Business in brief in 27 Jul
Foreign Minister Marty Natalegawa has expressed optimism that the target of Indonesia-Vietnam trade of US$5 billion in 2015 will be achieved earlier than expected, Indonesia’s ANTARA news agency reported. The bilateral trade between Indonesia and Vietnam rose significantly by 53 per cent to US$4.7 billion last year from a year earlier, he said in a press statement issued on Wednesday. "The achievement showed that comprehensive partnership between the two nations has increasingly become more strategic," he added. Marty is in Hanoi to attend the Indonesia-Vietnam Joint Commission meeting on Wednesday and Thursday. At the two-day meeting, Marty and his Vietnamese counterpart Pham Binh Minh discussed various areas of cooperation including trade, investment, agricultural, political, maritime and socio-cultural.
State oil group PetroVietnam and Russia’s state-owned Zarubezhneft are considering a second joint venture in Russia that would explore for oil and gas in the Barents Sea, the Vietnamese firm said. Officials of the two firms discussed the possible new venture at a meeting this week, PetroVietnam said in a statement issued late on Thursday as Vietnamese President Truong Tan Sang began a visit to Moscow. PetroVietnam and Zarubezhneft have been pumping oil and gas off Vietnam’s southern coast through a 51/49 joint venture, Vietsovpetro, since 1981. A second venture, Rusvietpetro, has been working in Russia’s Nenetsky autonomous region since 2010, and aims to raise its crude oil output by 32.5 percent in 2012 to 2 million tons, or 40,160 barrels per day. Petrovietnam said the first oil from Rusvietpetro’s third field, West Hosedayuskoye, was expected during Sang’s visit to Russia this week, and the venture’s output would rise to 3 million tons in 2013.
Vietnam’s two-year bonds climbed for a seventh day, driving yields to the lowest level in more than two weeks, on speculation slowing inflation will increase room for interest-rate cuts. The pace of consumer-price gains dropped to a 32 month-low of 5.35% in July, the General Statistics Office said on July 24. The overnight interbank deposit rate fell 66 basis points, or 0.66 percentage point, to 2.56%, the least since June 11, according to data compiled by Bloomberg. The yield on two-year notes fell three basis points to 9.5%, the lowest level since July 9, according to a daily fixing from banks compiled by Bloomberg.
Individuals may be banned from taking gold bullion with them when they leave the country, the State Bank of Vietnam (SBV) said on July 25 in a draft circular on which it is collecting feedback from relevant agencies. The regulation also targets raw gold materials and includes an exception for those who wish to settle down in other countries, the central bank said. In the abroad settlement case, travelers are allowed to carry only 1 kg of gold, instead of the current 3kg limit. The SBV also aims to take control over gold jewelry and fine arts through a tax policy. Specifically, local and international travelers wearing gold jewelry weighing at least 300g when leaving Vietnam will have to declare with the customs agency and pay taxes. Last year the central bank also reduced the amount of foreign currency that can be taken out of the country without customs declaration from US$7,000 to US$5,000.
Since early this year, Vietnam has attracted US$8.03 billion in foreign direct investment (FDI), announced the Foreign Investment Agency (FIA). Accordingly, by July 20, the country had 584 newly-licensed projects with a total registered capitalization of US$5.2 billion that is just 55.9 percent of the figure recorded a year earlier. So far, the FDI projects have disbursed US$6.25 billion, 0.8 percent lower than the same period last year. Most of foreign investment went to the processing, real estate, retail and wholesale trade, transportation and healthcare sectors. Japan tops the list of countries and territories investing in Vietnam with US$4.29 billion.
Milan will facilitate preparations for activities and events to mark the 40th anniversary of Vietnam-Italy diplomatic ties in 2013. Milan’s Mayor, Giuliano Pisapia, confirmed this at a meeting with Vietnamese Ambassador to Italy Nguyen Hoang Long on July 25. At the meeting, the mayor said the city’s people always support and wish to further develop cooperative ties in economics, culture and education with Vietnam. Representatives from local economic groups expressed keen interest in Vietnam’s investment policy. The organization of Vietnam Year in Italy and Italy Year in Vietnam in 2013 is aimed at increasing mutual understanding in all aspects between the two countries, he added.
Vietnam wants to receive technical and financial assistance from the World Bank, especially in settling bad debts among businesses. The statement was made by Finance Minister Vuong Dinh Hue at a working session with Pamela Cox, visiting Vice President for East Asia and Pacific region of the World Bank (WB) in Hanoi on July 26. Hue also suggested the WB extend Vietnam’s access to the International Development Association (IDA)’s preferential loan facility, which is of importance to Vietnam, especially at time when Vietnam is making efforts to reduce poverty in 63 poorest districts nationwide and cope with climate change. The Vietnamese Government is currently focusing on building new rural areas in line with sustainable development, Hue said.
An exhibition to promote Vietnam’s tourism potential and opportunities for business cooperation opened in Bangkok on July 26. Various products of Vietnam ranging from textiles and garments, and information about its people and landscape drew the special attention of attendees. Nguyen Thanh Hung, Vietnamese Trade Counselor to Thailand, said the exhibition offers an opportunity for visitors to learn more about the country and its preparation to join the ASEAN Economic Community (AEC) in 2015. “We aim to introduce the benefits of developing travel products to Vietnam to our neighboring countries, especially Thailand”, Hung said. The event, jointly held by Vietnamese Trade Bureau and the Vietnamese Embassy in Thailand, marks the 70th anniversary of the Department of Foreign Trade under the Thai Ministry of Commerce.
The Prime Minister has approved a VND9,000-billion rescue package for farmers and businesses operating in the tra fish sector. According to Duong Ngoc Minh, Vice President of the Vietnam Association of Seafood Exporters and Producers (VASEP), the funds will be channeled through the Bank for Investment and Development of Vietnam (BIDV). However, local businesses are finding it hard to access the incentive loans with the lowered interest rate of 11.4 percent/year, even though they are facing numerous financial difficulties, he said. VASEP will continue working with the BIDV and the General Department of Fisheries to use the rescue package effectively and ease difficulties for producers and exporters, Minh stated. The funding aims to help local farmers and businesses realize the target of producing and processing 800,000 tons of fish by the end of this year.
The State Bank of Vietnam’s proposed tightening of lending in foreign currency is likely to be delayed until next year. The central bank on March 8 issued a circular on lending by credit institutions which said they would provide foreign currency loans to import goods and services only if borrowers demonstrate they would have sufficient foreign currency to repay the loans. But it is not clear how local businesses can establish that, Dau Tu newspaper reported. Lenders can provide short term loans to pay for imported fuel and for manufacturing projects in prioritized sectors if it is expressly approved by the central bank. Analysts said the new regulations would significantly reduce the number of people who can get foreign currency loans. Many enterprises that require foreign currency would have to buy it from banks instead of borrowing like they do at present. The new regulations are likely to affect trade at a time when exports are leading economic growth, they said.
Hyundai Nam Viet has been chosen by the parent company in South Korea to be sole distributor in Vietnam for commercial cars, multi-purpose vehicles and competed-built unit (CBU) from Jeon-Ju Company in South Korea. Speaking at a customer meeting yesterday in Ha Noi, Min Wang Sil, deputy general director of Hyundai Motors, said Vietnam imported between 1,500-3,000 cars and buses a year, making it one of the most dynamic markets in the region. At the meeting, Hyundai Vietnam and BIDV signed a comprehensive business agreement for BIDV to supply comprehensive banking products for Hyundai Vietnam to meet expanding business and investments.
FPT, the country’s giant software developer, posted VND11.5 trillion (US$546 million) in the first half of this year and a before-tax profit of VND1.2 trillion ($57 million), a slight increase over the same frame last year. During this period, after-tax profit of the parent company rose 6 per cent to VND753 billion ($36 million) and the average earning per share was VND2,788 ($0.13).
Ha Noi’s post and telecoms sector has so far this year earned nearly VND8 trillion ($381 million) in revenue, a 30 per cent year-on-year increase. The number of landline telephone subscribers in Ha Noi in the reviewed period was 1.1 million, 3 per cent down on the corresponding period last year. Meanwhile, the number of mobile-phone subscribers climbed to 12 million.
Prime Minister Nguyen Tan Dung has agreed for the Ministry of Planning and Investment to hold a conference to mark 25 years of FDI to the country in October. In that period, FDI projects have made a significant contribution to Vietnam’s socio-economic development. About 50 per cent of Vietnam’s export turnover came from FDI projects. FDI projects also help create jobs.
Confectionery giant Kinh Do Corp (KDC) posted a surprise loss of over VND39.2 billion (US$1.9 million) in the second quarter of this year, a poor performance compared to a profit of VND318 billion ($15.1 million) in the first three months. First-half profits totaled VND278.5 billion ($13.3 million). The loss was attributed to damage caused by the sale of its stake in domestic dairy producer Nutifood during the period. The company announced it had sold its remaining 2.7 million shares, or 18 per cent stake, in Nutifood. Specific figures have not been disclosed.
