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20 March 2014

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FINANCE

Lower saving rate,depositors prefer longterms

20/MAR/2014 INTELLASIA | INFONET.VN

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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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

20/MAR/2014 INTELLASIA | DAN TRI

Vietnam is the best stock market in Asia from the beginning of 2014 to date (increaselevel of 19 percent to date). In such brisk market, share of Saigon Thuong Tin Commer-cial Joint Stock Bank (Sacombank - coded STB) did not post the best performance.As per the analysis report sent to investors, ACB Securities Company (ACBS) reportedthat STB has been one of the best shares of the banking industry in recent years. Capi-talisation value increased from the third position to the first position in the group ofprivate banking shares ($673 million in October 2011 to $1.1 billion at current time).Compared to other bank shares, basic indexes of STB were most remarkable. Specifi-cally, return on equity (ROE) is 15 percent compared to ROE a number of Eximbank(coded EIB) and ACB and has exceeded two numbers of Vietcombank (coded VCB)and VietinBank (coded CTG). The return on assets (ROA) is 1.4 percent compared toROA (0.4 to 0.5 percent) of EIB and ACB and about 1 percent of VCB and CTG.Moreover, price of STB shares seems quite cheap compared to PE trailing and is 50 per-cent lower than the unweighted average level of VCB, EIB and ACB. Of course, the ac-tual data of the whole industry are still a question mark when bad debts are notrecognised completely, but these figures partially reflect basic things of shares.The chart of STB shares showed suspicious movements. Price of STB was almost flatin the second half of 2013 and increased 20 percent in January 2014 before rumour of

paying great dividend in cash. Yet, the bank announced to pay dividend in shares laterand share price was not adjusted. ACBS made the question: "May Vietnamese investorprefers paying dividend in shares?"The current bigger problem is merger plan with SouthernBank. Tram Be is a largeshareholder of Sacombank with ownership rate of nearly 7 percent and his familyowned 21 percent of stake in this bank. Thus, minority shareholders of Sacombankhave reasons to worry about the appropriate rate of share swap.Actually, with 21 percent owned family members in Southern Bank (the ownershiprate can be much larger when taking into account other relationships), Tram Be mustconsider this rate towards bringing benefits to Southern Bank, ACBC commented.It will not be easy to quantify current difficulties, but expert Mekong Man of ACBSsaid that it will be bad. Outstanding loans of Southern Bank are equal to 40 percent of

Sacombank but Southern Bank's chartered capital is equal to 32 percent of Sacombank.Net interest margin (NIM) is only a fraction of Sacombank.In addition, Phuong Nam is a net borrower; while Sacombank is a net lender in the in-terbank market (net borrowing rate of SouthernBank can be 2.5 trillion dong while netlending rate of Sacombank is estimated at 2 trillion dong. Mekong Man forecasted thatSouthernBank's bad debt rate can be many times higher than that of Sacombank ac-cording to the calculation of Moody's.In summary, the swap rate must be reasonable, minority shareholders of Sacombankwill suffer loss (if no), ACBS report noted.According to ACBS, Vietnam Asset Management Company (VAMC) plays a very im-portant role in this deal: How much VAMC will buy the bad debts and how muchthese bad debt costs. If the swap rate is calculated based on the value of current bookvalue (one STB share will swap 1.3 share of SouthernBank) will be a great big disad-

vantage for shareholders of Sacombank unless VAMC accepts to acquire most baddebts of SouthernBank.


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Eximbank to earn

great profit on capitalwithdrawal fromSacombank


According to the new investor support bulletin that was announced by ACB SecuritiesCo (coded ACBS), the company said that Vietnam Export Import Commercial JointStock Bank (Eximbank) will most likely to withdraw capital from Sai Gon Thuong TinCommercial Joint Stock Bank (Sacombank). Information was given based on a workingday of ACBS with Sacombank.Information comes ahead of an annual shareholders' meeting 2014 of Sacombank. Themeeting is expected to attract attention when it will be submitted to shareholders formerger with Southern Commercial Joint Stock Bank (SouthernBank) and dismissal ofmembers of director board. In a talk with Fica.vn. chair of Sacombank director boardPham Huu Phu said that he will return to Eximbank.In January 2013, Eximbank and Sacombank signed a cooperation agreement tostrengthen competitiveness. The agreement is effective for five years. Notably, the twosides will research, consider and submit to the shareholders' meeting and state compe-tent agencies for merger plan in three to five years later.At current market value, Eximbank will earn great profit from an investment after overtwo years of holding stake when it withdraws capital from Sacombank.On January 9 2012, Eximbank bought nearly 103.26 million STB shares from ANZ Vi-etnam at the price of 16,000 dong per share. Total investment value is 1.652 trilliondong.In June 2013, Sacombank paid first round dividend in cash at the rate of 14 percent andin the share at the rate of 6 percent. After payment stage, Eximbank received 145 billiondong and nearly 6.2 million shares. Eximbank increased the number of shares to 109.46million units, equivalent to holing rate of nearly 10 percent.In December 2013, Sacombank paid dividend in cash at the rate of 8 percent. Thereby,Eximbank received barely 88 billion dong of dividend.

Closing trading session of March 17 2014, each STB share was valued at 19,900 dong.Assuming that Eximbank sells STB shares at this price level, it will gain 2.178 trilliondong. Including dividend paid in cash, Eximbank will earn about 46 percent of theprofit from its investment in Sacombank after two years of holing.If selling Sacombank shares, Eximbank will recognise over 500 billion dong of profit inthe financial statement. Eximbank incurred 222 billion dong of loss in Q4/2013 andgained 658 billion dong of profit before tax.In case of Eximbank's capital withdrawal, two relevant organisations still hold largevolume of shares.Specifically, Exim Saigon Investment Joint Stock Bank holds over 500 million shares(including dividend of 6 percent) and Saigon-Asia Financial Investment Joint Stock Co- an organisation related to the chair of Sacombank director board Pham Huu Phu

holds over 28.4 million STB shares.

Sluggish lendingattributable to baddebts but not interestrates


Since March 18 2014, deposit interest rate ceiling has decreased from 1.2 percent peryear to 1 percent per year for deposits of non term and under one month. The maxi-mum interest rate has decreased from 6 percent per year compared to current levels of7 percent per year for deposits of one month and six months.Refinancing interest rates have decreased to 6.5 percent per year compared to levels of7 percent per year; rediscount interest rate has declined from 5 percent to 4.5 percentper year. The overnight lending interest rate in interbank electronic payment and in-terest rate of loans to offset capital shortages in compensation payment has loweredfrom 8 percent per year to 7.5 percent per year. Besides, USD deposit interest rate hasreduced to 1 percent per year instead of the current level of 1.25 percent per year.Deposit interest rates tend to decrease slightly, which will be a favourable condition tolower lending interest rate level. This information is expected to affect the stock marketin the week of March 17 to March 21 2014.According to Vietcombank Securities Joint Stock Co (coded VCBS), there is not muchmotivation for banks to further decrease lending interest rates. Limited output of


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banks is mainly due to bad debts, health and capital absorption capacity of enterprises

not unreasonable interest rates.According to own information of VCBS, most enterprises could easily access bank cap-ital in the past time. The main factor to promote credit growth of banks is loans withpreferential interest rate of 7 percent to 8 percent. Accordingly, there is a little geo-graphical balance that can be further decline from this interest rate level.Thus, if bad debt settlement does not have obvious changes, decrease in lending inter-est rates will mainly come from old loans.In stock market perspective, a strong point increase of the stock market and significantimprovement of liquidity in the first two months of 2014 have contribution of cheapprice flow in the context of maintaining economic stability and gaining better recoverypotential.Thus, a further decrease in deposit interest rates is a quite positive information and thestock market is expected to have good attraction and lure more money flow. This in-

formation can be a hick to help the market pass psychological resistance at 600 pointsthis week.VCBS said, to pass level of 600 points, blue-chips will be most likely to lead the mar-ket's increase momentum. Moreover, it is likely that industry-leading enterprises willcontinue to offer positive information in the shareholders' meeting and announcementof business results of Q1/2014 in coming time.Accordingly, investors can consider disbursing large capitalisation stocks that have agood foundation and are expected to have strong support information such as highdividend payment, optimistic business results of Q1/2014, good projects, etc., VCBSrecommended.

Foreigners unhappy

with meager FOL rise

20/MAR/2014 INTELLASIA | SAIGON TIMES DAILY

Strategic foreign investors on March 18 showed disapproval of a scant increase of theforeign ownership limit (FOL) in local banks.The central bank's Decree 01, which took effect late last month, caps the share owner-ship percentage of a foreign strategic investor at less than 20 percent of chartered cap-ital of a Vietnamese credit institution, five percentage points higher than that in theprevious Decree 69/2007/ND-CP.However, the total percentage of shares owned by all foreign investors in a domesticbank shall not exceed 30 percent, unchanged from the current regulation.In special cases, to restructure weak banking institutions, the prime minister may de-cide whether those ratios could exceed the limits on a case-by-case basis.Speaking at a seminar on business environment improvement in Hanoi on March 18,Nicolas Audier from the European Chamber of Commerce in Vietnam (EuroCham),

said the new ratio discouraged most foreign investors who are interested in investingin local banks.The decree contains no significant improvements as total foreign ownership at a bankremains at 30 percent while the 20 percent limit for strategic investors has been in placealready.Audier mentioned Asia Commercial Bank had been controlled by a group of share-holders while Standard Chartered Bank and the International Finance Corporation(IFC), which owned shares in the local lender, did not know about it. As foreign part-ners did not have enough power, they could not do anything positive for banks withtheir involvement.Vietnam should weigh a higher FOL, especially at a time when the banking industryis facing a lot of problems such as huge bad debt, complicated cross ownership andpoor governance. Without the involvement of strategic foreign partners, merging

weakened banks could not help settle bad debt, Audier said.Remco Gaanderse from ING Bank said the government should have raised the owner-ship limit applicable to foreign strategic partners to 50-51 percent, instead of 20 per-cent.If the 20 percent limit is maintained, Vietnamese banks still manage themselves and


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they cannot approach modern governance models of international banks, he said.

Mac Quang Huy, managing director of Maritime Bank Securities Company, said if theFOL was revised up five or 10 years later, the goal of attracting strategic foreign inves-tors to the nation to join the bid to solve bad debt would turn meaningless. "We shouldincrease the FOL right now," he stressed.However, representatives of government agencies expressed concerns over the sug-gestions.Nguyen Manh Hung at the banking strategy institute under the central bank said for-eigners now hold around 6 percent of total chartered capital of the banking system.Only some lenders such as ABBank and VietinBank have seen the strategic foreignroom full. Therefore, foreigners actually have yet to make strong investments in Viet-nam.However, foreigners strongly disbursed money into the local stock market in 2007 and2008 and then withdrew it. So, it is necessary to stay cautious, Hung added.

http://english.thesaigontimes.vn/Home/business/financial-markets/33600/Foreigners-unhappy-with-meager-FOL-rise.html

High NPL limits ratereduction's support

20/MAR/2014 INTELLASIA | VIR

The State Bank of Vietnam (SBV) yesterday announced to cut deposit rates and refi-nancing rate in order to spur the credit growth, but this action is likely to have littleeffect. Eugenia Fabon Victorino, economist of ANZ Banking in Asia Pacific, discusseswith VIR's Ngoc Linh.According to the SBV, the credit growth declined 1.66 per cent in the first two monthsthis year. In your view, what do you see are the reasons for the decline?In our view, the decline in outstanding credit is due to banks unwinding short termloans that were offered in the last two months of 2013. We believe a significant portion

of the loan growth in November and December 2013 had been offered in response tothe regulations set by the SBV at the latter part of the year to achieve full-year creditgrowth target. Without these temporary incentives which expired at the end of 2013,we believe the credit growth target of 12 per cent would not have been met. Hence, thecontraction in outstanding loans in the first two months of 2014 reflects what hap-pened in end-2013.The SBV yesterday cut rates to spur credit growth. In your opinion, how is this actioneffective?We see the latest reduction in interest rates as having a limited effect on credit growth.Since the start of 2014, banks have initiated a series of deposit rate cuts, while loan rateshave remained broadly stable since November 2013. We reiterate our view that thesluggish credit growth is more a reflection of tight credit supply due to high nonper-

forming loans.How will the rate reduction affect the fund mobilisation of banking sector?We expect the recent rate reduction to have a limited effect on fund mobilisation in thebanking sector. The SBV has been on an easing bias since 2012. Despite cutting variousinterest rates by more than 850 basis points, credit growth remains soft reflecting lack-luster domestic demand.We believe cutting deposit rates would further drive local depositors into Vietnam'sstock market as deposit accountholders search for higher yield. However, we still ex-pect credit growth to remain muted until much more is done in solving the structuralproblem of high non performing loans.Since last year, Vietnamese government has taken some actions to deal with bad debtslike the establishment of VAMC. But you mentioned the rate reduction would providelimited support to credit growth and the structural problem of high non-performing

loans continued to limit domestic demand keeping credit growth soft. How effectivedo you see government's recent actions to the economy?We see the establishment of the VAMC as positive in improving sentiment in the bank-ing sector. However, in our view, the capital allotted to the VAMC is not sufficient tofully solve the structural problem of bad debts in the system. We believe the imple-


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mentation of Circular No.2 without further delays should shed light on the true level

of non-performing loans in the system. Unless, there is more transparency on the mat-ter, we believe banks will continue to ration credit, thereby denying credit to certainsectors of the economy.To further spur the credit growth, what should SBV do in upcoming time?To spur credit growth, we believe more transparency on the level of nonperformingloans is required. To this end, we are constructive in our view on Circular No.2 whichshould standardise the classification of debt in banks' balance sheets. However, we be-lieve the announced delay of at least 6 months with regard to the classification of baddebts is a step back in policy.In the meantime, we think the SBV should promote credit growth to small and medi-um enterprises and the agricultural sector, while maintaining credit standards. In2013, it was reported that most of the credit was still focused on large entities and state-owned enterprises, depriving small and medium enterprises of much-needed capital.

http://www.vir.com.vn/news/en/money/high-npl-limits-rate-reductions-sup-port.html

FX, gold trading viafloors illegal inVietnam: SBV

20/MAR/2014 INTELLASIA | TUOITRENEWS

Forex trading conducted through accounts is a form of margin trading in which the networth of the accounts are constantly re-evaluated according to the fluctuations of cur-rency exchange rates or changes in the prices of commodities and raw materials, in-cluding gold, said Nguyen Quang Huy, director of the SBV's Foreign ExchangeManagement Department at a press conference in Hanoi."Forex trading via exchange floors is not a kind of trading activity intended to satisfythe foreign exchange needs of a nation, but it is purely a speculation," he said.According to Huy, local organisations and individuals can only carry out foreign ex-

change transactions in accordance with SBV rules with an authorised credit institution.Other exchange activities must be allowed by the prime minister and licensed by theSBV, Huy said.Despite never being treated as a legal trading activity, a number of local organisationsand individuals have engaged in this kind of trading in Vietnam, he added."In addition to legal risks in which rule breakers can be fined up to VND50-100 million,organisations and individuals also face the risk of paying a transaction fee to tradingfloor owners without knowing that they can intervene in the transaction process inways that are detrimental the traders," Tuan warned."In particular, the forex market is the most fluctuating and unpredictable among finan-cial markets," he remarked. "As investors in Vietnam still have limited access to infor-mation, the risk of losses is very high," he said.

This is the first time the SBV has stated its views on forex trading after announcing aban on gold trading via accounts, which took effective in March 2010.However, the SBV found that many underground exchange floors still operate widelyin Vietnam.In HCM City alone, dozens of companies are now participating in those activities.http://tuoitrenews.vn/business/18443/fx-gold-trading-via-floors-illegal-in-vietnam-sbv

Vietcombank toconform to US tax rule

20/MAR/2014 INTELLASIA | VNS

Vietcombank plans to be the first Vietnamese bank to conform to the US' Foreign Ac-count Tax Compliance Act (FATCA).The registration procedures are expected to be completed before April 25.The bank announced this in a news report earlier this month, as it selected the consult-ing firm KPMG Vietnam to advise it on the issue.FATCA is a set of new tax laws which will be effective from July 1, 2014. The US gov-ernment enacted the law in 2010 to prevent and detect tax evasion by US taxpayerswho are hiding income and assets overseas. The rules affect almost every financial in-stitution in the world, including those in Vietnam.


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Vietcombank deputy general director Nguyen Danh Luong said that, with this move,

the bank expresses the determination to comply with not only domestic laws but alsointernational conventions.The bank also aims to increase its prestige and competitiveness in international trans-actions, as it plans to expand agent networks worldwide.According to the bank, obeying FATCA means that financial institutions will save sig-nificant business costs, since the Act sets a tax rate of 30 per cent for those which do notconform. The tax will be imposed on revenues originating from the US, including in-terests, dividends and incomes from the liquidation of profitable assets.http://bizhub.vn/banking/4981/vietcombank-to-conform-to-us-tax-rule.html

New stimulus packagefor agriculturediscussed

20/MAR/2014 INTELLASIA | VNA

The State Bank of Vietnam and Ministry of Agriculture and Rural Development haveheld discussions on a new stimulus package to boost farming production chains andapply technology in agriculture.As of now, details about the value of the package, incentives, and lending conditionsare yet to be revealed. Major stakeholders are seeking lending mechanisms that can re-assure banks to offer loans to farmers and use the government's support policy.Although presently the State Bank encourages credit institutions to offer loans to farm-ers, they are hesitant because of high risk and the borrowers usually do not have col-lateral.In a cabinet meeting last month, the government requested the State Bank to work withthe Ministries of Agriculture and Science and Technology to outline a credit pro-gramme for the agriculture sector that provides preferential loans for models that pro-mote the linkage of farming production chains, scientific and technologicalapplication, and the linkage between production and export.

Director of State Bank's Credit Department Nguyen Viet Manh stated that time and de-tailed regulations were needed to launch a new stimulus package for agriculture."To ensure the effectiveness of the package, they have to review planning on the sub-farming sectors, production areas, and the linkage of input and output," he noted, add-ing that comprehensive examination can lead to sustainable financing or even bankswill be able to offer loans to borrowers without the need for mortgage.The package will also target large-scale production models and land consolidation.Vice director of State Bank's branch in HCM City, Nguyen Hoang Minh, claimed thatthis year, credit for farming and rural areas will focus on projects that applied technol-ogy or are related to farming product processing in order to improve the quality andcompetitiveness of the products.Chair of Vietnam Farmers' Association Nguyen Duy Luong remarked that although

since 2010, the government has passed a decision on credit for agriculture, rural areas,and farmers, the crediting was still limited.Beneficiaries somehow failed to show interest in such preferential loans due to limitedaccess.For instance, banks will not offer another loan if the borrowers did not pay the previ-ous ones, Luong reported, noting that the requirement was too strict.Former Governor of State Bank Cao Sy Kiem stated that a lending mechanism basedon production chain was new but reasonable, as it can meet the capital demands offarmers and farming enterprises and will help the banks to recover the issued loans.This will help to avoid scattered loans, he remarked.This year, loans for agriculture are expected to be worth 35-37 trillion VND (1.67 billion- 1.76 billion USD), about 70-85 percent higher than that of last year. Currently, the in-terest rate for agriculture loans are less than nine percent per year and the State Bank

is encouraging banks to lower the rate.http://en.vietnamplus.vn/Home/New-stimulus-package-for-agriculture-discussed/20143/47703.vnplus


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Cambodia, Vietnam

aim for stronger tradelinks

20/MAR/2014 INTELLASIA | VOV

The Association of Vietnamese Investors in Cambodia (AVIC) aims to lift its foreigndirect investment (FDI) in Vietnam to $4-4.2 billion in 2015.The figure was released at a meeting hosted by the AVIC in Phnom Penh on March 19to seek measures for trade promotion and business expansion of Vietnamese firms inthe Cambodian market.The Association is set to achieve a two-way trade turnover of $5 billion next year, anddrive up the number of Vietnamese visitors to Cambodia by 30 percent annually to 1.6million in 2015.Many local businesses showed their keen interest in the fields of agriculture, energy,aviation, finance, banking, health care, and infrastructure development.The AVIC hoped to boost Vietnam-Cambodia border trade and promote the exchangeof goods favoured by Vietnam such as fertilisers, petrol, and energy.Vietnamese ambassador Ngo Anh Dung spoke highly of Vietnamese businesses' in-vestment contributions to delivering economic benefits to Cambodian people as wellas strengthening traditional friendship, solidarity and cooperation between the twocountries.He asked the AVIC to enhance its role in creating a close link among local investors,and encourage its members to make further contributions to social welfare and com-munity development in Cambodia.By the end of 2013, the total Vietnamese investment in Cambodia reached over $3 bil-lion with 128 projects, ranking fifth among the largest foreign investors in the country.Vietnam also became Cambodia's third largest trade partner among more than 140countries and territories trading with Cambodia.Last year, Vietnamese firms raised $5 million for Cambodia's social welfare activities.http://english.vov.vn/Economy/Cambodia-Vietnam-aim-for-stronger-trade-links/

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Vietnam seesSwitzerland as majorEuropean partner

20/MAR/2014 INTELLASIA | TUOITRENEWS

The visit was made at the invitation of President of the Swiss National Council (LowerHouse) Ruedi Lustenberger.After an official welcome ceremony for NA Chair Hung at the headquarters of theSwiss parliament in Berne, the Vietnamese lawmaker held talks with his host.Chair Hung expressed his pleasure at the development of the two countries' friendshipand multifaceted cooperation over the past years.He hopes that Switzerland will continue encouraging its businesses to invest in Viet-nam, especially in finance, banking, insurance, high technology, chemicals and phar-maceuticals, the Vietnamese official added.

The chair also thanked the Swiss parliament and government for their support andprovision of official development assistance (ODA) to Vietnam.He told his host that Switzerland's ODA capital has been used effectively in Vietnam,contributing to the country's poverty reduction programme, rural development, envi-ronmental protection, and socio-economic development.He also invited President Ruedi Lustenberger to visit Vietnam and attend the 132ndInter-Parliamentary Union Assembly (IPU-132) to be held in the country in March2015.Meanwhile, President Ruedi Lustenberger highly valued the Vietnamese National As-sembly's adoption of a new constitution, describing it as an important milestone in thecountry's legislative work.He also agreed that the two countries will further promote their bilateral cooperationin all areas, saying that the Swiss parliament, with its experience, is ready to assist Vi-etnam in implementing the constitution.In order to develop the Vietnam-Switzerland comprehensive cooperation, the twocountries should maintain the exchange of all-level delegations, especially friendshipparliamentarian groups, and promote people-to-people exchanges, the two leaderssaid.


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Two-digit export

growth expected thisyear: report


A HSBC report released yesterday anticipates that Vietnam's merchandise exports willgrow at around 12 per cent annually between 2014-2016, although last year's figurewas 15.4 per cent in nominal US dollar terms.The HSBC Global Connections Report completed last December covered 23 marketswith a sample of 5,550 exporters, importers and traders from small and mid-marketenterprises on trade volume, buyer and supplier risks, and the need for trade finance,among others.It gauges sentiment and expectations on trade activity and business growth over thenext six months.Of the Vietnamese businesses surveyed, 70 per cent see Asia as the most promising re-gion for trade "over the next six months" (2014's H1). Europe was cited by 14 per centof respondents, reflecting the return to growth in the Eurozone; and 10 per cent select-ed North America.Almost 90 per cent of businesses surveyed trade elsewhere within Asia. Around 45 percent trade with Europe and nearly 20 per cent with the Americas.Vietnam's trading reach is becoming more international, with 10 per cent of businessesreporting trade with the Middle East and/or Latin America compared with less than 5per cent when the survey was first conducted in 2009.The currency of choice for trade is predominantly the US dollar, identified by almost80 per cent of respondents. But currency volatility is a concern for almost 40 per centof traders, and half of respondents reported that trade was negatively affected by weakproduct demand.The report says the economic growth rate is set to pick up in the medium term, helpedby a strong improvement in foreign direct investment. Lower inflation and credit con-straints will support domestic activity.

Rising incomes across emerging markets will help to drive strong trade flows from Vi-etnam to these markets.China will replace the US as Vietnam's largest export destination by 2030, while Ma-laysia will move from fifth place in 2012 to third place by 2030.The Asean Free Trade Area (ACFTA) will pay dividends, helping exports to Indonesiaand Malaysia to grow around 15 per cent a year until 2030.Clothing and apparel will still be Vietnam's biggest export sector in 2030, reflectingsustained wage competitiveness, but exports of ICT equipment are forecast to increaseby 10 per cent a year until 2030, by which time it will have become the second largestexport sector.China and Korea will still be Vietnam's largest import partners in 2030.Imports from India are forecast to rise rapidly, growing almost 20 per cent a year, mak-

ing India its third largest import partner by 2030.Industrial machinery is expected to account for more than 25 per cent of the growth ingoods imports, as Vietnam develops its infrastructure needs.Focus on technologyIn 2013 almost 20 per cent of Vietnam's exports were high-tech goods, up from around5 per cent ten years before.Vietnam imports slightly more high-tech goods than it exports; some are final consum-er products, but other high-tech imports are intermediate inputs into the ICT produc-tion process.Around a third of Vietnam's population now lives in cities. The rapid pace of urbani-sation should provide an increasingly skilled workforce to help the country developits foothold in global ICT. However, this will depend on increasing spending on R&D.http://vietnamnews.vn/economy/252564/two-digit-export-growth-expected-this-

year-report.html


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Vietnam-EU FTA

negotiations due forend of the yearcompletion


Vietnam and the European Free Trade Association (EFTA) are in Free Trade Agree-ment (FTA) negotiations and are expected to complete them by the end of this year.This information was released during talks between Vietnamese minister of Trade andIndustry Vu Huy Hoang and his Norwegian counterpart Monica Mland in Hanoi onMarch 19, as part of the Norwegian Crown Prince Haakon Magnus's official visit to Vi-etnam from March 18-21 at the invitation of Vietnamese State vice President NguyenThi Doan.The two ministers agreed that the FTA between Vietnam and the EFTA (comprisingIceland, Liechtenstein, Norway, and Switzerland) will boost bilateral trade ties andcreate a legal framework for investors from both sides.Minister Hoang thanked Norway for its continued support and called for relevant par-ties to speed up FTA negotiations and boost cooperation in hydro-electricity, naviga-tion aquaculture, and support industries.In response, the Norwegian guest pledged his determination to expedite FTA negoti-ations between Vietnam and the EFTA, with a view to taking full advantage of tradeliberalisation and fostering trade links.The two sides expressed hope that Vietnam-Norway trade and investment will contin-ue to grow, especially post signing of the FTA.They also reached consensus on exchange visits to promote mutual understandingand offer further cooperation opportunities in the future.A round-table discussion is due to be held among senior officials regarding the FTAbetween Vietnam and this bloc.http://www.dtinews.vn/en/news/018/33879/-vietnam-eu-fta-negotiations-due-for-endof the year-compeletion-.html

Small tax debtscollected


Despite efforts by customs officers, the amount of tax arrears collected is tiny com-pared to the total, with more debts categorised as irrecoverable now from beingtermed recoverable.According to the latest report of the HCM City Customs Department, as of February28 the total tax debts that must be recovered in the city amounted to VND1.65 trillionand are all overdue debts. The amount categorised as recoverable accounts forVND719 billion while VND904 billion is seen as irrecoverable.Compared to December 31, 2013, recoverable debts declined while others increasedsharply.However, only VND25.5 billion was collected among the debts incurred between July1, 2013 and February 28, 2014, equivalent to 2.62 percent of the target set by the general

Department of Customs.The HCM City Customs Department admits that such an amount is small and ac-counts for only 1.6 percent of the total tax arrears (VND1.572 trillion). Meanwhile, withdebts incurred on January 1-June 30, 2013, VND4.316 trillion was collected.A leader of the department told the Daily that it could be seen that debts were movingaround, reflected by the dropping recoverable debts and the increasing amount of po-tentially unrecoverable debts.It is because recoverable debts if not being collected will become potentially unrecov-erable debts, which will affect revenues for the State budget.According to the department, HCM City's import turnover reached $5.3 billion in theyear's first two months, up $270 million from last year's same period. Meanwhile, theexport turnover rose by $587 million to $5.48 billion.The amount of budget collected from export-export business in the period wasVND12.85 trillion, rising by 39 percent and equivalent to 17 percent of the target.http://english.thesaigontimes.vn/Home/business/vietnam-economy/33604/Small-tax-debts-collected.html


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Vietnam ETF Roars as

Bad Debt Effort TakesShape

20/MAR/2014 INTELLASIA | ETFTRENDS

The Market Vectors Vietnam ETF (NYSEArca: VNM) is not moving much Wednesday,but the lone Vietnam ETF resides just 4.7 percent below its 52-week high.A return to that high and additional gains are not out of the question for the $541.9 mil-lion VNM. More than 10 percent of VNM's current assets under management tally hascome into the ETF this year and more could be on the way as the Vietnamese policy-makers and central bankers continue enacting plans that make the frontier market anattractive destination for foreign capital. [Blue Chips Lift Vietnam ETF]State Bank of Vietnam Governor Nguyen Van Binh told Bloomberg the central bank isurgently trying to enact legislation "for a government-backed asset management com-pany, lenders and investors to buy and sell bad-debt assets and collateral at banks."The legislation is crucial because although VNM has tried higher on an annual basisover the past two years, the ETF tumbled in the second quarters of 2012 and 2013 dueto fears about the fragility of Vietnam's banking system, which has been riddled withbad loans and toxic debt. VNM allocates 37 percent of its weight to the financial serv-ices sector, the ETF's largest sector allocation. [Vietnam ETF Rallies on Higher ForeignOwnership Limits]"Moody's Investors Service estimated bad debt at Vietnamese banks comprised at least15 percent of total assets in a note last month," Bloomberg reported. The VietnameseAsset Management Company, that country's spin on TARP, has purchased almost $2billion in bad loans and debt since the end of 2013. In the past 90 days, VNM hassurged 20.1 percent, easily outpacing major emerging and frontier markets bench-marks in the process.On Monday, Vietnam's benchmark VN Index touched a new 52-week high Monday,helped by news of VNM buying some new securities to add to its lineup. VNM is add-ing food producer Masan Group and PetroVietnam Transportation along with real es-

tate firms Vingroup and HAGL, Reuters reported.Market Vectors Vietnam ETFhttp://www.etftrends.com/2014/03/vietnam-etf-roars-as-bad-debt-effort-takes-shape/

Foreign capitalinflows pour back intoVietnam

20/MAR/2014 INTELLASIA | VIETNAMNET

Investors ahoy!Bridge Capital and other five institutions have just spent a combined almost $23.7 mil-lion acquiring 25.5 million shares of the bourse-listed housing developer Nam LongGroup (NLG) through an additional offering.This is to some extent a happy end to a story that started in October 2012, when theymet each other at an international investment conference co-organised by Viet CapitalBank and Viet Capital Securities Co. (VCSC).

Until that day, Nam Long did not list yet. deputy director Nguyen Vinh Tran joinedVietnam Access Day 2012 with a presentation on opportunities to invest in his firm inthe hope of finding suitable investors for a placement. Fortunately, his dream has nowbecome a reality.Speaking at a ceremony held two weeks ago to mark the admission of the new share-holders, Nam Long chair Nguyen Xuan Quang said: "It's great that we've found part-ners who understand and want to work in concert, especially in a situation where thereal estate market is still in a tough time."Bridge Capital is happy too. The fund entered Vietnam in 2008 but it has been able tomake three investment deals only to date, with Nam Long being the latest.The organisers might be totally unaware of such outcome, but that was what theyhoped to see after the Vietnam Access Day 2012 event.Encouraged by sharpening enthusiasm among foreign investors for getting into Viet-nam, Viet Capital founders want to make Vietnam Access Day a periodic two-yearevent.Vietnam Access Day 2014 will provide investors with a complete panorama of the localeconomy as well as detailed information about specific sectors of interest. Businessleaders and think-tanks will converge to give presentations and host panel-led de-


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bates.

They will discuss a host of issues, including economic outlook, changes in consumertrends, risks to the banking system, and derivatives and new products for the stockmarket.The organisers hope to see 200 global investors at the event, where some 38 leading Vi-etnamese firms will be able to promote investment opportunities.Vietnam Access Day 2012 gathered 210 local and global investors, 60 representativesfrom leading Vietnamese businesses and 34 guest speakers, making it the largest eventof its kind about Vietnam.Come on in!Upon the financial crash and subsequent recession in the West, confidence evaporatedand capital fled for adventures in emerging markets. But since developed economiesshowed signs of turnround with the US Federal Reserve tapering its QE programme,funds have been retreating to the rich world.

The capital outflows from emerging markets would end shortly. History data trackedby a securities firm have shown that it takes 40-50 weeks for such a flight to cease. Ifhistory repeats itself, this means funds will stop fleeing emerging markets from Aprilor May, and even reverse their trend towards Asia.Vietnam has emerged as a more attractive market as regional peers such as Thailandis facing political instability, Indonesia will host a presidential election and possiblesubsequent changes, while the Philippines is characterised by relatively expensivestocks. Even China's official non-manufacturing PMI is worsening.The local bourse generated a return of roughly 22 per cent last year and a 16.23 per centplus in the first two months of this year, an adequate reward for the risks foreign in-vestors are taking. Moreover, Vietnam's political and economic stability alongsidestronger efforts to reform the banking system, state-owned enterprises and the econo-

my as a whole are beckoning investors.Many offshore institutional investors have expressed an interest in Vinamilk, REE,DHG Pharma, FPT and Binh Minh Plastics, but few opportunities exist for further in-vestment. So, the long-awaited decision to lift foreign ownership cap to 60 per centfrom the present 49 per cent should attract certain foreign capital inflows once ap-proved, although stock prices have already taken the information into account.So far this year, net buys by foreign investors reached $133 million, equivalent to asmuch as 40 per cent of last whole year. While exchange-traded funds (ETFs) still makeup a significant portion of foreign capital inflows, many other funds are much moreactive now. One foreign fund jumped in right after the country's traditional Tet holi-days and two others are mulling an entry. Meanwhile, some existing leading fundshave successfully raised new capital, thus indicating that a significant amount of mon-ey is pouring in."Foreign investors show more and more interest in Vietnam's market," research headwith a securities firm said. "Specifically our institutional research team has receivedmany offshore institutional investor visits to Vietnam in the year to date. This year, for-eign investors tend to diversify their assets to more stable and potential markets andwe think Vietnam is one of the markets they are keen on. When they visited Vietnam,they showed more interest in such sectors as consumer, oil and gas and affordable res-idential real estate which are closely tied to Vietnam's growth."A picture is worth a thousand words, goes a popular saying. Vietnam Access Day 2014will provide investors site visits to Dat Xanh Group's housing projects, Vinamilk's fac-tory and HCM City Infrastructure Investment Co.'s Thu Duc water plant. The overallpicture should be rosy enough and foreign investors might view Vietnam a destina-tion, rather than just a stopover.

http://english.vietnamnet.vn/fms/business/97826/foreign-capital-inflows-pour-back-into-vietnam.html


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Many giant groups

face great debts

20/MAR/2014 INTELLASIA | INFONET

Besides fame due to huge profit each year, owners of groups are also the first and thesecond largest debtors at banks for their loans worth up to several trillion dong.HPG's liabilities are higher than equityIn 2013, revenue from sales and service supply of Hoa Phat Group Joint Stock Co (cod-ed HPG) reached over 19.2 trillion dong, increasing 13 percent compared to that of2012 and exceeding the plan by 4 percent. This group announced 1.954 trillion dong ofnet profit, two times higher than levels of 2012 and exceeding set target by 63 percent(1.2 trillion dong).As of December 31 2013, inventory value reached nearly 8 trillion dong, up over 1 tril-lion dong compared to beginning of 2013. Although announcing greater revenue andprofit, HPG's total liabilities far exceeded equity in late 2013.Specifically, liabilities as of December 31 2013 reached 13.377 trillion dong, up nearly3 trillion dong compared to the beginning of 2013 (including 11.012 trillion dong ofshort term debts and 2.365 trillion dong of long term debts). Meanwhile, HPG's equitywas at 9.498 trillion dong in late 2013, approximately 4 trillion dong lower than totalaccount payable at the same time.Ocean group takes loans at high interest ratesAccording to the financial statement of 2013, Ocean Group Joint Stock Co (coded OGC)gained 290.6 billion dong of profit before tax, up 66 percent and 168 billion dong ofprofit after tax, up 80 percent.Yet, this group announced loans worth trillion dong at very high interest rates (savinginterest rate in 12 months plus 7 percent per year), Ocean Group incurred nearly 500billion dong of borrowing interest in 2013. In Q2/2013, OGC and its branches had 558.7billion dong of long term loans from OceanBank. OGC owns 20 percent of capital inthis bank.

Statistical loans reached 1.535 trillion dong in 2013, including 452 billion dong of loanfrom HDBank (up 416 billion dong), 97 billion dong of commercial loans from Ocean-Bank, etc. 918 billion dong of due loans includes 500 billion dong of SouthernBankbond, 200 billion dong of HDBank bond, 500 billion dong of Techcombank bond atcoupon rate of 10 percent per year and commercial loans of Oceanbank that will be duein 2014. In addition, OGC had 2.079 trillion dong from commercial banks and othercreditors.HAGL's debts hit the recordAccording to the financial report of late 2013, Hoang Anh Gia Lai Joint Stock Co (codedHAGL) had the second largest loan balance in the stock bourse with 14.255 trilliondong of borrowed money.HAGL is multi-sectoral group that owns a series of rubber and sugar cane projects.

This group announced to leave the domestic real estate market, but it expanded prop-erty business in Myanmar. In 2013, HAGL sold six hydropower projects.According to the latest figures, this group issued 8.376 trillion dong of bonds to part-ners and banks. Bank loans as of the end of 2013 reached 5.879 trillion dong. Short termloans reached 2.689 trillion dong. Specifically, the group had 1.097 trillion dong ofloans from Bidv, 921 billion dong of loans fro Vietcombank, 499 billion dong of loansfrom Sacombank, 100 billion dong of loans from Viet-Lao Bank, 47 billion dong ofloans from Vietinbank, 17 billion dong from Agribank and 5 billion dong from theSHB. Total long term loans reached 4.046 trillion dong. Of which, the group had 1.784trillion dong of loans from Bidv, 1.164 trillion dong of loans from Sacombank, 480 bil-lion dong of loans from Eximbank, 332 billion dong of loans from Lao-Viet Bank, 147billion dong of loans from ACB, 126 billion dong of loans from Vietcombank, etc.

Lax firms suffer astheir brands areduplicated


Poor vigilance by Vietnamese companies has allowed the trademarks of their well-known products to be mimicked by foreign competitors - a situation that is likely toescalate if left unchecked.Some 25 per cent of Vietnamese enterprises don't allocate a budget for branding, while


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70 per cent invest a little without forming any strategies and 5 per cent run compre-

hensive strategies for branding and marketing.The case against fake trademarks spoofing Buon Ma Thuot coffee in China earlier thisyear, which involved costly legal proceedings, has reignited a sense of self-preserva-tion in the business community.Other major brands such as Trung Nguyen Coffee and Phan Thiet Fish Sauce, Vinata-ba, were also illegally registered abroad to cash in on their fame. It is also extremelyexpensive and time-consuming for Vietnamese firms to fight against trademark in-fringement.These notorious incidents have set a precedent for trademark nfringement against Vi-etnam's products, thus damaging the reputation of the genuine product and stealingthe producer's revenue.If enterprises don't make a concerted effort to invest in the development and protec-tion of their brands, they may have to pay a much heavier price later on.

However, it seems that Vietnamese companies have not fully understood the signifi-cance of this issue, said Vo Tri Dung, an industry expert.The bulk of the country's exports, including rice, fruit, and fisheries products, lack ma-jor brand names, stated Tran Huu Hiep, head of the South-West Region Steering Com-mittee's Economic Department.Hiep noted that the task of creating location-specific brand names for key productswith cooperation between the government, farmers, scientists, and corporations hadbeen attempted in the past but had not been very successful.On the global market, products that are made in Vietnam are overshadowed by for-eign brands; in many cases, they have to rely on these foreign brands to help them pen-etrate world markets as subcontractors.Their intellectual property rights are infringed upon by competitors, or they get ex-

ploited in foreign markets.The Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry hassuggested that building a national programme to increase awareness and support lo-cal enterprises in building, protecting, promoting and developing their brands is anurgent and strategic requirement.On the other hand, cooperation between the state and the business community alsoplays an important role in promoting a common image for Vietnamese products,which is seen as a cost-effective, time-saving way to facilitate penetration and to gaina strong foothold in foreign markets for individual Vietnamese brands.Speaking on issues affecting the export of local products, Fabienne Berger-Remy, a lec-turer in marketing and brand management at IAE Paris, pointed out that culture andlocation were important factors in brand building, which explains why adaptation isnecessary when approaching a new market.However, she warned, enterprises should be very cautious in determining the degreeof adaptation they will follow while retaining the signature style of their products.L'Oreal, IBM, Coca Cola, and Apple, as well as Disney are icons of success that Viet-namese companies nurturing dreams of international branding can emulate.http://vietnamnews.vn/economy/252571/lax-firms-suffer-as-their-brands-are-dupli-cated.html

How much isVinalines worth?

20/MAR/2014 INTELLASIA | TBKTSG

The investors' thoughts now concentrate on the IPO of the Vietnam National ShippingLines (Vinalines) which would go equitised in the first quarter of 2015.Vinalines has been found in the list of the state owned economic groups and generalcorporations which must go equitised in 2014-2015. The minister of Transport Dinh La

Thang has also shown the ministry's determination to fulfill the equitisation soon,which "not only aims to collect money from the stake sale, but also to change the man-agement platform."However, investors do not know well about Vinalines. What they have heard is thatVinalines is incurring losses, while two of its subsidiaries - Vinashinlines and Falcon -


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are following the procedures to declare the bankruptcy, but it is still really attractive.

Figures make investors confusedOn Vinalines' website, investors can read that the corporation made a profit ofVND1.241 trillion in 2010, VND62 billion in 2011. However, it took a loss of VND2.439trillion in 2012. Meanwhile, there is no figure about profit in 2013.As such, if referring to the information on the website, the corporation began takingloss in 2012.Meanwhile, the Report No. 146/BC-CP dated June 12, 2012 submitted by the govern-ment to the National Assembly showed that the general corporation met big difficul-ties in 2011, when it incurred the loss of VND434 billion after it made a profit ofVND142 billion in 2010 and VND317 billion in 2009.As such, if referring to the government's report, the corporation began taking loss in2011.In another document - the government inspectors' report about Vinalines' capital use,

management and total assets in 2007-2010, one can read that Vinalines took a loss ofVND412 billion in 2009 and VND1.274 trillion in 2010, a very big loss.As such, if referring to the government inspectors' report, Vinalines began incurring aloss in 2009 already.The different statistics released by different sources have made investors puzzled.They cannot find the answer to the question how big the Vinalines' accumulated lossis.What are Vinalines' debts like?The government's Report No. 146 showed that by the end of 2011, Vinalines' totaldebts had reached VND43.135 trillion, including VND9.309 trillion worth of shortterm debts.Unable to pay debts, Vinalines has to negotiate for the debt restructuring. minister of

Transport Dinh La Thang reported at the November 2013's National Assembly's meet-ing that Vinalines had restructured VND7.885 trillion worth of debts at BIDV.Meanwhile, it had successfully negotiated with the other creditors on the delays ofdebt payment.In the latest news, at the working session with the Ministry of Transport on February24, Vinalines affirmed that it had drawn up the plan on restructuring the VND54.7 tril-lion debts incurred by the holding company and subsidiaries, and restructured the$196 million loans with foreign credit institutions and restructured the VND43 trillionloans with domestic banks.The question about Vinalines' total assetsAnalysts believe that the assets of the corporations mostly lie in its fleet and sea ports.The northern ports, namely Doan Xa and Dinh Vu, have been operating well with theprofits sometimes equivalent to 100 percent of their chartered capital. The ports in thecentral and southern regions have been less profitable, but satisfactory, despite theshipping crisis.Meanwhile, there is not much information about the current situation of its fleet aftera lot of purchase and sale deals made recently.http://english.vietnamnet.vn/fms/business/97818/how-much-is-vinalines-worth-.html

Vinalines has newCEO


Le Anh Son has been appointed general director of the Vietnam National ShippingLines Corporation or Vinalines. Son will officially assume the position from March 20.Son, who is currently Vinalines deputy general director, will replace the predecessor -Nguyen Canh Viet, who has just been promoted to the position of deputy director ofthe Storm and Flood Control Committee of the Ministry of Transport.

Son was born in 1971 and holds an MA in Finance - Banking. He used to serve as di-rector of the Maritime Consulting Company and Head of the Financial ConsultingCommittee of Vinalines. He is the 2nd child in a family with several generations work-ing in the transportation industry.In 2013, Vinalines did not operate effectively when its key business - cargo shipping -


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remained losses. Meanwhile, the equitisation process went slowly.

At the conference on restructuring State-owned enterprises last month, prime ministerNguyen Tan Dung criticised Vinalines for slow equitisation. At present, up to 11 sub-sidiaries of Vinalines are not equitised yet.Also at the conference, the prime minister asked ministries and localities to replaceleaders of the State-owned businesses where equitisation is performed slowly.Transport minister Dinh La Thang said that he replaced two leaders (General directorand Chair) of the Traffic Engineering Construction Corporation No. 8 (Cienco8) for thesimilar reason.http://english.vietnamnet.vn/fms/business/97849/vinalines-has-new-ceo.html

Market heats up as bigforeign retail mallexploiters turn up

20/MAR/2014 INTELLASIA | DNSG

Parkson has returned, while Ocean Group has jumped into the HCM City market. Themoves taken by the big guys are believed to heat up the market.Any slight commotion by the "big guys" would have influences to the retail premisesmarket.On March 15, Parkson, the big guy from Malaysia, took delivery of six trade floors atLeman Luxury Apartments in district 3 developed by C.T Group. This is the secondproject co-developed in cooperation between Parkson and C.T Group. The other oneis Parkson Shopping Mall at C.T Plaza in Tan Binh which has been operational.Prior to that, in December 2013, the shopping mall exploiter, belonging to MalaysianLion Group, inaugurated another shopping mall in district 2, its eighth shopping mallin Vietnam.As such, Parkson has developed nine shopping malls, including six in HCM City, twoin Hanoi and one in Hai Phong City) with the total floor area of 172,000 square meters,since the day it arrived in Vietnam in June 2005.

The retail premises area occupied by Parkson Vietnam is the third largest among thesix markets Parkson has invested in so far, including Malaysia, Indonesia, China, SriLanka, Myanmar and Vietnam.However, the number of Parkson shopping malls in Vietnam is really modest if com-pared with China, Malaysia, Indonesia and Sri Lanka.Tham Tuck Choy, general director of Parkson Vietnam, said 2013 was a difficult yearfor Parkson and retailers, but declined to talk about the revenue.However, The Edge Financial Daily has reported that the revenue of Parkson HoldingsBhd, which holds the controlling stakes of Parkson Retail Asia, was lower by 4.2 per-cent in the first quarter 2014 than the 2013's first quarter, while the shopping malls inVietnam's revenue decreased by 2 percent.Though the market is getting tougher, Parkson still keeps confidence on the long term

potentials of the Vietnamese market. It plans to open one or two more shopping mallsa year, after considering the market performance and the retail premises market.In 2014, a shopping mall would be opened in the central city of Da Nang, while Park-son are looking for retail premises to set up more shopping malls in Hanoi and HaiPhong.Also in March 2014, South Korean Lotte Group put its seventh Lotte Mart in Vietnaminto operation. This is one of the three shopping malls the group plans to set up thisyear. The other two are located in the Go Vap district in HCM City and in Can ThoCity.The Japanese Aeon would put its second shopping mall into operation in Binh Duongprovince after it opened the first one in Tan Phu district in HCM City.Not only foreign investors, Vietnamese corporations have also jumped into the mar-ket. Ocean Group is about to inaugurate a shopping mall on the Van Thanh "golden

land plot" in HCM City.The ambitious business plans to develop 70-80 Ocean marts and Ocean malls nation-wide by 2015 which would cover the area of 200,000 square meters in total.Ocean Group, together with Vincom, the Vietnamese financially powerful groups, arebelieved to be the redoubtable rivals for foreign investors.


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Ocean Group has made its presence in the southern market by developing the five Vis-

sai Hotel.http://english.vietnamnet.vn/fms/business/97819/market-heats-up-as-big-foreign-re-tail-mall-exploiters-turn-up.html

BIZ NEWS

Business Briefs March20

20/MAR/2014 INTELLASIA

* EI.T Investment Company (FIT) has announced March 26 as the ex-dividend date topay 2013 share dividend for existing shareholders at the 5: 1 ratio and issue over 10.2million shares at the 5:1 ratio and issue over 10.2 million shares at the 100:65 ratio* CSC Vietnam Joint Stock Company has bought 680,000 shares of Pan Pacific Corpo-

ration (PAN).* Gia Lai Electricity Joint Stock Company has offloaded around five million shares ofGia Lai Cane Sugar Thermoelectriciry Company (SEC), an 18.3 percent stake. Gia LaiElectricity Joint Stock Company has offloaded around five million shares of Gia LaiCane Sugar Thermoelectriciry Company (SEC), an 18.3 percent stake.* Thanh Thanh Cong Tay Ninh Company (SBT) has decided to contribute VND189 bil-lion to establishment of Thanh Thanh Cong Alcohol Trading Production Joint StockCompany to secure a 90 percent stake in the latter.* Kim Cuong Investment Joint Stock Company has sold over 902,000 shares of VungTau Real Estate and Construction Company (VRC) to reduce its holding from 14.5 per-cent to 8 percent.* Vietnam Property Fund Limited has sold nearly 4.2 million shares of Hoang Anh GiaLai Company (HAG), or a 0.6 percent stake.* Sacombank has launched a promotion programme to refund 10 percent of transac-tion value to customers who pay electricity, water, telephone and Internet bills via itsiBanking service from now to June 3.* Vietcombank has got approval from the central bank to inaugurate a branch in BinhDuong Province.* Tan Tien Plastic Packaging Company (TIP) plans to buy back over 1.4 million sharesas treasury shares at VND28,000-33,000 each. Transactions will be made from March27 to April 25.* Chailease International Leasing Co. Ltd has obtained approval to open a representa-tive office in Can Tho City while Mirae Asset Financial Company has been allowed toestablish a representative office in Binh Duong Province.* The central bank has given approval to HSBC Vietnam Bank to raise its chartered

capital from VND3 trillion to over VND7.5 trillion.* Saigon-Hanoi Commercial Bank has cooperated with Smartlink Card Service JointStock Company to help its customers make online payments on websites of Smart-link's partners.* Hoang Anh Saigon Real Estate Company has offered for sale apartments of the HungNgan Garden project at a price starting from VND10.9 million per square meters. Lo-cated in HCM City's District 12, Hung Ngan Garden consists of four 22-floor blocksproviding over 1,300 apartments of 53-65 square meters. Apartments will be trans-ferred in next year's first quarter.* Lock&Lock has opened the first Cas a Zen furniture store in HCM City, which is alsothe second store of the kind in Vietnam. The new store is on level 4 of Crescent Mall inDistrict 7. On this occasion, Lock&Lock is offering discounts of up to 30 percent on all

products at Cas a Zen until March 31.* Saigon Railway Station will operate more HCM City-Nha Trang train journeys fromApril 29 to May 3 to meet the increasing transport demand in the Reunification Day-May Day holiday. Besides, trains running from HCM City to Phan Thiet, Quy Nhon,Hue and Hanoi will be added with more carriages in the period.* Binh DuongWater Supply, Sewerage and Environment Company (Biwase) on Mon-

BUSINESS


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day kicked off the project to upgrade Ba Bo Canal's section in Binh Duong Province's

Thuan An Town. The project worth over VND345 billion will be finished after eightmonths.* Toyota Vietnam yesterday introduced the all new Vios 2014 with four models, in-cluding Vios 1.5G priced at VND612 million, Vios 1.5E at VND561 million, Vios Limoat VND529 million and Vios J at VND538 million.

Stocks up despitepetrol price hike


Shares advanced on both the national stock exchanges yesterday despite a hike in theprice of petrol.The petrol price hike was expected to have a negative impact on the stock market dur-ing the afternoon trade. However, the market moved against expectations due to sig-nificant capital inflows and firm investor confidence.On the HCM City Stock Exchange, the VN Index added 5.74 points, or as much as 0.96per cent, to close yesterday at 605.59 points, as it recovered from Tuesday's loss.A total of more than 192 million shares changed hands yesterday with the total tradingvalue reaching VND3.2 trillion (US$152.3 million).With gainers overwhelming losers by 19-4, the VN30-Index, tracking the southerncity's 30 largest shares by capitalisation and liquidity, gained 1.23 per cent to end theday at 681.94 points.The Tan Tao Group (ITA) was the pick of the investors yesterday as more than 18.5million of its shares changed hands and led the bourse in terms of liquidity.Shares of ITA increased by VND600 (US$0.028) per share to its ceiling price ofVND9,500 (US$0.45) after the news that the group was working with a French electric-ity group on the Kien Luong 1 Thermoelectric Plant project.Banking stocks were also active yesterday after the State Bank of Vietnam amended

the Circular 02 about bad debt. Vietinbank (CTB), Eximbank (EIB), Military Bank(MBB), Sacombank (STB), and Vietcombank (VCB) all closed in the black.Other big gainers included FPT Group (FPT), Hoa Phat Group (HPG), Hoa Sen Group(HSG), and Ocean Group (OCG).Those gains pushed the benchmark indices to close higher, while the shares of Petro-Vietnam Low Pressure Gas Distribution (PGD), PetroVietnam Transportation (PVT),Ree Corporation (REE), and Vinamilk (VNM) dropped.Overall, 183 codes on the southern bourse gained, while 55 codes lost values.On the Hanoi Exchange, the HNX-Index posted a gain of 2.38 per cent to end at 89.68points and the HNXFF-Index closed at 90.38 points, with an apparent rise of nearly2.95 per cent.Liquidity was at a high level as the total trading value reached VND1.4 trillion

(US$66.7 million) and nearly 130 million shares were traded.The HNX30-Index, tracking the top 30 stocks, advanced 3.73 per cent to finish at 183.97points.A record of more than 31.4 million shares of the Sai Gon - Hanoi Bank (SHB) success-fully changed hands yesterday, the highest recorded level for a stock to be traded in asingle trading session.http://vietnamnews.vn/economy/252561/stocks-up-despite-petrol-price-hike.html

Many listed firmsannounce to advance2013 dividend

20/MAR/2014 INTELLASIA | DAU TU CHUNG KHOAN

Some listed companies on Hochiminh Stock Exchange (STC) have just announced theBoard of directors' Resolution on 2013 dividend payment.Accordingly, four companies including Tuong An Vegetable Oil Joint Stock Co (TAC),Seaprodex Refrigeration Industry Corp (SRF), Import Export & Economic CooperationJoint Stock Co (SAV) and Petrolimex Insurance Corporation (PGI) shall advance 2013dividend to their shareholders in the near future. Specifically:TAC: the Company's Board of directors has approved 2013 dividend payment of 16percent in cash (equivalent to 1,600 dong/share) starting from May 16, 2014. Ex-interestdate is on March 25. Registration deadline date for shareholders is March 27.


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SRF: the Company's Board of directors has decided to close the list of shareholders to

make temporary dividend advance for February 2013 in cash at a rate of 12.5 percent(equivalent to 1,250 dong/share). Time for payment is scheduled to start from April 02,2014.Previously, SRF have advanced 10 percent of 2013 dividend at the end of September2013 also in cash. SRF is expected to pay 2013 dividend at 35 percent.SAV: The Company's Board of directors agreed to make advance payment of 2013 div-idend of 4 percent in the second quarter of 2014. Specific time for payment is decidedby the general director. In 2013, SAV planned to pay 25 percent of dividend in stock.PGI: The Company's Board of directors has decided to advance 2013 dividend of 8 per-cent, lower than the previously set rate of 10 percent. At the same time, the Board alsodecided to organise annual general meeting (AGM) at 8.30 am on April 23, 2014 at Dae-woo Hotel, 360 Kim Ma, Ba Dinh, Hanoi.

Hanoi improvescompetitivenessranking


Hanoi climbed up 18 notches from 51st to 33rd place in the latest 2013 provincial com-petitiveness index (PCI) rankings released on March 20.The central city of Danang topped Vietnam's 2013 PCI list for cities with 66.45 points,marking the third time it carved out the lead, though it only placed 12th overall.A number of provinces in the Mekong Delta region were cited among the top fiveprovinces on the list, including Kien Giang (63.55 points, 3rd) and Dong Thap (63.35points, 5th).HCM City - the economic hub of the south - leapt up three steps to make it into the 2013PCI's top ten.The central province of Thua Thien Hue secured 65.56 points and 2nd position, whilethe northern province of Quang Ninh ranked fourth, eking out 63.51 points.

Many northern mountainous provinces were listed among those with the lowest PCI.http://english.vov.vn/Economy/Hanoi-improves-competitiveness-ranking/274453.vov

Textile exportspredicted to leap thisyear


Some major firms in the apparel industry have predicted the industry's export valuethis year to grow by a staggering 30 percent this year given the strong demands in Vi-etnam's traditional markets.Nguyen Van Thoi, board chair of TNG Investment and Trading Joint Stock Companyas a major apparel exporter, told the Daily that he had observed greater demands, andthe growth rate of Vietnam's textile industry is expected to hit 30 percent.According to the Vietnam Textile and Apparel Association (VITAS), the industry last

year obtained export revenues of $20 billion, a rise of 18.7 percent against 2012. Of all,textile and garment shipments accounted for $17.9 billion while yarn fetched $2.1 bil-lion.The turnover is projected to reach $26 billion this year, Thoi said, adding many enter-prises have had full orders for 2014.Foreign clients consider 2014 a golden year for Vietnam's enterprises because manybuyers of Vietnam's apparel products had cleared all stocks last year.TNG's export revenues climbed to over $70 million last year, with exports to the USrepresenting 60 percent of the company's total export sales. Thoi expected his compa-ny's apparel exports to fetch nearly $100 million this year.Bui Van Tien, CEO of Viet Tien Garment Joint Stock Company, also expressed his sur-prise over the fast-growing rate in the industry."More and more orders are flowing to Vietnam. At the moment, we can choose betterones instead of taking them all with low prices previously," said Tien.Even though things have turned out to be more optimistic, fierce competition in pricesis also a concern. Therefore, firms with low capacity may run into difficulty.VITAS said Vietnam's exports to the US, the EU and Japan last year generated $8.6 bil-lion, $2.7 billion and $2.3 billion respectively, all showing double-digit growth rates.


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Textile and garment

sector urged torestructure soon


Vietnam should soon restructure its textile and garment industry by increasing com-petitiveness, and offering value-added products, stated deputy prime minister HoangTrung Hai.During his speech at an opening ceremony of Esquel Group's new garment factory inthe northern Hoa Binh province yesterday, the deputy PM noted that apart from thesix signed free-trade agreements (FTAs), Vietnam was in the process of negotiating sixothers, such as the Trans-Pacific Partnership, FTAs with EU, and the Customs Unionof Belarus, Kazakhstan, and Russia.Three of them were expected to be finalised in 2014, he remarked, adding that this wasa historic time for the domestic textile and garment sector to restructure and be an in-tegral part of the global production chain by producing hi-quality and value-addedproducts.In order to achieve this goal, he called for greater efforts by the government, ministries,local authorities, and the business community including the foreign-invested sector.The Esquel Group vice Chair and CEO John Cheh stated that the $25 million garmentplant in Hoa Binh Province's Luong Son Industrial Zone was the group's third plant inVietnam, besides its existing facility in the southern Binh Duong Province and anotherfactory in the neighbouring Dong Nai Province.The new factory with start operating at full capacity next year and will produce sevenmillion hi-quality shirts annually for renowned international brands such as HugoBoss, Tommy Hilfiger, and Muji and will provide jobs to 3,000 locals.He added that the group also planned to develop a fabric mill in Vietnam this year.Esquel Group is one of the world's leading producers of premium cotton shirts. It hasalso opened production facilities in China, Malaysia, Mauritius, and Sri Lanka.http://vietnamnews.vn/economy/252562/textile-and-garment-sector-urged-to-restruc-

ture-soon.html

Vietnam's fabric &garment exports up19.3pct in Jan-Feb'14

20/MAR/2014 INTELLASIA | FIBRE2FASHION

The exports of fabric and garments from Vietnam increased by 19.3 percent year-on-year to $ 2.936 billion in the first two months of 2014, according to the data released bythe general Department of Customs, Vietnam's Ministry of Finance.With $1.435 million worth of goods, the US turned out to be the largest importer of fab-ric and clothing items from Vietnam during January-February 2014, followed by Japanand South Korea with imports of $379.366 million and $278.098 million, respectively.Among the European countries, Germany was the top buyer of fabric and garmentsfrom Vietnam with imports valued at $106.783 million. Spain, the UK and the Nether-lands were the other large importers of Vietnamese fabric and apparel last year with

goods worth $99.159 million, $74.697 million and $34.249 million, respectively.Vietnam's fabric and garment exports to Canada were valued at $57.352 million, whilethose to China and Taiwan were worth $55.308 million and $26.809 million, respective-ly, during the first two months of 2014.During the two-month period, Vietnam also exported 113,454 tonnes of yarn worth$341.675 million, of which 48,460 tonnes of yarn was supplied to China, while Turkeyimported 14,829 tonnes of yarn from the Southeast Asian country, the Customs datashowed.In 2013, Vietnam's fabric and garment exports grew by 18.9 percent year-on-year to$17.946 billion.Vietnamese firms are expecting an increase in export orders this year due to economicrecovery in developed countries and prospects of the signing of the 12-nation trans-pa-cific partnership (TPP) agreement by June this year.http://www.fibre2fashion.com/news/textile-news/newsdetails.aspx?news_id=161058

Vietnam's coffee salesslow as prices fall

20/MAR/2014 INTELLASIA | BRECORDER

Coffee prices in Vietnam fell on Tuesday, pulled down by a decline in London robustafutures market, putting a brake on farmers' selling that began early this month, traders


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said. Robusta prices rising beyond a key level of 40,000 dong per kilogram in Vietnam,

the world's largest producer of the bitter beans used mainly for making soluble coffee,has prompted farmers to accelerate selling in the past two weeks.On Monday, global coffee markets retreated as a forecast for widespread rain in topgrower Brazil's coffee belt took out some of the market's weather premium. May ro-busta on Liffe finished 0.7 percent lower at $2,159 a tonne. On Tuesday prices in Viet-nam, which closely track London futures prices, eased around 1 percent from theprevious day to 41,000-41,300 dong ($1.94-$1.96) per kilogram, well below 41,600-41,700 dong a week ago."After a strong sale last week, farmers are not selling now as prices ease a bit," a traderin HCM City said. Farmers in the Central Highlands coffee belt, who grow coffee onsome 80 percent of the region's total coffee acreage, had earlier expected prices to riseto 45,000 dong per kilogram on dry weather affecting the Brazilian crop. But lowerprices in London pulled Vietnamese prices down this week, and also narrowed the

discounts of Vietnamese beans.On Tuesday, Vietnamese robusta grade 2, 5 percent black and broken were offered at$70 to $90 a tonne below the May contract, down from $85-$110 last Tuesday. In thesame period last year, the beans were offered at premiums of $40 a tonne to Londonfutures prices. While sales slowed this week, Vietnam's coffee export data for Februarysuggested supply to the global market was ample.Last month Vietnam exported 184,100 tonnes (3.07 million bags) of coffee, a surge of83.4 percent from a year ago, Vietnam Customs said last Thursday, far above marketexpectations. Some coffee farms have been facing water shortage in the central high-land province of Kontum, as the dry season peaks in the region, state-run LiberationSaigon daily said on Tuesday.The newspaper report followed a similar statement issued on March 6 by the Vietnam

Coffee and Cocoa Association (Vicofa), the industry body, which said the dry weathercould be one of the reasons to reduce output of the next 2014/2015 crop. Traders widelydismissed Vicofa's forecast, saying the crop has not been hurt. The crop year lasts fromOctober to September."There's been no impact from the dry weather on coffee at all," said a trader in Dak Lak,the country's largest coffee growing province in the Central Highlands. "Farmers arewatering trees in the third phase and everything so far has been normal." Kontum isthe smaller coffee growing province among the five provinces in the Central High-lands, producing around 25,000 tonnes a year, or 1.5 percent of Vietnam's total output.Farmers often water trees three to four times, starting in February, with each phaselasting about 10 days and intervals of around 20 days each, until rain returns in earlyMay.http://www.brecorder.com/agriculture-a-allied/183/1164246/

Vietnam imports over70pct of dairy input


The domestic dairy industry currently imports 70-80 percent of its input materials, cre-ating a strong link between the price of Vietnamese dairy products and correspondingglobal prices.In recent times, local dairy producers have, out of necessity, increased prices of prod-ucts on the back of rising prices in the world market, which is giving rise to concernand the need for an improved alternative strategy for cow breeding.Since the prime minister approved a policy on cow breeding in 2001, Vietnam has do-mestically met only 28 per