Business in brief 25/11
Vietnam raised the benchmark interest rate to 8%, the first increase since January, and narrowed the dong’s trading band to 3% from 5%. The rate increase from 7% is effective from Dec. 1, according to a statement on the central bank’s Web site today. The dong will trade in a tighter trading band from tomorrow, the statement said. Signs of quickening inflation have increased pressure on the central bank to raise rates. Consumer prices gained 4.35% in November from a year earlier, the biggest increase since May, according to figures released by the General Statistics Office in Hanoi today. Inflation may accelerate to 6 percent by the end of the year, Deputy Prime Minister Nguyen Sinh Hung said last week.
Vietnam’s central bank has granted quotas for the import of 10 tons of gold since lifting an import ban earlier this month and 6.8 tons had already come in, state broadcaster VTV said on Wednesday. "The imports will have an impact on the local gold market," VTV quoted State Bank of Vietnam Governor Nguyen Van Giau as saying. He said the quotas had been granted to eight banks and three gold traders, it reported, without specifying names.
Vietnam’s central bank set Thursday’s mid-point reference rate for dong/dollar transactions on the interbank market at 17,961, it said in a statement on Wednesday. Wednesday’s rate was 17,034 dong per dollar. Earlier the central bank announced a one-off devaluation plus an increase in interest rates.
Vietnam’s decision to raise interest rates and devalue its currency are positive steps which will help stabilize its finances, but the moves will have no immediate impact on its credit rating, a sovereign credit analyst with Fitch Ratings said on Wednesday. "The monetary tightening and exchange rate measures will help stabilise its external financial position," Hong Kong-based analyst Vincent Ho told Reuters. "We were worried about this deterioration and finally they have taken these steps to stabilize the situation, which is good. But at this moment there are no rating implications." Vietnam’s central bank governor said on Wednesday the bank would raise the benchmark base rate to 8 percent from 7% effective Dec. 1 and announced a one-off devaluation in the dong, effective from this afternoon. In June, Fitch Ratings downgraded Vietnam’s local currency sovereign rating to BB-minus from BB, blaming sustained fiscal decline and structural weaknesses in its economy.
Siam Cement, Thailand’s largest industrial conglomerate, said on Wednesday it had signed a deal with Qatar Petroleum to invest in a petrochemical complex in Vietnam worth about USD3.5-4.0 billion. Under the framework agreement, Vietnamese partners including PetroVietnam and Vinachem would hold 29 percent of the project, while the remaining 71 percent would be held by non-Vietnamese partners, including Siam Cement, Qatar Petroleum International and a trading firm, it said in a statement. Qatar Petroleum would provide feedstock for the project.
Nova Scotia Premier Darrell Dexter will leave this weekend on a trade mission to Vietnam. Dexter will join key players in the transportation and education sectors for an Atlantic Gateway initiative designed to forge business ties with the Asian country. The premier says Vietnam is rapidly growing hub for container traffic and manufacturing and Halifax is positioned to be a key gateway to the North America for their products. The trade mission is being led by the Atlantic Canada Opportunities Agency. A number of education officials will accompany the mission to market the province’s colleges and universities as a destination for Vietnamese students studying abroad. The trade mission will go from Sunday to Dec. 3 and include stops in Ho-Chi Minh City and Hanoi.
Dung Quat crude oil refinery produced a total 935,938 metric tons of products by Nov. 17, Vietnam Oil & Gas Group said in an e-mailed statement Monday. The 148,000 barrel-a-day facility, which started commercial output in February, imported 1.45 million tons of crude oil in the period, according to the statement. Dung Quat refinery also sold 803,387 tons of its products, including LPG, propylene, gasoline, kerosene and diesel to the market, the company said. The country’s first refinery was shut from August until Oct. 1 after problems developed with a gasoline making unit called a fluid catalytic cracker. A fluid catalytic cracker takes vacuum gasoil and other so- called heavier fuel streams and processes them into gasoline, liquefied petroleum gas and petrochemicals. The unit allows refineries to use lower-cost crude oils.
Switzerland wants to boost trade with Vietnam as well as ties between their two governments, announced the National Council of Switzerland at a working session with a visiting delegation from the Vietnam National Assembly’s Economic Committee in Switzerland on November 23. The Swiss delegation, headed by Hansruedi Wanddfluh, said Switzerland is looking forward to Vietnamese President Nguyen Minh Triet’s scheduled visit in May 2010. Switzerland, which considers Vietnam a key to its economic ties with ASEAN, has praised Vietnam’s measures to counter the economic downturn and its success in slashing its inflation rate from 20 percent to six percent in 2009. The Vietnamese delegation’s working visit to Switzerland will run until November 24.
The Saigon Mechanical & Casting Joint Stock Company (Sameco) has successfully produced the first 100 metal valves for exports to Japan after two years of experimenting. The products are made by orders from two Japanese companies Moris and Nippon Daiya Valve (DNV). Sameco has bought a 10 billion VND modern metal casting line to produce the valves using Japanese technology provided by Moris. In 2010, the company will produce 200 tonnes of inox valves and 100 tonnes of cast iron valves for Moris and DNV under a 42.5 billion VND (2.36 million USD) contract.
