VietNam Business

Tuesday, January 11, 2011

Liberty joins hands with bank for loan program

HCMC - Liberty Insurance and Orient Commercial Joint Stock Bank (OCB) signed an agreement last week to launch a loan program to provide financial support for those who want to buy cars.

Under the collaboration program named “Car Within Reach,” Liberty will offer insurance service to auto buyers while the bank will offer loans in Vietnam dong for customers to buy cars. The loan requires collateral including fixed assets, the car itself, or third-party guarantees.

OCB says the approved loan may be up to 100% of the car value for a maximum term of five years. The borrowing procedure is simple as the bank will confirm their approval within 24 hours.

The bank says repayment can be made by automatic account deduction or directly at any of its offices. Besides, the loan program also offers a discount rate of 0.5% per year off the standard interest rate charged by OCB.

OCB says it is cooperating with most authorized auto dealers in the country to extend more loans for car buyers.

Trinh Van Tuan, general director of the bank, says the “Car Within Reach” program is designed to offer consultancy not only on the bank’s loan programs, but also on the selection of cars and car insurance products. This will help save time for customers.

“We have studied and found that Liberty is appreciated for the auto insurance product thanks to its service quality, and simple, fair and fast claim procedures,” Tuan said in a statement.

Carlos Vanegas, general director of Liberty Insurance, pins hopes on the partnership, saying that it will create a premise for further cooperation programs between the bank and the insurance company.

Supermarkets report strong earnings in Big Sale month

Customers flood a food counter at the Big C Hoang Van Thu Supermarket. Food and cosmetics items were more sought after during the Big Sale month - Photo: Minh Tam

HCMC – Many supermarkets in HCMC have reported strong sales in September when the Big Sale month was launched citywide by the city’s Department of Industry and Trade.

Most supermarkets witnessed 15% to 30% growth in September sales against the previous month, but some saw the growth rate close to 50%. Store chain operators attributed the high growth rate to deep discounts – between 5% and 50% - on thousands of items during the month.

Saigon Co.op, which is the biggest domestic store chain operator, said its revenue surged 45% in September against August, and even 50% higher compared to that in the year-earlier period.

“Consumers spent more during the month,” said a representative of Saigon Co.op.

Maximark chain has not had the growth figures for its stores in HCMC, but the chain’s revenue from all stores including in Nha Trang and Can Tho expanded 15% year-on-year, said Nguyen Thi Phuong Thao, head of Maximark Cong Hoa.

Thao said Maximart launched the promotion not only in HCMC but chain-wide.

Duong Thi Quynh Trang, external relations manager of Big C, said the number of shoppers grew by 30% in September. “This is quite an upbeat figure, proving the attraction of the promotion month to consumers,” Trang told the Daily.

During festive days like the National Day on September 2, all supermarkets saw a shopping spree, and many stores had to extend the working hour by another 30 minutes, or mobilized more cashiers.

Several traders attributed the revenue rise to a new trend being established in the city, saying the sales promotion month has been launched for years, thus helping customers familiarize themselves with the shopping seasons of big discounts.

Apart from supermarkets, other trade centers and commercial facilities have not yet reported their September figures. The HCMC Department of Industry and Trade expects to have the final figures about the promotion month in the next few days.

Mounting inventory puts refinery under tenterhooks

A view of Dung Quat Oil Refinery in Quang Ngai Province. The facility is facing huge inventory of oil products at the moment - Photo: Van Nam

HCMC, HANOI – Mounting inventory at Dung Quat Oil Refinery is threatening to cripple production at the facility as local distributors have signed irrevocable import contracts earlier and cannot shift to local products at the moment, sources said.

Minister of Industry and Trade Vu Huy Hoang said at a regular meeting of the ministry on Monday that the country’s first oil refinery was having a backlog of two million cubic meters of liquefied petroleum gas (LPG) plus over 700,000 tons of oil products.

Meanwhile, local oil traders refused to buy products from the refinery based in the central province of Quang Ngai despite rising demand.

Dung Quat, if running at full capacity, can turn out 150,000 tons of petrol, 240,000 tons of diesel oil, 23,000 tons of LPG and others, which is enough to meet one-third of local demand.

Vu Quang Nam, deputy general director of PetroVietnam as the parent firm of the refinery operator, told the meeting that if consumption of its finished oil products continues to go slow, the refinery will have to scale down production due to the lack of storage facilities.

“So I suggest the Ministry of Industry and Trade instruct all oil and petrol traders in the country to quickly increase their purchases of our products,” Nam said. He noted imports were still increasing while local products were piling up.

Figures at the meeting show the country in the January-September period imported US$4.87 billion worth of oil products, an increase of 4% year-on-year.

However, traders have pointed an accusing finger at the oil refinery operated by Binh Son Oil Refinery and Petrochemical Co., a subsidiary of PetroVietnam.

Pham Thi Huyen, deputy general director of the country’s biggest oil trader Petrolimex, explained that oil traders were still importing oil products from foreign suppliers since production at Dung Quat was not stable.

Due to the unstable production at Dung Quat plant since 2009, several oil traders have since early this year signed contracts to import enough petrol for local demand until the year-end, Huyen said.

She added that domestic oil traders could not stop importing oil products under the signed contracts by this time, otherwise they will have to pay compensations.

So, she said, the reasonable thing now is that Binh Son Oil Refinery and Petrochemical Co. to secure more tanks for storing its products to avoid disrupting the Dung Quat refinery’s production plan.

The Petrolimex executive also traded barbs with PetroVietnam over what she termed as an illogical trading mode when the oil and gas group demanded that all local oil traders buy Dung Quat’s products via PV Oil. Huyen said her company wanted to buy products directly from Binh Son Oil Refinery and Petrochemical Co. to cut cost as PV Oil imposed a high intermediary fee.

Minister Hoang agreed to her point, asking PetroVietnam to allow oil traders to have direct access to Binh Son Oil Refinery and Petrochemical Co.

Nguyen Cam Tu, deputy minister of industry and trade, remarked that the operator of Dung Quat refinery was not serious in complying with production schemes that had been announced, posing difficulties for oil traders in selling its products.

Tu also requested that oil traders to purchase more from the oil refinery. “In the coming time, petroleum traders should limit imports and increase purchases from Dung Quat.”

It is not known after the meeting whether oil traders would buy more from the oil refinery, or whether the facility would have to limit production.

The US$3 billion refinery has plans to process some 5.2 million tons of crude oil to turn out some 4.1 million tons of oil products this year.

The refinery is also expected to have a total processing capacity of 6.5 million tons by 2011 to meet 30% of the country’s demand.

EVN pledges sufficient power supply in Q4

HCMC – The Electricity of Vietnam Group (EVN) pledged on Monday that the State utility would try its best to meet the country’s total power demand at some 25 billion kilowatt hours in the fourth quarter of this year.

The group’s deputy general director Dang Hoang An told an online meeting organized by the Ministry of Industry and Trade that EVN would mobilize more energy sources to minimize power outages.

EVN has had to purchase a maximum volume of power from other sources including 67.8 billion kilowatt hours from China to lessen impacts of the power supply crunch in the January-September period, An told the meeting to review industrial production in the first three quarters. He explained that power supply was strain lately due to droughts, causing the water flow to reservoirs to dwindle.

According to a report issued on Monday by the Ministry of Industry and Trade, in the last quarter of the year, some power plants are expected to start commissioning such as the first power turbine of Son La Hydropower Plant, and the first turbines of Song Tranh 2 Hydropower Plant and Dong Nai 3 Hydropower Plant.

The forthcoming operation of such hydropower plants will help ease the power shortage in the country.

However, An noted that the power outages could still occur for around ten days this month as PetroVietnam has just announced a scheme to maintain the gas pipelines of Ca Mau Gas Power Complex over ten days.

Furthermore, An of EVN also told the ministerial meeting that the most worrying problem for EVN is to cope with the water storage in the coming months, particularly during the dry season in the first half of next year.

“EVN will work with the Ministry of Agriculture and Rural Development in the coming days to seek measures for this matter,” An said, referring to the conflict of storing water for power generation and pumping water for farming.

Speaking at the meeting, Minister of Industry and Trade Vu Huy Hoang asked PetroVietnam to work with its Malaysian partner to speed up the gas pipeline maintenance and for the time being use oil to fuel the Ca Mau power plant so that it can run at full capacity in the pipeline maintenance process.

Related to industrial production of the country, the ministry in its report expected a growth rate of 14% as targeted for the manufacturing sector this year, after attaining an industrial production value of VND574 trillion in the year to date, a year-on-year increase of 13.8%.

The ministry also predicted that for the whole year 2010, the country will also obtain total export revenue of US$69 billion, an increase of 21%, while import expenditure is estimated at US$82 billion, up 17% year-on-year.

Lawmakers strike cautious note about high inflation

Lawmakers strike cautious note about high inflation Vietnam’s economic expansion must be accompanied by efforts to control public debt and inflation, legislators said.

According to a government report released at a meeting of the National Assembly’s Standing Committee on Saturday, most of the economic targets set for this year will be achieved, including an annual inflation rate of 8 percent and a 6.7 percent growth in gross domestic product.

The government also projected an economic expansion of 7-7.5 percent and 7 percent inflation for next year.

But Phung Quoc Hien, chairman of the NA’s Finance and Budget Committee, said keeping inflation at 7-8 percent a year should not be seen as a triumph.

“An economic growth of 6.7 percent would be more meaningful if inflation is controlled at a low level,” Hien said. “Other countries have inflation rates of 2-3 percent and they have already made efforts to control prices because they consider such rates too high.”

Vietnam has set its annual inflation target at 7-8 percent for several years and “this has to be reconsidered,” he said.

The Finance and Budget Committee said trade deficit and public debt expansions also posed problems to the economy.

Vietnam’s public debt is expected to reach 52.6 percent of the GDP this year and then expand to 57.1 percent in 2011, according to the government report.

Many legislators said they are concerned that these ratios pose grave threats to the safety of the economy.

Ha Van Hien, chairman of the Economy Committee, said the problem is that, while debt is expanding, it has not been used effectively.

Truong Thi Mai, chairwoman of the Social Affairs Committee, said she's worried about Vietnam's future: the national debt is huge and the country’s GDP growth has been forecast to slow down after 2020.

The government has set a budget deficit target at 5.5 percent of GDP for 2011, but the Finance and Budget Committee requested the target to be lowered to 5 percent only, or VND120 trillion.

Vietnam plans to raise minimum wage to from VND730,000 to VND830,000 a month in May of next year. The government estimated that VND27 trillion from its budget will be use to finance the plan.