Time right for Vietnam to woo Japan: economist

Photo: AFP

A Japanese economist who advises the Vietnamese Ministry of Planning and Investment has said Vietnam should take advantage of the current economic and political situation to boost exports to Japan and attract Japanese investment.

With the yen’s relentless rise taking it to a 15-year high against the dollar last month, Vietnam’s exports to Japan are cheaper while Japanese investors are doing business more aggressively overseas, Kyoshiro Ichikawa told Tuoi Tre in an exclusive interview.

The recent territorial tension between China and Japan will surely make Japanese investors think twice about pouring more money in China and they are likely to partially or wholly relocate their investments and production facilities to Vietnam, he said.

The yen is likely to rise further in the short term since US economic recovery is slower than expected, he said.

But he allayed the fears that the appreciating yen will mean Vietnam’s official development assistance debt to Japan will rise since the appreciation is a short-term phenomenon.

Japan ODA commitments to Vietnam are worth over 1.394 trillion yen.

It used to be the equivalent of $14 billion but has risen to nearly $16.3 billion. In terms of the depreciating dong, it has risen from VND251 trillion to VND304.5 trillion.

Projects funded by ODA loans and yen-denominated commercial loans will be affected adversely by the currency appreciation, the ministry had said earlier.

Japan is one of Vietnam’s largest trading partners.

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Time right for Vietnam to woo Japan: economist

Photo: Tuoi Tre

A Japanese economist who advises the Vietnamese Ministry of Planning and Investment has said Vietnam should take advantage of the current economic and political situation to boost exports to Japan and attract Japanese investment.

With the yen’s relentless rise taking it to a 15-year high against the dollar last month, Vietnam’s exports to Japan are cheaper while Japanese investors are doing business more aggressively overseas, Kyoshiro Ichikawa told Tuoi Tre in an exclusive interview.

The recent territorial tension between China and Japan will surely make Japanese investors think twice about pouring more money in China and they are likely to partially or wholly relocate their investments and production facilities to Vietnam, he said.

The yen is likely to rise further in the short term since US economic recovery is slower than expected, he said.

But he allayed the fears that the appreciating yen will mean Vietnam’s official development assistance debt to Japan will rise since the appreciation is a short-term phenomenon.

Japan ODA commitments to Vietnam are worth over 1.394 trillion yen.

It used to be the equivalent of $14 billion but has risen to nearly $16.3 billion. In terms of the depreciating dong, it has risen from VND251 trillion to VND304.5 trillion.

Projects funded by ODA loans and yen-denominated commercial loans will be affected adversely by the currency appreciation, the ministry had said earlier.

Japan is one of Vietnam’s largest trading partners.

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Lending rate almost beyond enterprises’ reach: report

The organizers of the survey Vietnam Business Insight Survey announce the results at a conference in HCMC - Photo: Thu Nguyet

HCMC – Many local enterprises are taking out short-term loans with interest rate of more than 12% a year, which they say they can’t afford for a long time, according to a survey report released on Thursday.  

The Vietnam Business Insight Survey, conducted among nearly 400 enterprises in the country, shows the current interest rate of short-term loans is nearly touching the unaffordable level for many local companies. It means many of them are hardly able to burden the high rate any longer.

The survey is made every quarter by the Vietnam Chamber of Commerce and Industry (VCCI) in co-ordination with the General Statistics Office and Asia Competitiveness Institute, under the financial support of the Asia Foundation.  

In details, two-thirds of nearly 400 corporate respondents are borrowing short-term loans at an annual interest rate of more than 12%. About 60% of these enterprises say the lending rate is unreasonable, and 36% of them can’t afford the high capital cost loans in the long term.

Therefore, instead of borrowing from banks, they resort to other capital sources to support their operations and production, which negatively affects their investment strategy. According to the survey, about 94% of business respondents say under-12% lending rate is reasonable for them.  

Besides the expensive loans, the survey found many local companies are facing challenges from lack of electric power and skilled labor, and traffic congestion.  

In addition, local companies are coping with obstacles from the current business environment, said Vu Kim Hanh, vice chairwoman of Leading Business Club, at a conference to release the survey in HCMC.  

Hanh explained that they suffered fierce competition from fake, cheap and smuggled goods. Hence, some of them stopped their production and were having their products outsourced to China then labeled “Made in Vietnam” to reduce costs of the products.    

“Even some companies recognized as producers of high-quality Vietnamese products are outsourcing to China and label the goods as domestically made,” she said.  

Hanh added that local enterprises also told her that they were burdened by un-official fees but didn’t give any details. Costs for after-sales services, promotion and environment protection are challenging local producers.

The survey also shows local enterprises’ trade and production improved in the second quarter of this year compared with the first quarter.

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Lending rate almost beyond enterprises’ reach: report

The organizers of the survey Vietnam Business Insight Survey announce the results at a conference in HCMC - Photo: Thu Nguyet

HCMC – Many local enterprises are taking out short-term loans with interest rate of more than 12% a year, which they say they can’t afford for a long time, according to a survey report released on Thursday.  

The Vietnam Business Insight Survey, conducted among nearly 400 enterprises in the country, shows the current interest rate of short-term loans is nearly touching the unaffordable level for many local companies. It means many of them are hardly able to burden the high rate any longer.

The survey is made every quarter by the Vietnam Chamber of Commerce and Industry (VCCI) in co-ordination with the General Statistics Office and Asia Competitiveness Institute, under the financial support of the Asia Foundation.  

In details, two-thirds of nearly 400 corporate respondents are borrowing short-term loans at an annual interest rate of more than 12%. About 60% of these enterprises say the lending rate is unreasonable, and 36% of them can’t afford the high capital cost loans in the long term.

Therefore, instead of borrowing from banks, they resort to other capital sources to support their operations and production, which negatively affects their investment strategy. According to the survey, about 94% of business respondents say under-12% lending rate is reasonable for them.  

Besides the expensive loans, the survey found many local companies are facing challenges from lack of electric power and skilled labor, and traffic congestion.  

In addition, local companies are coping with obstacles from the current business environment, said Vu Kim Hanh, vice chairwoman of Leading Business Club, at a conference to release the survey in HCMC.  

Hanh explained that they suffered fierce competition from fake, cheap and smuggled goods. Hence, some of them stopped their production and were having their products outsourced to China then labeled “Made in Vietnam” to reduce costs of the products.    

“Even some companies recognized as producers of high-quality Vietnamese products are outsourcing to China and label the goods as domestically made,” she said.  

Hanh added that local enterprises also told her that they were burdened by un-official fees but didn’t give any details. Costs for after-sales services, promotion and environment protection are challenging local producers.

The survey also shows local enterprises’ trade and production improved in the second quarter of this year compared with the first quarter.

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Cost of borrowing declines

HA NOI — The interest rate on loans at commercial banks from August 20-26 was lowered by 1 per cent to about 13 per cent per year.

This move aims to boost the economy after the State Bank of Viet Nam injected capital into the market to improve liquidity.

State owned banks are charging exporters, farmers and rural developers between 12-13.5 per cent per year for both short and long term loans. Private banks charge between 12-14.5 per cent.

The total trading volume on the inter-bank market was VND101.22 trillion ($5.19 billion) in Vietnamese dong and US$1.96 billion in US dollars, up 3.9 per cent and 1.8 per cent, respectively.

Most tradings in dong were made overnight and during the week. Overnight interest rates for the dong rose 0.08 per cent.

Average short term interest rates ranged from 6.78 per cent to 8.56 per cent per year.

The highest lending interest rate was 12 per cent and the lowest interest rate was 6 per cent.

The exchange rate hovers around VND19,480-19,500 per US dollar after the dong depreciated by 2 per cent last week. — VNS

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Dollar lending rises post-devaluation

Companies in Vietnam may be finding it harder to repay dollar debt in the wake of its latest dong devaluation but demand for greenback loans is rising on speculation that the exchange rate will be stable in the short term, bankers said.

The State Bank of Vietnam cut the interbank reference rate to 18,932 dong per dollar on Aug 18 from 18,544 previously, aiming to help control the trade deficit.

The move took some pressure off the dong and helped stabilise the foreign exchange market, traders said, but bids offered by banks were hovering near the ceiling allowed within the dong’s 3 percent trading band.

It also put an expected squeeze on certain businesses, including importers and those with dollar loans coming due, state media reported.

Nevertheless, demand to borrow dollars has risen since the move, bankers said on Monday.

A treasury manager at a Hanoi-based lender, who declined to be identified, said the demand for dollar loans at his bank started to edge up again following two months on a downward path.

“After the latest devaluation, borrowers seem to think that the exchange rate will stay unchanged for three to four months. This makes them feel confident enough to take loans in the short term,” he said.

“There is also speculation there may be future changes in the rate and that this latest devaluation is a sign of that. In such a case, it would be beneficial to borrow now and settle the loans before the next change.”

A currency trader in another Vietnamese bank confirmed the rising demand for dollar loans, saying most of loans were short term and would be due in a few months.

Dollar credit jumped 34.4 percent in the first seven months from the end of last year, the Vietnam Economic Times said on Aug. 25, quoting the central bank data.

The central bank in June tried to slow dollar lending by requesting lenders monitor their dollar loans. In June and July, dollar loan demand was falling as the gap between dong and dollar rates narrowed, bankers said.

With dollar loan demand increasing, banks recently announced they would raise the interest rates on dollar deposits to as high as 5.5 percent from around 4 percent, state media reported.

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Dollar lending rises post-devaluation

Companies in Vietnam may be finding it harder to repay dollar debt in the wake of its latest dong devaluation but demand for greenback loans is rising on speculation that the exchange rate will be stable in the short term, bankers said.

The State Bank of Vietnam cut the interbank reference rate to 18,932 dong per dollar on Aug 18 from 18,544 previously, aiming to help control the trade deficit.

The move took some pressure off the dong and helped stabilise the foreign exchange market, traders said, but bids offered by banks were hovering near the ceiling allowed within the dong’s 3 percent trading band.

It also put an expected squeeze on certain businesses, including importers and those with dollar loans coming due, state media reported.

Nevertheless, demand to borrow dollars has risen since the move, bankers said on Monday.

A treasury manager at a Hanoi-based lender, who declined to be identified, said the demand for dollar loans at his bank started to edge up again following two months on a downward path.

“After the latest devaluation, borrowers seem to think that the exchange rate will stay unchanged for three to four months. This makes them feel confident enough to take loans in the short term,” he said.

“There is also speculation there may be future changes in the rate and that this latest devaluation is a sign of that. In such a case, it would be beneficial to borrow now and settle the loans before the next change.”

A currency trader in another Vietnamese bank confirmed the rising demand for dollar loans, saying most of loans were short term and would be due in a few months.

Dollar credit jumped 34.4 percent in the first seven months from the end of last year, the Vietnam Economic Times said on Aug. 25, quoting the central bank data.

The central bank in June tried to slow dollar lending by requesting lenders monitor their dollar loans. In June and July, dollar loan demand was falling as the gap between dong and dollar rates narrowed, bankers said.

With dollar loan demand increasing, banks recently announced they would raise the interest rates on dollar deposits to as high as 5.5 percent from around 4 percent, state media reported.

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Dollar lending rises post-devaluation

Companies in Vietnam may be finding it harder to repay dollar debt in the wake of its latest dong devaluation but demand for greenback loans is rising on speculation that the exchange rate will be stable in the short term, bankers said.

The State Bank of Vietnam cut the interbank reference rate to VND18,932 per dollar on August 18 from VND18,544 previously, aiming to help control the trade deficit.

The move took some pressure off the dong and helped stabilize the foreign exchange market, traders said, but bids offered by banks were hovering near the ceiling allowed within the dong's 3 percent trading band.

It also put an expected squeeze on certain businesses, including importers and those with dollar loans coming due, state media reported.

Nevertheless, demand to borrow dollars has risen since the move, bankers said on Monday.

A treasury manager at a Hanoi-based lender, who declined to be identified, said the demand for dollar loans at his bank started to edge up again following two months on a downward path.

"After the latest devaluation, borrowers seem to think that the exchange rate will stay unchanged for three to four months. This makes them feel confident enough to take loans in the short term," he said.

"There is also speculation there may be future changes in the rate and that this latest devaluation is a sign of that. In such a case, it would be beneficial to borrow now and settle the loans before the next change."

A currency trader in another Vietnamese bank confirmed the rising demand for dollar loans, saying most of loans were short term and would be due in a few months.

Dollar credit jumped 34.4 percent in the first seven months from the end of last year, the Vietnam Economic Times said last Wednesday, quoting the central bank data.

Total credit was up just 12.97 percent, the central bank said in its July monthly report.

The central bank in June tried to slow dollar lending by requesting lenders monitor their dollar loans. In June and July, dollar loan demand was falling as the gap between dong and dollar rates narrowed, bankers said.

With dollar loan demand increasing, banks recently announced they would raise the interest rates on dollar deposits to as high as 5.5 percent from around 4 percent, state media reported.

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