VietNam Business

Wednesday, December 8, 2010

Experience shared to make IPOs less exclusive

Photo: Reuters

Issuing shares in Vietnam differed from procedures in other countries as Vietnamese companies offered shares exclusively to existing shareholders rather than seeking new ones, said State Securities Commission at a conference in Hanoi on Thursday.

The SSC drew attention to this distinction at the at the "Steps preparing for a successful IPO of enterprises" conference jointly held by itself, the business and financial news Bloomberg and Singapore's Mileage Communications Group.

When collecting opinions of existing shareholders, almost all investors volunteered to buy additional shares, which led to successes for the majority of share issuers, said Bui Hoang Hai, deputy director of the SSC.

"This can be considered a method to force existing shareholders to buy additional shares," he added.

In other nations, shares are usually auctioned off to new shareholders, the public or strategic investors. To ensure success, issuers must then be transparent with all financial information and reports to demonstrate their potential and improve their image in the eyes of investors, Hai said.

Vietnamese enterprises actually did not pay much attention to how best to attract investors so as to make IPO successfully, he said.

To prepare for IPO, most companies only submit a prospectus and documents to meet the minimum requirements. "To make a successful IPO, companies need to map out long-term strategies," Hai said.

Nguyen Ngoc Canh, director of SSC's international co-operation department, said in the context of the slowed local stock market, firms were faced with many difficulties for their IPO despite profitable company performance.

Canh emphasized the crucial role professional consultants and securities firms play in helping issuers create transparent and comprehensive documents and financial reports as well as advising better management and business strategies.

"Issuers could publicize information in a timely manner and investors could understand more about their businesses, as a result they could auction shares or make IPO effectively," Canh said.

Yah Boh Tiong, chairman of Mileage Communications Group, advised firms to facilitate strong communication with shareholders, raise investor awareness of company profiles and business performance.

Strategies to improve companies' images should be undertaken carefully throughout three phases, including before IPO, leading up to IPO and post-IPO, Tiong said.

Chairman of the Singapore Securities Investors Association David Gerald said that it was essential to create knowledgeable investors through education and information, promote corporate transparency and corporate governance and safeguard investors' rights.

"Good corporate governance practices translate into good corporate performance," he said.

According to the SSC, the aggregate value of all shares issued to the public, employees, strategic partners and those auctioned at stock exchanges by companies in the first half of this year reached about VND74.96 trillion (US$3.84 billion).

The conference drew about 100 businessmen, security companies, as well as local and international experts.

Consumer price index leaps 1.31% in September

HA NOI — The consumer price index in September soared dramatically by 1.31 per cent over last month, a leap that was three times greater than forecasts by the Market Watch Team.

The CPI rise sparked concerns that the year would end with a high annual inflation rate.

Do Thi Ngoc, an expert from the General Statistics Office, said the high increase in CPI this month was part of a trend in annual cyclical inflation fluctuations in Viet Nam.

On aggregate, the CPI rose 8.92 per cent over the last 12 months, and 8.64 per cent in comparison with the first nine months of last year.

Ngoc said two of the reasons for the strong increase in CPI during September were a rise of 2.32 per cent in food prices and a hike of 12.02 per cent in education services, while school fees increased by three to four times in 36 cities and provinces.

Another reason was an increase of 2.1 per cent in the depreciation of the Vietnamese dong compared to the US dollar, which in turn, hit a series of imported products, including construction steel, fuel and gasoline.

In addition, outbreaks of blue-ear pig disease also caused food and meat prices to soar.

A long National holiday spurred consumption and domestic tourism, a sector that saw price rises of nearly 0.8 per cent in food and restaurant services.

Gold saw a robust increase of 3.58 per cent in price this month, a rise of 37.39 per cent in comparison with the same period last year. Meanwhile, the US dollar increased 1.61 and 7.08 per cent, respectively.

Only post and telecommunications groups saw a decline in prices of 0.07 per cent this month.

Several provinces saw a high CPI, including Khanh Hoa (2.79 per cent); Thua Thien-Hue (1.89 per cent) and Can Tho (2.97 per cent).

The GSO's experts also predicted that from now until the end of the year, the CPI will fluctuate due to increases in essential commodities prices, a continuous depreciation of the Vietnamese dong compared to the US dollar and price hikes for input materials for production and import products.

Also, consumption will soar next month during celebrations of 1,000 years since the foundation of Ha Noi, along with Christmas and the new year. Therefore, CPI for the year will likely be higher than 8.5 per cent.

CPI rises in major cities

The CPI in HCM City increased by 0.97 per cent compared to last month, after two consecutive months of decline, according to the city's Statistics Office.

The city's CPI in September rose 7.59 per cent compared to the same month last year.

Since the beginning of the year, the CPI has increased 5.54 per cent.

September was also the only month of the year that the prices of all 11 commodity groups in the price basket increased against last month.

Of the 11 commodity groups, the education category saw the highest increase of 5.57 per cent as September is the traditional start of the new school year. Most schools have raised tuition fees for the new school year.

The culture-sports-entertainment sector had the second-highest increase with 1.51 per cent, followed by the transport with 1.13 per cent.

Meanwhile, the CPI in Ha Noi also increased by 0.96 per cent compared to last month, according to the Ha Noi Statistics Office.

Ha Noi's CPI in September increased by 9.05 per cent compared to the same period last year.

In September, gold prices were up 3.57 per cent over last month and the US dollar rose by 1.35 per cent against the Vietnamese dong.

Dr Tran Hoang Ngan, deputy rector of the University of Economics in HCM City, said that if the trade deficit was not managed more effectively, the time period between the rise of the US dollar against the Vietnamese dong would eventually become shorter, affecting macroeconomic stability, production and trade. — VNS

FDI disbursement tops $8b first nine months

Vehicle parts production at the Taiwan-invested Viet Nam Precision Industrial No1 Co in northern Vinh Phuc Province. — VNA/VNS Photo Tran Viet

HA NOI — Disbursement of foreign investment during the first nine months of this year surpassed US$8 billion, an increase of 4.8 per cent year-on- year, according to the Foreign Investment Agency (FIA).

However, the disbursement which hit $800 million in September was $50 million lower than that of the previous month, and far behind the average disbursement rate of about $900 million for each month since the beginning of this year.

During the nine-month period, the nation attracted $12.19 billion in foreign direct investment (FDI), 87.3 per cent of the amount during the same period last year. Earlier, the country had set a target of drawing $22 to $25 billion in FDI this year.

Up to 720 new projects were licensed during the period, worth a combined $11.4 billion, an increase of 37.3 per cent over same period last year.

There was a decline in additional investment to existing projects, the FIA said, adding that 153 projects had registered to increase capital by a combined $783 million, only 13.8 per cent of the same period last year.

An FIA representative yesterday refused to make further comments on the drastic decrease.

Netherlands was the leading source of foreign investment in Viet Nam, investing $2.2 billion, followed by South Korea with $2 billion and the US with $1.87 billion.

The processing and manufacturing sector held the lion's share of FDI, gobbling up $3.65 billion, or 30.2 per cent of the registered total.

Business advantages were described as one of the main reasons for the large influx of FDI into the sector. The foreign-invested sector posted a nine-month export turnover of $27.4 billion, a year-on-year rise of 26.5 per cent or equivalent to 53 per cent of the country's total export value.

Meanwhile, FDI in the electric and gas production and distribution sector reached $2.94 billion, accounting for 24 per cent of all FDI.

With a high average investment capital of $150 million per project, the real estate sector ranked third in FDI attraction with $2.75 billion, making up 22.6 per cent of the total.

The southern province of Ba Ria-Vung Tau was the top destination for foreign investment, attracting $2.23 billion. It was followed by the northern province of Quang Ninh with $2.15 billion, HCM City with over $1.8 billion and central Nghe An Province with $1 billion. — VNS

Tuesday, December 7, 2010

Banks to push sustainable projects

Financial institutions must play a more active role in promoting sustainable hydropower development in the lower Mekong River basin, the World Wide Fund for Nature (WWF) has said.

Leading US, European and Asian financial institutions Friday attended a conference co-convened by WWF and other development partners in Bangkok to highlight the financial, social and environmental risks and responsibilities of hydropower development on the lower Mekong River.

The meeting will also explore ways to understand and mitigate these risks.

"It is a missed opportunity," said Marc Goichot, sustainable infrastructure senior advisor for WWF Greater Mekong.

"Lower Mekong dam sites were selected in the 1960s and there has not been a process to review them with the benefit of today's science and technology."

Currently, there are 11 hydropower dams proposed for the lower Mekong River, which runs through Laos, Cambodia, Thailand and Vietnam.

If one of these dams is built, it will break the lower Mekong's ecosystem connectivity, which can have a cascade of negative effects.

"Putting a dam on the lower Mekong River will block fish migration to spawning grounds, collapsing fish stocks," said Michael Simon, head of the People Infrastructure and Environment Program of Oxfam Australia.

"Do lenders want to be associated with putting the food security of 60 million people in some of the world's poorest countries at risk?" he added.

Forecasts show the productivity of lower Mekong fisheries, which is valued up to US$7 billion annually, would drop by up to 70 percent by lower Mekong mainstream dams.

In addition, iconic species such as the Mekong giant catfish and Mekong dolphin would face likely extinction if the proposed dams go ahead.

"Hydropower projects can limit their impact to ecosystem connectivity. For example, a large dam can be built in the floodplain beside a river channel rather than across it, or a hydropower project can have no dam at all," said Goichot.

In southern Laos, there is such an alternative being proposed by the Lao Department of Electricity and semi-state owned French company CNR (Compagnie Nationale du Rhone).

Banks to push sustainable projects