Vietnamese central bank to keep interest rate at 8 pct

Vietnam’s central bank said it will keep its benchmark interest rate unchanged for a ninth consecutive month in September as it strives to boost lending.

The so-called base rate will stay at 8 percent from Sept. 1, the State Bank of Vietnam said in a statement on its website Wednesday. The benchmark was raised from 7 percent on Dec. 1. The refinancing and discount rates will also be held at 8 percent and 6 percent respectively.

The government has been urging banks to cut credit costs to bolster the economy as it targets 25 percent lending growth and 6.5 percent economic expansion this year, even as inflation has held above 8 percent for most of 2010. The central bank allowed lenders to set their own rates for medium- to long-term loans in February, scrapping a cap linked to the benchmark.

“The base rate will stay at 8 percent until the end of the year,” Alan Pham, Ho Chi Minh City-based chief economist at VinaSecurities Joint-Stock Co., said before the announcement. Following the elimination of the cap, the base rate “is irrelevant and nobody cares what it is,” Pham said.

Commercial lending rates ranged from 12 percent to 15 percent in July, the central bank said in August. It previously said it will seek to further cut the costs over the rest of 2010 through measures including increased money supply. Credit growth reached 12.97 percent by July 31 from the end of last year.

Dong devaluation

The State Bank of Vietnam lowered the dong’s reference exchange rate by 2 percent last week, citing the need to narrow the trade deficit. The shortfall was $900 million this month from a revised $978 million in July, a report showed Tuesday. For the eight months through August, the gap was $8.16 billion.

The dong traded at 19,490 per dollar at 4:18 p.m., down from 19,099 before the devaluation was announced. The Ho Chi Minh City Stock Exchange’s VN Index slid 2.4 percent to 423.89, after entering a so-called bear market Tuesday following a drop of 21 percent since May 6.

“With the recent devaluation of 2 percent, inflation would likely pick up,” Pham said. “So banks have to keep up their lending rates or even raise them, to keep their real rates positive.”

Inflation cooled for a fifth month in August, climbing 8.18 percent from a year earlier compared with 8.19 percent in July, according to data released this week.

Vietnam’s gross domestic product expanded 6.4 percent in the second quarter, after advancing 5.8 percent in the first three months of the year. Prime Minister Nguyen Tan Dung said in June the economy may grow as much as 7 percent in 2010.

The Southeast Asian nation is preparing a “rapid and sustainable” development strategy for 2011 to 2020 that will lead to average GDP growth of 7 percent to 8 percent a year for the period, the prime minister said last week.

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Vietnam, Indonesia top US companies’ Southeast Asia plans

Vietnam and Indonesia are the top investment destinations in Southeast Asia for US businesses, according to the American Chamber of Commerce.

Companies are “much more positive” on the prospects for regional growth, even as dissatisfaction over corruption increased, according to a business outlook survey published by the chamber Thursday. Improved economic links within Southeast Asia and higher profit expectations are among the reasons prompting businesses to consider expansion, the survey showed.

Asia’s rebound is outpacing much of the rest of the world as exports boost earnings and domestic demand strengthens, benefitting companies including Singapore Airlines Ltd. and Malaysia’s Sime Darby Bhd. The Association of Southeast Asian Nations said its 10-member nations drew 3.6 percent of global foreign direct investment in 2009, up from 2.8 percent in 2008.

Most companies surveyed “continued to expand or expand significantly in Asean over the past two years” and more plan on doing so over the next two years amid optimism about growth, the chamber said. “This business expansion is directed most strongly towards Vietnam, Indonesia, Thailand and Singapore.”

US businesses were mostly satisfied with the availability of low-cost labor except in Singapore and Malaysia, the report showed.

The greatest concern for companies in most countries is corruption, except for Singapore and Thailand. Respondents cited the city-state’s housing costs and the stability of the Thai government as the main worries in those two nations.

“Corruption continues to be a source of great dissatisfaction for respondents, many of whom cited it as a barrier to doing business in Asean,” the chamber said. “The level of local protectionism also remains a concern in a range of countries -- Malaysia, Thailand, Vietnam, and Indonesia.”

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FDI rockets up in August

HCMC – Foreign direct investment (FDI) in Vietnam has shot up this month to nearly US$2.5 billion, almost doubling the monthly average US$1.3 billion in the first half, and taking it to US$10.79 billion for the year so far.

It’s a sharp contrast to FDI in the previous three months: US$1.5 billion in May, US$800 million in June and just slightly over half a billion dollars last month.

August saw 125 projects licensed, according to a report from the Ministry of Planning and Investment’s Foreign Investment Agency.

In the year to date, 658 foreign-invested projects worth some US$10.79 billion have been licensed, up 41% year-on-year, according to the agency.

However, the amount of capital added into 143 existing projects in the period is only US$787 million, down 85.8% from the same period last year.

According to the agency, the total investment in the country so far this year, inclusive of additional funds into operational projects, is about US$11.6 billion, 87.7% of the same period last year.

The agency predicts Vietnam to receive US$22-25 billion in newly registered and additional FDI capital this year, an increase of 5-10% from 2009, owing to the recovery of the global economy. New FDI approvals in 2009 plunged as much as 70% from the previous year due mainly to the economic crisis.

The agency reported the real estate sector has attracted close to US$2.39 billion of registered capital in the first eight months, taking the third position of the total FDI commitment, after the processing and manufacturing industry sectors with US$3.66 billion and the sectors of power and water with US$2.94 billion.

According to the agency, FDI disbursements in Vietnam total about US$850 million this month, taking the January-August figure to US$7.25 billion, up 3.6% from the same period last year.

Given the average monthly disbursement of around US$900 million, it is predicted that FDI disbursement will reach US$11 billion this year, slightly higher than last year’s figure of US$10 billion.

It is widely recognized that in FDI attraction, disbursement is more significant than commitment, and quality is more important than quantity.

Foreign invested enterprises have this year benefited from the regional recovery, as seen in their trade values. Exports have surged 26.6% over the same period to some US$23.96 billion. If crude oil export is excluded, this value is still more than US$20.6 billion, up 39.9% year-on-year.

Meanwhile, the FDI sector has also spent US$22.37 billion on imports, up 43.6% year on year.

Market bounces back slightly

HCMC – The local market recovered slightly on Thursday after three consecutive falling sessions, with the VN-Index adding 3.18 points, or 0.75%, against the previous day to 427.07.

The market opened higher and after hitting a daily high of 429.12, it abruptly reversed direction and fell sharply towards the end of the second matching phase. The index then staged a second rally and finally closed just below the highs.

Liquidity, however, declined sharply as just around 39.7 million shares worth VND957 billion were traded, decreasing by around 23% and 25% against the previous session respectively. Investors demanded 73.6 million shares, increasing by 15.7% from the day earlier, while they offered over 67 million shares, a 23% decrease.

There were slightly more gainers than losers at 112 to 106. Twelve stocks went to the ceiling and 28 others plunged to the floor prices. Large caps including PVF, PVD and BVH performed well and helped keep the market up during the day.

Refrigeration Electrical Engineering Corp. (REE) took the lead in terms of liquidity and it gained 3.2% to VND16,000 per share with over 1.2 million shares traded. Saigon Securities Inc. (SSI) followed, adding 0.8% against the day earlier to VND25,500 on the volume of around one million shares.

Foreigners shifted to the selling side as they bought 3.3 million shares worth VND119 billion and offloaded 3.5 million shares worth VND127 billion. They accounted for 12.4% and 13.3% of the market’s buying and selling value respectively.

Fiachra Mac Cana, managing director of HCMC Securities Corp., said the market managed a mild recovery on Thursday but the lower volumes and limited price movement of most stocks means the trend change lacked conviction.

“After falling so sharply this week, sellers took a breather on Thursday as shown by the sharp decline in market offers during the day compared to Wednesday. This allowed for a technical rebound not surprising given some indicators have been signaling an over-sold market for several days. However, if anything, on Thursday’s movement by its very limitations suggests some further downside risk to come over the next few days,” Mac Cana said.

APEC Securities Co. said the mild rally on Thursday could not help the market escape the downward trend. “We expect a higher trading volume within the next sessions for a clearer sign of bottoming out. Short-term investors can acquire shares now but they should be cautious as people will offload shares if the market increases,” the broker said.

The Hanoi market also edged higher but in lower turnover of VND682 billion. The HNX-Index added 0.72 point, or 0.61%, from the previous session to close the day at 119.53.

There were 136 stocks rising while 150 stocks were down at closing, including five stocks hitting the ceiling prices and 14 stocks dropping to the floor prices. Foreigners were active net sellers and accounted for 1% and 2.7% of the market’s buying and selling value respectively.

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Da Nang hosts series of AEM consultations

A series of consultations took place in the central coastal city of Da
Nang on August 26 within the framework of the 42nd ASEAN Economic
Ministers’ Meeting (AEM-42), the fourth ASEAN Economic Council Meeting
and related meetings.

At the ninth consultations
between the AEM and the Chinese Minister of Commerce (AEM-MOFCOM), the
ministers welcomed the completion of the ASEAN-China Free Trade Area
(ACFTA) in Jan. 1, 2010, with the abolishment of tariffs on 97 percent
of the goods in the common list among six ASEAN nations, including
Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand,
(ASEAN-6) and China. More than 89 percent of current products are being
freely traded among ASEAN-6 and China . Other remaining parties of
ACFTA are implementing their pledges to reduce tariffs as scheduled in
the ASEAN-China Agreement on Trade in Goods (TIG).

The conference also recognised the results of the forum on China-ASEAN
Free Trade Area that was held in Nanning , China , on Jan. 7 and 8
this year to celebrate ACFTA implementation.

The
ministers reached consensus on consolidating the implementation of the
TIG Agreement and approved concrete rules of origin that have been
transposed to HS2007 in ACFTA to be supplemented to the TIG Agreement.

They emphasised the importance of implementing the
regulation to grant amended certificate of origin and said they hoped
for the early signing of the second protocol on amending the TIG
Agreement of the Framework Agreement on Comprehensive Economic
Cooperation between ASEAN and China .

The
ministers hailed China ’s proposal to organise a seminar on
cross-border trade payment in Chinese yuan to facilitate ASEAN-China
trade and economic cooperation.

They welcomed the
progress of the feasibility study of the expanded Tonkin Gulf
economic cooperation and said they hoped the study would be finalised as
soon as possible.

At the 16 th consultations
between the AEM and the Japanese Minister of Economy, Trade and
Industry, they expressed their pleasure that the flow of foreign
investment capital from Japan into ASEAN increased from 4.7 billion
USD in 2008 to 5.3 billion USD in 2009.

Japan ’s investment made up 13.4 percent of ASEAN’s total investment in 2009, they said.

They recognised the results of the ASEAN-Japan Comprehensive Economic
Partnership Agreement, the ASEAN-Japan Economic Cooperation, the
Intelligent Community Initiative, the Asian sustainable chemical safety
plan, the Asian knowledge economy initiative, the future prospect of the
Japan-ASEAN economic cooperation and the ASEAN-Japan Industrial and
Economic Cooperation Committee.

At the second
Mekong-Japan industrial economic ministerial conference, the ministers
welcomed business proposals to the Mekong-Japan industrial and economic
cooperation that were presented on August 25, 2010 at the dialogue forum
for Mekong and Japanese businesses and government.

They discussed and approved an action plan to implement the
Mekong-Japan Industrial and Economic cooperation initiative to be
reported to leaders of the fourth Mekong-Japan Summit slated for October
2010 in Hanoi .

Other events include the
Mekong-Japan consultations, the AEM+3 consultations, the AEM+3
consultations with the East Asia Business Council (EABC), the AEM-RoK
consultations and the AEM-CER (Closer Economic Relations countries of
Australia and New Zealand ) consultations./.

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ASEAN aims to narrow development gap

Boosting internal cooperation and expanding cooperation with developed
partners around the world have been defined as the prime solutions that
ASEAN should take to narrow the widening development gap among its
members.

“An increasingly widening development gap is posed as the top impediment
to ASEAN’s future growth,” Prime Minister Nguyen Tan Dung said,
addressing the 42 nd ASEAN Economic Ministerial Meeting and Related
Meetings in Da Nang city on August 25.

Statistics provide
the facts of the disparity in GDP between the group of Indonesia ,
Brunei , Thailand , Malaysia , Singapore and the Philippines , and
the group of Cambodia , Laos , Myanmar and Vietnam within ASEAN
is 80-90 times and that in per capita income is 17-50 times.

ASEAN member countries are dealing with great differences in market scope and economic structures.

In
trade, Singapore is topping other ASEAN member countries in
import-export value as it has accounted for 33.5 percent of the group’s
import-export value. It is followed by Thailand , 18.6 percent and
Malaysia , 18.3 percent.

Meanwhile, Vietnam has accounted for a
meagre 1.47 percent and all three countries of Laos , Myanmar and
Cambodia have made up only 2.2 percent of ASEAN’s import-export value.

“This disparity will make ASEAN divided and unsustainable,” emphasised ASEAN Secretary General Dr. Surin Pitsuwan.

He
regarded the disparity as a cause that hinders ASEAN member countries
from opportunities to gain benefits from their integration effectively.

Due
to the disparity in the development gap, trade within the group in 2009
accounted for just 20 percent of its total trade value of 1.5 trillion
USD.

To increase the group’s internal trade to 30 percent by
2015, ASEAN member countries, especially Cambodia, Laos, Myanmar and
Vietnam, need to make the best utility of their cooperation based on
signed agreements on trade liberalisation and commitments to lifting tax
and technical barriers, said Pitsuwan.

Indonesia , Brunei ,
Thailand , Malaysia , Singapore , and the Philippines have given
Cambodia , Laos , Myanmar and Vietnam tax incentives and provided
them with funding and experts for training courses on management,
economics, investment promotion, information technology, and English.

ASEAN’s
partners, including Japan, China, the EU, the US, and Australia have
also lent helping hands to Cambodia, Laos, Myanmar, and Vietnam -- the
less-developed countries in ASEAN-- through the ASEAN Integration Fund
and the Japan International Cooperation Agency.

They have also
funded more than 200 projects on infrastructure, transport and
communications, information technology, and human resource development
in these countries.

Vietnam should utilise preferential
treatments from ASEAN’s free trade agreements with its big partners and
take advantage of special incentives it enjoys from bilateral agreements
with these partners to quickly narrow its development gap with other
ASEAN member countries./.

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Foreign visitors to Vietnam rise sharply

The number of foreign visitors to Vietnam in August rose by 38
percent over the same period of last year, reaching more than 430,000
despite the off-season.

According to the General Statistic Office, most of Vietnam’s major
tourist markets still maintain high growth, including Cambodia, topping
the list with a growth of 247 percent, followed by China 101 percent,
Australia over 77 percent and Thailand over 74 percent.

Since the beginning of the year, Vietnam has welcomed 3.3 million
international visitors, representing a year-on-year increase of 35
percent.

The experts forecast that the number of foreign
tourists to Vietnam would continue to increase from now to the end of
the year due to various important celebrations in the country including
the 1000 th anniversary of Thang Long-Hanoi and the 2010 International
Yacht Festival in Mui Ne, the southern province of Binh Thuan .

Besides, as part of the tourism stimulus programme which will be held
in Ho Chi Minh City in November, the sale campaign for tourists with
discounts from 10-50 percent is also considered attractive for
tourists./.

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