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  • 8/10/2019 200314Intellasia Finance Vietnam


    20 March 2014


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    finance & business news


    Lower saving rate,depositors prefer longterms


    On the first day after the saving rate cap was reduced to 6 percent/year, most new depos-itors chose medium and long-term deposits and turned away short-term ones.Right after the State Bank of Vietnam (SBV)'s decision to reduce the deposit interest rateceiling for less than six-month term to 6 percent/year, all large and small banks simulta-neously announced new interest rate benchmark. Notably, banks reduced the depositrates for not only less than six-month terms, but also in fact for medium and long-terms.

    At big banks, the lowest recorded interest rate for one month term of 5 percent/year be-longs the Joint Stock Commercial Bank for Investment and Development of Vietnam(Bidv-BID), followed by Vietnam Commercial Bank (Vietcombank-VCB) with 5.5 per-cent/year, and Vietnam Export Import Commercial JS Bank (Eximbank-EIB) with 5.8 per-cent/year starting from March 18.For terms from two to five months, interest rates were listed at 5.5-5.8 percent per year.Notably, the interest rate reduction was not only given to short terms, but also to longterms, with a fall of 0.3-0.5 percent. For example, at Bidv, the interest rate for six to 11month terms fell by 0.5 percentage points, from 7 percent per year to 6.5 percent per yearand it fell to 7 percent per year for 12 month term.In some other big banks such as Vietcombank, Vietnam Bank for Agriculture and RuralDevelopment (Agribank), Eximbank, etc. the deposit rate for 12 month term also reduced

    to 7.3-7.5 percent/year.

    FINANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

    Lower saving rate, depositors prefer long terms 1Sacombank to be put at disadvantages when merging

    with Southern Bank 3Eximbank to earn great profit on capital withdrawal from Sacombank 4Sluggish lending attributable to bad debts but not interest rates 4Foreigners unhappy with meager FOL rise 5High NPL limits rate reduction's support 6FX, gold trading via floors illegal in Vietnam: SBV 7Vietcombank to conform to US tax rule 7New stimulus package for agriculture discussed 8

    Cambodia, Vietnam aim for stronger trade links 9Vietnam sees Switzerland as major European partner 9Two-digit export growth expected this year: report 10Vietnam-EU FTA negotiations due for end of the year completion 11Small tax debts collected 11Vietnam ETF Roars as Bad Debt Effort Takes Shape 12Foreign capital inflows pour back into Vietnam 12Many giant groups face great debts 14Lax firms suffer as their brands are duplicated 15How much is Vinalines worth? 15Vinalines has new CEO 16Market heats up as big foreign retail mall exploiters turn up 17

    BIZ NEWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

    Business Briefs March 20 18Stocks up despite petrol price hike 19

    Many listed firms announce to advance 2013 dividend 19Hanoi improves competitiveness ranking 20Textile exports predicted to leap this year 20Texti le and garment sector urged to restructure soon 21Vietnam's fabric & garment exports up 19.3pct in Jan-Feb'14 21Vietnam's coffee sales slow as prices fall 22Vietnam imports over 70pct of dairy input 22Stable 2014 pepper output predicted 23Vietnam focuses on saving, effective energy use 23Fuel retailers raise petrol prices 24EVN has to spend 70b dong/day on using oil for

    electricity generation 24Power supply strained by gas pipeline leakage 25Power demand surges in south 25Quang Ngai looks forward to big-ticket gas-power project 26Russian firm says will build nuclear centre in Vietnam 26Quang Binh seeks $4b for 40 projects 27Vietnam raises pump prices on global hikes 28HK group opens new garment factory in Vietnam 28US investor joins $4 bil casino project in central Vietnam 28Lotte Mart to open four more supermarkets this year 29Site clearance delays highway upgrade 29Savills Vietnam gets new director 30SUZUKAKU builds a new factory in Vinh Phuc 30


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    Vietnam finance & business 20 March 2014

    Not only large state-owned banks adjusted down longer term deposit rate, but also

    joint stock banks lowered the saving rate for 12-month terms. At Tien Phong Commer-cial Joint Stock Bank (TPBank), the interest rate for 12-month term fell to 8.95 percentsince March 18 and it is just 7.1 percent per year at Dong A Bank. Or at PetrolimexGroup Joint Stock Bank (PGBank) which used to offer the highest interest rate in themarket also reduced the interest rate to 8.1 percent per year for 12 month term, and 9percent for 36 month term from March 18.Explaining the slight reduction of interest rate for long terms by banks, a Fund man-ager at a Hanoi-based Joint Stock Commercial Bank said, in addition to the capital re-structuring when the short-term interest rates fall, the simultaneous reduction ininterest rate for terms of from 12 months onwards is to help banks save and balancetheir cost of capital.It is not surprising that people choose to deposit long-terms instead of short-terms asbefore, the director revealed: "currently, only 40 percent of deposits choose short terms

    instead of the ratio 70 percent previously and most customers coming today for trans-actions choose to deposit for terms of from 12 months onwards."The "shift" to long-term deposits instead of short-term ones has been foreseen by theleader of the central bank as well as commercial banks before the central bank's interestrate cut policy came into effect. At his meeting on March 17, deputy Governor NguyenDong Tien also believed that the short-term interest rate will have a direct correlationto long term thereby people and businesses will benefit from long-term loans. He add-ed, in the current context of the market and inflation, the central bank had consideredimpacts before making the decision and forecasted that the influence will not be so big.Considering that the interest rate ceiling cut by 1 percent is a positive and reasonablemeasure of the central bank in the current economic context, Nguyen Duc Huong, per-manent vice President of Lien Viet Post Joint Stock Commercial Bank (LienVietPost-

    Bank) supposed that money will not be withdrawn from the banks to pour into otherinvestment channels such as gold or stock because the current reduction in interest rateis not strong enough to lead to a reduction in capital mobilisation sources but only re-duce the short-term deposits, and also increase the medium and long-term ones.This means the deposit terms shall be restructured, in which medium and long-termdeposits shall "attract" more depositors, said Huong.Bidv's deputy general director Tran Xuan Hoang also believed that banks have antici-pated the scenarios when lowering interest rates following the central bank's policy.With Bidv's deposit growth in the first two months of the year of 1.2 percent and 1.6percent in credit growth, the deputy director totally believed that people will stillchoose savings as a safe channel to keep their money though interest rate reduction.He stressed that "To say whether this interest rate reduction affects the bank's capitalmobilisation, I think it surely does, but it is not too much. Capital shall be still goinginto the bank and enough to supply to the credit division".Assoc. Pro. Dr Tran Hoang Ngan, vice Rector of Economics, University HCM Citysaid: if the target of restraining inflation becomes clearer, interest rates can be main-tained at 5-6 percent, enabling to reduce the lending interest rates and facilitate busi-nesses' capital access at banks to carry out their projects whereby supporting theeconomic growth.In addition, people who have idle money may look at other investment channels in-stead of putting their money into savings, such as investing in business and produc-tion or securities if they have knowledge of this field. Thus, capital will flow intobusiness and go into areas where capital is currently needed.In particular, total social investment capital in the last year has not been reached withlow growth. The reduction in interest rate shall promote investment and support job

    creation and economic development.What is important now is that we have to keep interest rate low and stable for a longrun. We have a clear ability to control inflation, and investors are willing to have me-dium and long loans to invest in machinery, equipment, product innovation and pro-ductivity improvement.

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    Vietnam finance & business 20 March 2014

    Declined interest rate also helps reduce the cost of using capital in businesses. The low-

    ered interest shall help interest rates in Vietnam to be compatible to the current rates,regional countries such as Thailand, Singapore, and Malaysia whose loan interest rateranges around 5-6 percent/year. This will help Vietnamese enterprises to compete fair-ly with foreign ones and enhance their competitive advantages in the international are-na.

    Sacombank to be putat disadvantages whenmerging withSouthern Bank


    Vietnam is the best stock market in Asia from the beginning of 2014 to date (increaselevel of 19 perce