the Government’s petrol price management scheme, saying that government agencies allow petrol importers to raise retail prices whenever they complain about losses.

The retail petrol price has increased for the fifth time this year by 700 dong per litre following price increases of electricity, water, cement, fertiliser and paper, all of which have sparked concerns about the return of high inflation.

Dr Le Dang Doanh, a senior economist, has pointed out a paradox in the price management of the Government: While it is trying to encourage production and provide credit, it is also raising the prices of many goods. Doanh said that Vietnam may fail to encourage production with its demand stimulus packages, supposedly the top priority now.

Doanh acknowledged that petrol price increases are unavoidable as crude oil and petrol prices in the world have increased sharply. “However, I have to remind you that when the world’s petrol price was $147 per barrel, the petrol price in Vietnam was 14,500 dong per litre. Now the world’s price is around $70 per barrel, while the domestic price is 14,200 dong per litre,” Doanh said.

“How high will petrol prices be on the domestic market if the world’s price increases further? What will the Government do in this case?” Doanh questioned.

According to Doanh, the petrol price now in Viet Nam is much higher than in Singapore and China.

Meanwhile, Dr Ngo Tri Long, Former Deputy Head of the Market and Price Research Institute under the Ministry of Finance, said that the petrol price increases have not been productively controlled, therefore, people meet difficulties every time prices increases.

“Petrol importers always complain that they incur losses and ask for petrol price increases. Meanwhile, government agencies just rely on the reports from the importers to make a decision on raising petrol retail prices, while they don’t carry out necessary verification.

“In fact, enterprises have been making fat profit by trading petroleum, while only people meet difficulties from petrol price hikes,” Long said.

Vu Dinh Anh, Deputy Head of the Market and Price Research Institute, also said that when adjusting domestic prices in accordance with the world’s market, the Government needs to think about how to minimise the negative effects of the price hike.

While Anh believes that the petrol price increase will not increase the likelihood of inflation, Doanh asserts that the petrol price will lead to a new price increase wave, simply because petrol and electricity are the two important input materials for many industries.

Doanh has warned about a new high inflation wave.

“Information has come to people that the global economy is recovering. Even the ‘psychological recovery’ would be enough to lead to price increases, while the price increases are coinciding with the loosened monetary policy of the Government,” he explained. (VTC)

Southeast Asian investment-grade corporate bond prices will fall as companies struggle to refinance debt and revive earnings, according to RGE Monitor.

“Markets in Asia are operating on the assumption that in the second half things will improve,” Arpitha Bykere, RGE’s senior fixed-income analyst for the region, said in a phone interview from New York. “Our forecasts tell us yes, the second half will be better than the first, but there won’t be a significant improvement in company sales or credit liquidity.”

Spending in countries including Singapore, Malaysia and Indonesia will decline as more people lose their jobs, according to RGE, the analysis group chaired by New York University economist Nouriel Roubini, dubbed Dr. Doom for predicting the credit crisis. With a “double hit” of maturing debt and lower income from sales, corporate defaults will rise, Bykere said.

JPMorgan Chase & Co.’s Asian Investment-Grade Index has risen 12.5 percent this year while its spread over U.S. Treasuries narrowed 3.07 percentage points to 3.93 percentage points. Asia-Pacific bond sales excluding Japan rose 89 percent to $301 billion since Jan. 1 as investors recovered from the shock of Lehman Brother Holdings Inc.’s collapse in September, according to data compiled by Bloomberg.

Economic Contraction

The global economy will shrink 2.9 percent this year, more than an earlier forecast of 1.7 percent, the World Bank said on June 22. Singapore, weathering its deepest recession since independence in 1965, expects two in five companies to cut wages if conditions worsen, the Ministry of Manpower said on June 30.

Indonesia’s exports, which account for one-third of gross domestic product, fell 28 percent to $9.26 billion in May from a year earlier, the Central Statistics Bureau said yesterday. The economy of Malaysia, Southeast Asia’s third-biggest, shrank 6.2 percent in the first quarter as exports fell.

“Spreads for investment-grade corporates in Asia have narrowed when, on the whole, access to credit hasn’t improved very much,” Bykere said. “We believe this improvement doesn’t really match the fundamentals.”

While Singapore companies are more vulnerable to an export slowdown because they lack a large domestic market, their refinancing risk is lower than in neighboring states due to the concentration of banks in the city-state, according to Bykere.

“It’s much easier to meet with lenders because of the country’s position as one of Asia’s financial hubs,” she said. “While from an export point of view we are more bearish on Singapore, in terms of dealing with debt-related issues we are more bullish compared to other ASEAN countries.”

As well as Singapore the Association of Southeast Asian Nations, known as ASEAN, comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand and Vietnam