Central bank eyes lower bank lending rates
The State Bank of Vietnam revealed recently that it would continue to keep bank lending interest rates unchanged from last year’s levels.
But analysts think this will be a very difficult task for the central bank since many factors are expected to impact the rates this year.
The first reason they mention is the imminent rise in the dollar after the US Federal Reserve increases interest rates an expected three times this year as economic growth and inflation pick up.
They say interest rates on the dong always have a close correlation with the value of the greenback.
The second reason is that Circular No.06, which caps the ratio of short-term funds that can be used for medium- and long-term loans, will reduce it from 60 percent to 50 percent this year.
This has forced banks to restructure their finances and increase interest rates on medium- and long-term deposits.
The hike in wages this year is likely to bring inflationary pressure on the economy.
In the event, some even predict lending interest rates to go up by 1-2 percentage points.
One of the measures the central bank is proposing is cutting deposit interest rates.
Many state-owned banks such as BIDV and Agribank have started to lower the rates on deposits of one to five months by 0.2-0.3 points.
Other lenders have also reduced the deposit interest rates, though by a more modest 0.05-0.1 points.
Sacombank has cut the rates on deposits of two and three months by 0.1 point to 4.9 percent and 5.2 percent.
The Ministry of Planning and Investment seeks to push lending interest rates to under 5 percent by 2020, but many analysts are sceptical about this too.
They said the rates cannot be cut any further since current rates are rather low compared with the average deposit interest rates.
The interest rates are around 6-7 percent for priority sectors for short-term loans and 9-10 percent for medium- and long-term loans.
The rates for normal production and business activities are between 6.8 and 9 percent for short-term loans and 9.3 percent and 11 percent for medium- and long-term loans.
SMEs positive about business future
Some 48 percent of 501 Vietnamese small and medium-sized enterprises (SMEs), which participated in The Future of Business survey, have positive views about the current situation.
This was revealed in findings unveiled by Facebook last week.
The survey, developed by the Organisation for Economic Cooperation and Development (OECD), World Bank and Facebook, is a source of information on SMEs looking to learn from other businesses.
This includes insights on how businesses are more confident if they trade internationally and how those that trade internationally are using digital tools at a higher rate.
The percentage is not so high but still higher than the global average of 42 percent, according to the survey, which was conducted last December, a month that was significant since it ended one year of the country’s economic development.
The December survey revealed some 69 percent SMEs were hopeful of a positive future, nine percent higher than the global average rate.
Thirty-eight percent of SMEs said they created jobs in the past six months and 66 percent said they want to create jobs in the next six months.
Among the key findings for Vietnam, the survey revealed the most common challenges for business, which included attracting customers, increasing revenue and maintaining profitability.
“Some 78 percent of Vietnamese small businesses said they used online tools to advertise to potential new customer products and services,” according to the survey.
Facebook said 21 percent of small businesses surveyed engaged in international trade. This was high considering 70 percent of these businesses have fewer than 10 employees and are not large multinationals.
The most commonly reported challenges for small businesses engaging in international trade are finding business partners, market access limitations and different regulations in other countries, which comprised 82 percent, 64 percent and 54 percent of the participants, respectively.
Meanwhile, women running businesses were found to be as confident about the current and near-term outlooks of their businesses and reported facing the same challenges as male-run businesses.
Women-run businesses used digital tools for two of the six purposes included in the Future of Business survey, more than male-run businesses.
Small businesses represent more than 90 percent of enterprises in all economies and also constitute a majority of a country’s employment virtually worldwide. OECD, World Bank and Facebook teamed up to create an online monthly survey of small businesses to understand their sentiment, activities and challenges. Timely information about businesses provides a pulse on the current and future economic environment in which businesses operate and gives insight on ways to help businesses grow.
Nearly 6,100 Vietnamese businesses took part in the monthly surveys in 2016, according to reports.
National power firm plans 2017 expansion
The National Power Transmission Corporation (EVN NPT) said it plans to put 63 projects worth more than VNĐ21.2 trillion (US$934.43 million) into operation in 2017.
The key power transmission projects include the 500kV Thăng Long – Long Phú – Ô Môn line, the 220kV Long Phú – Sóc Trăng, and Long Phú – Cần Thơ – Trà Nóc lines, the 500kV Lai Châu transformer station, and transmission lines connected to Thái Bình thermal power plant.
Several major upgrade projects will also be completed, such as the 500kV Việt Trì transformer station, the 220kV Đồng Hới – Đông Hà and Đông Hà – Huế lines and the 220kV Bình Long – Tây Ninh lines.
The corporation will operate projects designed to ensure power supply for Hà Nội, HCM City, and key economic zones.
In 2017, EVN NPT hopes to complete procedures to launch 42 upgrade and support projects, while drafting investment plans and arranging funding for those to be put into operation after 2017.
The corporation will also make efforts to ensure the pace of projects funded by loans from foreign agencies.
EVN NPT Deputy Director General Trần Quốc Lâm said the corporation has urged leaders of its subsidiaries to build plans for the approved projects and aim to hit targets from the beginning of the year.
The corporation will strengthen technology application while bettering relevant documents and management and supervision to enhance efficiency of the projects.
In 2017, EVN NPT will also work with localities to accelerate land clearance for transmission projects.
Kon Tum green lights beverage factory
Kon Tum People’s Committee has approved in principle the development of a factory producing beverages extracted from sim fruit (rose myrtle) in the province’s Kon Plong District.
The factory, expected to cost approximately VND29 billion (US$1.3 million) will be developed by Sim Thien Son Co. It is expected to produce five million litres of beverages per year.
The committee also granted approval for several hi-tech agricultural projects in the district with combined investment of VND140 billion ($6.2 million).
Exports to Algeria up 16%
Vietnam exports to Algeria in 2016 increased by 16% to US$271.42 million against the previous year, according to Vietnam Customs.
Main export items included coffee (64,050 tons valued at US$112.96 million), telephones and components (down 26% to US$76.86 million), and rice (40,097 tons worth US$15.36 million).
The export products that obtained a growth were pepper, steel, seafood, computers, electronics and components, machines, equipment and tools.
The achievements were attributed to diverse trade promotion activities organized by relevant agencies last year.
The Vietnam Trade Office in Algeria held five trade promotion workshops introducing import-export potentials of both countries. It also supported Vietnam business people to attend fairs and exhibitions in Algeria.
The Ministry of Industry and Trade conducted working visits to Algeria for Vietnamese policy and market researchers to discuss measures to further promote trade in 2017 and coming years.
A series of trade events will be held this year to mark the 55th anniversary of diplomatic ties. A Vietnamese business delegation will attend the Alger International Fair and four trade and economic cooperation workshops will be held on this occasion.
Algeria is currently the fourth largest importer of Vietnam products in Africa, trailed by South Africa, Ghana and Egypt.
Vietnam earns record US$34 billion from smartphone shipments in 2016
Smartphones accounted for 27.1% of Vietnam’s total exports in 2016 with a value of US$34.32 billion, customs data showed.
Phone exports are expected to rise 13.6% to reach US$39 billion this year, the Saigon Times cited experts as saying.
Vietnam’s economic growth is being fueled by steady inflows of foreign direct investment into export-oriented sectors, especially smartphones and tablet computers, and many of them are made by Samsung Electronics.
Samsung has invested a total of US$15 billion to produce phones in Vietnam, according to the Association of Foreign-Invested Enterprises, equivalent to 10% of the country’s total foreign investments over the past three decades.
About 130,000 workers at Samsung’s two manufacturing facilities in the southern provinces of Bac Ninh and Thai Nguyen are involved in assembling 35 percent of all Samsung’s smartphones globally, including its flagship Galaxy Note 7.
Despite Samsung’s parent company scrapping the Galaxy Note 7 following a series of unresolved battery fires last year, Samsung Vietnam’s smartphone shipments in 2016 rose 8% from US$32.7 billion in 2015, accounting for nearly a fifth of the country’s total export revenue.
The company is targeting a 7-10% increase in exports from Vietnam this year, said Deputy Director Bang Huyn Woo.
The General Statistics Office said exports in 2016 rose 9% to $176.6 billion, while imports increased 5.2% to $174.11 billion. Vietnam’s trade surplus was estimated at about US$2.52 billion, it said.
Vietnam’s top 10 foreign exchange earners, including mobile phones, textiles, electronic and computer components, footwear and seafood products, accounted for 71.8% of total exports in 2016.
The government has set an economic growth rate target of 6.7% this year, which would be the fastest pace since 2007.
Vietnam Airlines pilot salaries revealed
Vietnam Airlines has approved a fourth salary rise for its staff since 2008 to ensure that the income of the firm’s staff remains among the region’s top airlines.
Meanwhile, the average salary of Vietnam Airlines flight attendants is VND25.5 million, while the figure for staff in other positions is VND17.4 million.
The salary increase at Vietnam Airlines is based on staff capacity and productivity.
Earlier in early 2015, the Ministry of Transport instructed Vietnam Airlines to review its salary policy, citing the high number of pilots who wanted to leave the company for better pay.
Vietnam Airlines and its subsidiaries earned combined revenue last year of more than VND76 trillion (USD3.34 billion) in 2016, an increase of more than 10% against 2015. Pre-tax profits stood at almost VND2.5 trillion (USD110 million), up 140% and 7% higher than the annual plan.
The national flag carrier is operating 85 planes and has 7,100 staff.
Multi-level marketing firm attempts to deflect accusations
Amway Vietnam said they had difficulties with administrative procedures after it was found out that they had failed to inform the authorities of changing business licence content.
On January 16, the Ministry of Industry and Trade announced a number of wrongdoings at two multi-level marketing companies, Amway Vietnam and Thien Ngoc Minh Uy. According to the ministry, Amway Vietnam couldn’t prove that it had informed several departments of industry and trade across the country when it changed its business licence content on multiple occasions.
In addition, even though the company have training courses for their distributors, it doesn’t have any measures to ensure that the distributors have followed and understood the courses.
On January 18, Bui Khanh Nguyen, Amway Vietnam Company’s PR director, said they had had difficulties with the administrative procedures. He went on to say that the Ministry of Industry and Trade was gathering opinions from all agencies and multi-level marketing firms for a new draft about multi-level marketing management.
He said, “Our difficulties have been known. The new draft will have many changes to tighten control over multi-level marketing but also create favourable conditions for the firms to continue business.”
Nguyen said the company didn’t have any other violations.
Dai-ichi Life VN gets nod to up capital
Insurance provider Dai-ichi Life Vietnam has received a licence to raise its capital to 117 million USD, from 100 million USD, so as to invest in new distribution channels in Vietnam.
With this go-ahead from the finance ministry, Dai-ichi Life Vietnam will become one of the top life insurance companies in terms of market capitalisation in the country.
“Dai-ichi Life Vietnam commits to become a ‘lifetime partner’ with Vietnam and Vietnamese people by striving to pioneer new aspects, bring significant change for the sake of the community and realise our objective of becoming the best life insurer in Vietnam,” said Takashi Fujii, chairman of Dai-ichi Life Vietnam.
In 2016, Dai-ichi Life Vietnam’s total premium for the year crossed 5,300 billion VND (235.5 million USD), an increase of 51 percent over 2015, and a 14.4-time rise since it was established in 2007.
Over 21 trillion VND poured into national power transmission network
The National Power Transmission Corporation (EVNNPT) said it plans to put into operation 63 projects worth over 21.2 trillion VND (934.43 million USD) in 2017.
The key power transmission projects include the 500kV Thang Long – Long Phu – O Mon line, the 220kV Long Phu – Soc Trang, and Long Phu – Can Tho – Tra Noc lines, the 500kV Lai Chau transformer station, and transmission lines connecting with the Thai Binh thermal power plant.
Several major upgrade projects will also be completed in the year, such as the 500kV Viet Tri transformer station, the 220kV Dong Hoi – Dong Ha and Dong Ha – Hue lines, the 220kV Binh Long – Tay Ninh lines,
The corporation will put into operation projects designed to ensure power supply for Hanoi, HCM City, and the key economic zones in the north and the south.
In 2017, EVNNPT hopes to complete procedures to launch 42 upgrade and support projects, while drafting investment plans and arranging funding for those which need to be put into operation after 2017.
At the same time, the corporation will make efforts to ensure the pace of projects funded by loans from foreign agencies.
EVN NPT Deputy Director General Tran Quoc Lam said the corporation has urged leaders of its subsidiaries to build detailed plans for the implementation of approved projects and embark on its targets right from the beginning of the year.
The corporation will strengthen technology application while bettering relevant documents and management and supervision to enhance efficiency of the projects.
In 2017, EVN NPT will also work closely with localities to accelerate land clearance for transmission projects.
Quang Ninh announces 2016 competitiveness index
Authorities of northern Quang Ninh province held a conference on January 23 to announce the 2016 competitiveness index of its departments, agencies and districts.
The index was based on a set of criteria for information transparency and access, leadership dynamism, time cost, unofficial expenses, fair competition, support for enterprise, legal regulations and top officials’ responsibility.
The provincial People’s Committee in coordination with the provincial Business Association and Vietsurvey group polled 989 local businesses, 15 departments and agencies, and 14 districts to compile the index.
Accordingly, Co To island district leads the 14 districts in the province with 76.78 points, followed by Hoang Bo district (64.85 points), Uong Bi city (64.09 points) and Mong Cai city (55.69 points).
The Quang Ninh Taxation Department tops the competitiveness rankings of 15 provincial departments and agencies with 81.87 points, followed by the provincial Department of Planning and Investment (70.15 points), the Department of Industry and Trade (59.23 points), and the Customs Department (53.52 points). The provincial Department of Agriculture and Rural Development and Hai Ha district are at the bottom.
Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, hailed Quang Ninh’s initiatives such as building an administrative centre and establishing an independent and effective investment promotion agency.
Chairman of the provincial People’s Committee Nguyen Duc Long said the province has paid special attention to improving business climate over the past time. Provincial authorities have held regular meetings with more than 1,100 enterprises and investors in Quang Ninh to promptly remove difficulties, while cutting time to process administrative procedures involving taxation, customs, social insurance and business registration.
In 2015, Quang Ninh ranked third among 63 cities and provinces nationwide in terms of the provincial competitiveness index.
Banks hike deposit rates for liquidity
During the run-up to Tet many banks have increased deposit rates to sustain liquidity.
Sacombank has hiked the rates on two- and six-month deposits by 0.1 and 0.2 percentage points to 5 percent and 5.9 percent.
DongABank hiked the rates on one- and six-month deposits by 0.1 and 0.3 points to 5 percent and 5.5 percent.
Some other banks have also increased the rates by 0.1-0.3 points.
Besides, banks are also scrambling to launch lucrative promotion programmes to attract deposits.
Vietinbank is offering bonuses of nearly 8 billion VND to depositors, SHB has earmarked 7.2 billion VND.
Market observers said many banks face liquidity pressure though the State Bank of Vietnam is pumping in a lot of money through open market operations (OMO).
A major part of almost 55 trillion VND were absorbed by the banks as of January 16.
The observers attributed the low liquidity to the fact that banks had to out a lot of money to enterprises and financial institutions, something that often happens a few weeks before Lunar New Year.
But other analysts dismiss the claim of low liquidity, pointing to banks’ transactions in the last few months of 2016. Most lenders had enough liquidity, with some even having plentiful cash, that they were ready to meet the payment demands of the market.
This was also proved by the fact that interest rates kept falling on the inter-bank market.
The liquidity helped the government successfully issue bonds totally worth 281 trillion VND.
Buddhism spring festival to open in Son Tay town early February
The Khai Nguyen Pagoda in Hanoi’s suburban town of Son Tay will host a Buddhism spring festival from February 4-7 (the 8th-11th of the first lunar month).
Most Venerable Thich Dao Thinh, head monk of Khai Nguyen Pagoda, said at a press briefing on January 23 that the festival aims to promote the country’s traditional cultural values, pray for a New Year of happiness, health and peace and encourage understanding, love, and community connection.
Highlights at the event include a flower exhibition, a fair of vegan food and sport and folk games like tugs of war, walking on stilts and boat racing.
Around 60 vegetarian restaurants across the country are expected to attend the event, introducing vegetarian dishes and products at 60 booths. The Khai Nguyen Pagoda and participating restaurants hope to set a Guinness record with 1,000 hot pots of vegetarian food at the festival.
The festival is co-organised by Khai Nguyen Pagoda, the An Lac business group, the Hanoi martial art association and the Vietnam Laughter Yoga club.
Vietnamese firms ignorant about EU FTA
Up to 69% of Vietnamese exporters to the European market said that they only heard about the EU-Vietnam Free Trade Agreement (EVFTA) and were unaware of its content.
The information was mentioned in a survey about impacts of EVFTA on Vietnam’s policy and mechanism reforms released by the Central Institute for Economic Management (CIEM) recently.
Up to 69% of Vietnamese exporters to the European market said that they only heard about the EU-Vietnam Free Trade Agreement (EVFTA)
According to the survey which covers 120 companies which have signed export contracts with EU partners, 26% said that they only knew a little about EVFTA while only 5% admitted that they have thorough knowledge of the agreement which is scheduled to take effect early 2018.
Due to the ignorance about the agreement, up to 63% of the interviewed exporters have not made any preparations for the agreement which is scheduled to take effect in early 2018.
The in-principle agreement reached on August 4 2015 includes the elimination of over 99% of all tariffs. Vietnam will liberalise tariffs over a ten-year period and the EU will do likewise over a seven-year period.
Experts, however, warned that the EVFTA is a new deal with more commitments to cut tariffs, create commercial advantages, and improve the investment and business environments, competition, and sustainable development. It will also create challenges because the EU is one of the most competitive markets in the world.
Vietnamese companies are advised to study more information about European markets, pay more attention to raising their product quality as well as packaging. Many Vietnamese companies said that a taskforce should be set up to provide information about EVFTA for the business community.
DPM approves adjustment of Ha Tinh’s socio-economic development master plan
Deputy PM Vuong Dinh Hue has approved the guideline to adjust Ha Tinh province’s socio-economic development master plan, on the basis of the proposal from the provincial People’s Committee.
Accordingly, the Ha Tinh provincial People’s Committee is assigned to select a qualified and experienced advisory organization that meets the requirements of reviewing and updating the master plan until 2030, with a vision to 2050, in accordance with current regulations.
Earlier, in his Decision No. 1786/QĐ-TTg dated November 27, 2012, the Prime Minister approved a master plan on socio-economic development for Ha Tinh province until 2020, with a vision to 2050, targeting to build Ha Tinh into a province with an advanced economy, a synchronous and gradually modernized infrastructure system, the capabilities of environmental protection and adaptation to climate change, and constant improvements in local people’s material and spiritual lives.
Deutsche Bank: Growth to reach 6.4%
Deutsche Bank has forecast that Vietnam’s GDP will grow 6.4 per cent this year, exceeding the 6.21 per cent recorded in 2016.
Ms. Juliana Lee, Senior Economist at Deutsche Bank, wrote in the Macroeconomic Prospects report that growth would be based on the sustainable recovery of agriculture and exports.
“We recognize that Vietnam continues to deploy improvement plans to boost economic growth potential in the long term,” she said.
However, when Vietnam achieves significant improvements in economic reform, with supporting foreign capital inflows into the country and increasing exports, the value of the Vietnam dong (VND) will increase.
State-owned enterprise (SOE) reform is very important for the country’s financial situation because it will increase efficiency in public spending and bolster the proceeds from SOE equitization.
Ms. Lee emphasized the importance of resolving bad debts and boosting credit risk management in ensuring the stability of the banking system if interest rates rise in the medium and long terms. “Restructuring banks and resolving bad debts should drastically increase growth but policies need improvements,” she said.
Conditions for business and investment in Vietnam are favorable, according to Senior Economists at Deutsche Bank.
Deutsche Bank offers trade finance services, cash management and securities custody services as well as business consulting services for enterprises operating in Vietnam.
Kido to secure controlling stake in Vocarimex
The Kido Group Corporation has been given permission to hold more than 51 per cent in the Vietnam Vegetable Oils Industry Corporation (Vocarimex) without the need to conduct a takeover bid, an extraordinary shareholders meeting of Vocarimex on January 20 heard.
The green light was necessary for Kido to acquire the controlling stake and become Vocarimex’s parent company. Kido currently holds 24 per cent and is expected to increase its ownership to 51 per cent during the first quarter.
Established in 1992, Vocarimex had total consolidated assets of VND2.4 trillion ($109 million) as at the end of March 2016. Its unrefined cooking oil accounts for 94 per cent of total revenue and 89 per cent of Vietnam’s unrefined oil supply. Vocarimex had 343 employees as at the end of 2015 and seven subsidiaries and associated companies. It also has three vegetable oil joint ventures: the Golden Hope-Nha Be Edible Oils Company, the North Oils & Fats Industries Company (Nortalic), and the Cai Lan Oils & Fats Industries Company (Calofic).
Vocarimex has two other large shareholders: the State Capital Investment Corporation (SCIC), with 36.3 per cent, and VPBank Securities (VPBS) with 8 per cent. VPBS will be permitted to divest prior to the due date, and the Vegetable Oil Extraction Joint Stock Company (VOE) will be merged with Vocarimex, the extraordinary shareholder meeting also heard.
In previous news, Kido spent some VND1 trillion ($44.35 million) last November acquiring 65 per cent of the Tuong An Vegetable Oil Company (TAC) – the largest subsidiary of Vocarimex and the No.2 player in the domestic cooking oil market.
Kido’s operating revenue stood at VND2.24 trillion ($99.3 million) in 2016, with VND1.53 trillion ($67.8 million) in financial revenue earned primarily from selling the remaining 20 per cent of its subsidiary, the Kinh Do Binh Duong JSC, to Mondelez International.
The No.1 player is Calofic, who held a 39.2 per cent market share in financial year 2015 and is 24 per cent owned by Vocarimex. It reported 2015 revenue of VND11 trillion ($493 million); three times higher than its nearest competitor, Tuong An. Calofic has won the trust of a wide range of customers with its famous brands, including Neptune, Simply and Meizan.
Last year the Singaporean-based Wilmar International bought 45 per cent of Bunge Ltd’s oilseed crushing factory. Bunge is Vietnam’s largest producer of soybean oil, the world’s largest palm oil processor, and one of the largest soybean buyers, and aims to strengthen its presence in Vietnam’s cooking oil market.
With Kido aiming to turn Vocarimex into a subsidiary and with Wilmar’s strategic deal, the country’s cooking market is set to see fierce competition. Vietnam’s cooking oil market now has 40 companies producing and selling cooking oil products, 70 per cent of which are palm oil, 23 per cent soy bean oil, and 7 per cent vegetable oil, according to data from the Ministry of Industry and Trade.
MWG’s vuivui.com to overtake thegioididong & dienmayxanh in revenue
MWG Chairman Nguyen Duc Tai confirmed with VET that vuivui.com will earn higher revenue than its other two chains – thegioididong.com and dienmayxanh.com – in the five years to come. The website operates under the Business to Customer (B2C) model, similar to the other websites, but “the difference is quality management and the speed of delivery,” he said. “Eighty per cent of products sold on the website come from thegioididong.com and the remainder from other suppliers.”
Controlling input, the company is responsible for handling complaints and suppliers if customers buy counterfeit or low quality products. Project Director Pham Van Trong said that vuivui.com also commits to compensating customers if delivery is slower than committed. The website will have three delivery timelines: 11am, 4pm and 8pm.
Mr. Tai expects that the number of visitors to the website will reach 200,000 per day with estimated revenue of VND20 billion ($896,000) by the end of this year. It will operate in Ho Chi Minh City this year and at this stage there are no further details regarding expansion plans.
Online business accounts for 5 per cent of total retail turnover and will expand to 20 per cent in the future. “MWG plans to become the No. 1 online retailer in Ho Chi Minh City in 2017 and in Vietnam by 2020,” he said.
MWG also officially opened the 286th dienmayxanh.com store, in Duong Dong town on Phu Quoc Island, the first consumer electronics chain on the island. The chain accounted for 16-17 per cent of total consumer electronics retail share as at last October and is expected to reach 30 per cent by the end of this year.
The company’s business plan for 2017 is for total revenue and after-tax profit to reach VND63.3 trillion ($2.83 billion) and VND2.2 trillion ($98.6 million), respectively, up 85 per cent and 58.5 per cent against 2016.
In early November he announced that after-tax profit for 2016 has been estimated at VND1.5 trillion to VND1.6 trillion ($67.5 million to $71.7 million).
The company planned to earn revenue of VND34.2 trillion ($1.53 billion) in 2016 but in the first eleven months it already stood at VND39.6 trillion ($1.77 billion), up 76 per cent year-on-year and equal to 116 per cent of the annual target.
After-tax profit in the first eleven months was VND1.4 trillion ($627.8 million), up 51 per cent year-on-year and equal to 104 per cent of the annual target. Turnover at thegioididong.com was VND28 trillion ($1.25 billion), a 50 per cent increase year-on-year, and VND11.7 trillion ($524.6 million) at dienmayxanh.com, 207 per cent higher year-on-year. Online turnover reached VND2.94 trillion ($131.8 million), up 103 per cent year-on-year and equal to 89 per cent of the annual target.
Thaco & South Korean partner to produce agricultural machinery
The Truong Hai Automobile JSC (Thaco) has held a signing ceremony for a cooperative agreement with South Korea’s LS Mtron in producing and distributing agricultural machinery, beginning in October.
LS Mtron will transfer technology to Thaco for the construction of a plant in central Quang Nam province producing machinery and equipment used in agriculture, which will have a localization rate of 50 per cent and be branded Thaco and be distributed by the Vietnamese partner. The second stage will expand production for export to Southeast Asia.
“This is a new business endeavor under Thaco’s development strategy to be the multi-industry group, which places mechanical and automobiles as key industries,” Thaco Chairman Tran Ba Duong said. “It is also part of its responsibility in participating in Vietnam’s agriculture production in the context of it being a key sector of the economy heading towards industrialization and high-tech application, so that it may continue to develop in the future.”
“I believe that with a similar vision and business philosophy and with growth based on the partnership, the cooperation between the two sides will succeed,” said Deputy Chairman of LS Mtron Ja Eun Koo. “We will become the leading company in agricultural machinery in Vietnam and Southeast Asia.”
Mr. Nguyen Ngoc Quang, Chairman of the Quang Nam Provincial People’s Committee, said the partnership is a notable event for the local company, the province, and the country’s agriculture sector, marking a milestone in Thaco’s development in production and providing a foundation for developing the new field in the future. Mr. Hoang Van Thang, Deputy Minister of Agriculture and Rural Development, highlighted that the country’s agriculture sector has ten key items with total export value of $32 billion and employs more than 90 million people. “Manual workers in the industry are large in number but capacity is low,” he said. “The cooperation between these two companies will open up new prospects and contribute to speeding up the industrialization of agriculture and enhance the competitiveness of the industry and farmers’ livelihoods.”
LS Mtron began operations in agricultural machinery in 1997. LS tractors account for the largest share in South Korea and it has established a business network in the US and factories in China and Brazil. It exports to 40 countries and 12,000 tractors annually to North America – the largest agricultural machinery market in the world.
Thaco began expanding the Truong Hai-Chu Lai Mechanical Automobile Industrial Zone last year, with investment of $35.3 million. It also began operations at a new production line of trailers and special purpose vehicles, and begun to export to South America.
Vietcombank’s after-tax profit rises 28%
Vietcombank, Vietnam’s biggest lender by market value, saw its 2016 after-tax profit surge 28 per cent while its bad debt ratio was kept at 1.48 per cent as at December 31, the bank’s consolidated financial statement for the fourth quarter of 2016 reveals.
Pre-tax profit stood at VND2.2 trillion ($97 million) in the fourth quarter, for VND8.5 trillion ($377.5 million) during the year as a whole, up 24 per cent against 2015. After-tax profit reached VND6.85 trillion ($303.3 million), up 28 per cent.
Customer deposits totaled VND590 trillion ($26.14 billion), a 17.7 per cent increase year-on-year, while customer loans stood at VND460 trillion ($20.38 billion), 18.8 per cent higher.
Total assets were VND788 trillion ($34.92 billion), up 17 per cent year-on-year, and charter capital rose 35 per cent to VND35.9 trillion ($1.59 billion) as at December 31.
In the fourth quarter alone, Vietcombank’s interest income rose 10 per cent to VND4.88 trillion ($216.2 million), contributing significantly to the annual figure of VND18.5 trillion ($819.7 million), which was a 19.8 per cent increase year-on-year.
Operating costs during the fourth quarter stood at VND2.48 trillion ($110 million), up 5.2 per cent year-on-year. Risk provision costs surged 40 per cent in the quarter, to nearly VND1.9 trillion ($84.2 million), with full-year risk provision costs standing at VND6.41 trillion ($284 million).
Earnings-per-share (EPS) improved, rising 16 per cent to VND1,897 ($0.08). As at the end of 2016, bad debts totaled VND6.84 trillion ($303 million), equal to 1.48 per cent of total outstanding loans and down 0.36 per cent compared to the beginning of the year.
Vietcombank was the first lender to buy back all debts it sold to the Vietnam Asset Management Company (VAMC). The initial amount of cumulative debts was VND6.5 trillion ($288 million), while the value of VAMC’s bonds in exchange was only VND4 trillion ($177 million).
Its share price rose 36 per cent during the year, giving it a market value of $6.2 billion. The lender trades at about three times the book value, compared with an average of 1.1 times for listed Vietnamese banks.
According to foreign media, Singaporean sovereign fund GIC Pte has hit a snag in seeking government approval for its planned investment in Vietcombank. GIC said in August it had reached preliminary agreement to purchase 305.8 million new Vietcombank shares, equal to a 7.7 per cent holding, at a discount to the market price, for less than $400 million.
The deal, originally expected to be completed by the end of last year, is yet to be approved by Vietnamese authorities while the government has withheld approval in part because GIC proposed buying the stock at less than the market price, according to Bloomberg.
Vietcombank’s biggest shareholder, the State Bank of Vietnam, owns 77 per cent, while the Mizuho Financial Group Inc. is its second largest shareholder, with 15 per cent.
MSI lists sectors with potential in stock market
A report from Maritime Securities Incorporation released on January 19 listed six sectors and one company in Vietnam’s stock market with potential in 2017: gas, food and beverages, insurance, construction and industrial production, automobile and retail, and building materials, as well as subsidiaries belonging to Vinachem.
The construction and industrial production sector is expected to achieve the highest growth, of 24 per cent, followed by food and beverages with 18 per cent, insurance, automobiles and retail with 17 per cent each, and building materials 10 per cent.
Crude oil prices may bounce back to $60 per barrel, which will support gas enterprises to improve their businesses performance.
Food & beverage enterprises, including Sabeco, Habeco, Vissan, and Quang Ngai Sugar, are expected to grow strongly in 2017.
Real estate may be risky because credit to the sector is limited and the supply of apartments is increasing significantly.
Fisheries and textiles have a poor outlook due to rising labor costs and falling exports.
The three sectors with the highest growth in 2016 were construction and industrial production (83 per cent), building materials (82 per cent), and automobile and retail (82 per cent), while real estate sector increased just 1 per cent.
MSI: VN-Index to reach 770 points this year
The VN-Index is expected to reach 770 points in 2017, according to a Maritime Securities Incorporation (MSI) report released on January 19.
Based on forecasts for Vietnam’s economy in 2017, cash flow analysis, and market liquidity in 2016, MSI believes that 2017 will be a successful year for the country’s stock market.
“The stock market in 2017 is expected to be more favorable than last year,” according to Vice President of Research at MSI, Mr. Bui Duc Hoan.
The VN-Index may have two periods of significant increases, from January to May and from August to December. In the first period, MSI believes the VN-Index will move from 680 to 750 points and adjust to between 730 and 760 points in June and July before reaching 770-790 points in the third quarter and adjusting to 770 (+/- 10 points) late in the year.
In 2016 the VN-Index recovered from 515 points to 680 points.
The VN-Index stood at 1,170 points in March 2007. The size of the stock market was small, with only 150 enterprises listed on HSX and HNX.
The 2009-2011 period was a difficult time, with the VN-Index bottoming out at 235 points. It has been on a relatively steady upwards trajectory ever since.
MB Ageas Life comes into being
The MB Ageas Life Insurance Company Limited, known as MB Ageas Life, was officially launched on January 16.
The company is a life insurance joint venture between Belgium’s Ageas Group, Thailand’s Muang Thai Life Assurance, and Vietnam’s Military Commercial Joint Stock Bank (MB).
The Ministry of Finance issued License No. 74/GP/KDBH on July 21, 2016, establishing MB Ageas Life with charter capital of VND1.1 trillion ($48.4 million). It specializes in life insurance, health insurance, and financial investment and its head office is in Hanoi.
MB Ageas Life is a move by MB in response to the government’s strategic development of Vietnam’s insurance market under Decision No. 193/QD-TTg issued in 2012.
The strategy is directed at developing insurers with strong financial capacity, governance of international standard, effective operations, and competitiveness in the country and the region.
A number of cooperative agreements were also signed at the launch ceremony, including an insurance agency contract between MB Ageas Life and MB and a cooperation contract to provide insurance products between MB Ageas Life and the Mcredit Co., Ltd.
These are important partnerships that will help MB Ageas Life provide products and services with added value to customers, promoting the development of distribution systems through banking channels.
Mr. Le Huu Duc, Chairman of MB, emphasized at the launch ceremony that MB is now building a strategy to become a diverse financial corporation, in which the bank is the parent company with subsidiaries specializing in securities, fund management, real estate, insurance, debt management, and consumer finance.
“The strategy aims to provide financial solutions to customers, contribute to revenue growth, and bring the greatest benefits to shareholders, partners and customers,” he said.
MB Ageas Life believes that it will be successful in the Vietnam, contributing to the development of the insurance industry and bringing quality services to every Vietnamese citizen.
Nation’s retail sales up 10.2% in 2016
Vietnam’s retail sales of goods and services were estimated at VND3.53 quadrillion (US$156.7 billion) in 2016, up 10.2% from last year, as indicated by data released by the General Statistics Office (GSO).
The retail sales of goods, which accounted for 75% of the total sales, reached VND2.67 quadrillion (US$118.9 billion), up 10.2% from last year.
The revenue in some sectors saw a handsome increase. Food and food products, for instance, surged 13 per cent year-on-year, household appliances rose 12 per cent, garments and textiles went up 11 per cent and transport services increased by 6 per cent. However, the sales of educational and cultural products grew at a low rate of 2 per cent.
The retail sales of accommodation, restaurant and catering services reached approximately US$18.4 billion, which accounts for 12% of the total revenue, posting an 11% year-on-year rise. This is mainly thanks to effective tourism policies that led to a significant increase in the number of tourists in the later months of 2016.
Localities that posted high accommodation, restaurant and catering services as well as retail sales include the southern provinces of Binh Duong and Binh Thuan at 18% and 17%, respectively; the northern city of Hai Phong (16%), Hanoi (14%) and Ho Chi Minh City (9%).
The sales of other services in 2016 reached an estimated US$18 billion, making up 11.4% of total revenue and surging 9.3% compared to the previous year.
Government approves development programme for support industries by 2025
The Prime Minister has issued Decision No. 68/ QD-TTg on a development programme for support industries in the 2016-2025 period.
The program will provide assistance through activities such as promoting domestic and international investment for production at support industries; furthering the development of domestic markets and the export of products from support industries; providing information and data on support industries; recognizing enterprises adapting to standards; assisting start-up enterprises and encouraging technology transfer and production testing; creating management systems of international standards for enterprises in support industries; and enhancing cooperation between enterprises in support industries and multinational corporations and improving personnel training in management and scientific and technical services for production in support industries.
Six specific programmes will be introduced. Activities to assist the research and development of technological applications and transfer in production testing of components and materials will receive the highest investment, of VND890 billion ($39.7 million), or 51.7 per cent of the total.
The programme which aims to assist enterprises in applying international standards in business and production management is expected to provide consultancy to 2,000 enterprises on the application of international management standards.
The investment promotion programme for support industries aims to attract foreign direct investment in support industries through organising fairs and promoting such investments in the media.
Agricultural sector aims for higher targets in 2017
Overcoming challenges from extreme weather and market volatility, the agricultural sector ended 2016 on a positive note when output rose by 1.44%.
It is noteworthy that amid difficulties faced in export markets, the export value of agricultural products did not fall but however climbed by US$1.7 billion to approximately US$32.1 billion thanks to a timely shift to goods that there is still room for growth.
The accelerated growth of the sector in the second half of 2016 had a significant contribution of such goods as seafood, and fruit and vegetables in particular. In 2015 fruit and vegetable exports reached only US$1.9 billion, lower than rice, but soared to US$2.4 billion in 2016, far surpassing the US$1.9 billion revenue recorded by rice exports.
But despite such positive figures, it is easy to see that Vietnam’s agriculture still faces many problems. In general Vietnam’s agriculture remains small in scale, largely based on households with 13.8 million smallholders cultivating on 78 million parches of land. Therefore, agricultural restructuring aligned with building new rural areas is an urgent task to foster production, improve income and ensure social security for the rural regions which account for 70% of Vietnam’s land area and 46% of population.
2017 is seen to be a key year in the implementation of the national socio-economic development plan and the agricultural development plan for the 2016-2021 period amid anticipated challenges. Nevertheless, the sector still targets a GDP growth of 2.5-2.8% and export revenues of US$32-32.5 billion. In order to achieve these targets and beyond, the agricultural sector will place a major focus on key products, particularly those with export values reaching US$1 billion and higher.
Restructuring of State-owned enterprises requires dual goals
The project on restructuring State-owned enterprises (SOEs) for 2016-2020 period requires dual goals, including resolving backlogs and weakness of the restructuring activities and improving the efficiency and competitiveness of SOEs.
The statement was made by Politburo member and Deputy Prime Minister Vuong Dinh Hue, who is also Head of the Central Steering Committe for the Innovation and Development of Enterprises, after listening to a report made by the Ministry of Finance (MoF) in Hanoi on January 20 on building a project to restructure SOEs in the 2016-2020 period
The Deputy PM asked the MoF to analyse the results in restructuring SOEs over the past years in order to identify the limitations and unachieved goals in order to overcome them in the coming time, such as the high capitalisation rate of the State, the arrangement of SOEs in the major fields of the economy and the improvement of the efficiency, productivity, scientific and technical application and competitiveness of the enterprises.
It is essential to ensure the consistency and efficiency of the SOEs as well as promote their role for the economy while implementing the project, added Deputy PM Hue.
He noted that the project should clarify measures to mobilise resources from the market to actively participate in restructuring the SOEs.
In addition, the project needs to clearly assign and decentralise the Government, PM and the Steering Committee for Enterprises’ Innovation and Development as well as ministries and localities, to decide on issues related to restructuring the SOEs, the Depty PM noted.
Regarding legal issues, he asked the ministries to review and further amend and supplement the system of regulations on the State management function, representatives of the State in enterprises, equitisation, SOE valuation methods, and supervision of investment resources of SOEs.
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR
The new administration should think carefully before moving forward with recent proposals about China and the U.S. role in Asia.
As China continues to grow, reform, invest abroad, and integrate with the global financial system, it is almost inevitable that one day the RMB will rival the U.S. dollar and the Euro as a global reserve currency. But that day is still far away.
