Cement makers decry coal shortfall

A worker operates cement packing line in Viet Nam Cement Industry Corporation. Vinacomin says the group is not responsible for cement producers'insufficient coal supply. — VNA/VNS Photo Tuan Anh

HA NOI — Officials from Viet Nam National Coal and Mineral Group (Vinacomin) said the group was not responsible for cement producer's insufficient coal supplies.

Viet Nam Cement Corporation (Vicem) said last week that they did not have enough coal to continue producing cement and several plants may have to stop operating because of coal shortage.

Officials from Vinacomin said the Cement Material and Transport Joint Stock Company (Comatce), Vicem's affiliate, that purchases coal for the cement industry, had signed contracts with the group to provide 1.5 million tonnes to the cement group this year.

Under the contract, Vinacomin is scheduled to deliver 350,000 tonnes of coal to the cement industry during the first quarter, 400,000 tonnes during the second, 350,000 tonnes in the third and 400,000 tonnes in the forth.

During the first nine months of the year, the group delivered 1.18 million tonnes of coal to the cement sector, a slight increase compared with the 1.1 million tonnes they were supposed to provide in accordance with the contract.

Representatives from Vinacomin have relied on these facts to argue that they are not responsible for the cement sector's lack of coal. The group will continue to deliver the coal on schedule until the end of this year.

Le Minh Chuan, Vinacomin's deputy general director, said coal demand for the cement sector rose 20 per cent this year, from 1.25 million tonnes last year to 1.5 million tonnes.

On September 14, the cement industry asked the group to provide 170,000 more tonnes of coal to the sector during the month, a 50 per cent increase month-on-month, the representative said.

Vinacomin agreed to deliver 112,000 tonnes of coal this month and 100,000 tonnes during the next two months.

The group will provide 5.8-5.9 million tonnes of coal, which will allow Vicem to produce 50 million tonnes of cement this year.

Vinacomin said Vicem should utilise new technical and technological solutions and use coal reasonably to deal with its shortage.

The cement factories should sign contracts to purchase coal before building their factories because if they do not have coal contracts then they would create problems for themselves and coal producers, said a representative from Vinacomin. — VNS

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Chambers of commerce join hands for cutting red tape

Businesses register for tariff codes. The Viet Nam Chamber of Commerce and Industry and European Chamber of Commerce have agreed to join forces to promote administrative reforms to improve the business climate. — VNA/VNS Photo Hong Ky

HA NOI — The Viet Nam Chamber of Commerce and Industry (VCCI) and the European Chamber of Commerce in Viet Nam (Eurocham) agreed to foster co-operation in administrative procedures reform and boost business competitiveness, following an agreement inked between the two sides on Monday.

The co-operation between the two chambers was expected to improve the Vietnamese business environment in a move to better facilitate both domestic and foreign enterprises.

Under the two-year partnership agreement, Eurocham would supply VCCI with technical and financial assistance in administrative procedure reform.

The agreement would create more opportunities for experts and businesses to suggest how administrative procedures should be effectively improved, said VCCI vice chairman Pham Gia Tuc.

Through the Advisory Council of the Government's Administrative Procedures Reform Project or Project 30, Eurocham has made suggestions in a number of sectors in Viet Nam including tax, customs, pharmaceutical and retail. Project 30 is a plan to substantially reduce the costs and risks of administrative procedures via the simplification or abolition of unnecessary procedures.

Under Project 30, ministries and Government agencies reviewed 5,500 procedures, and proposed to eliminate 453, replace 288 and amend 3,749 to make things easier for citizens and businesses.

They estimated most ministries and agencies had met requests to cut the costs of administrative procedures by 30 per cent, equal to VND30 trillion (US$1.58 billion) per year. — VNS

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Customs to go online

Customs officers process electronic applications. — VNA/VNS Photo Pham Hau

HCM CITY — Nearly two-thirds of customs' application forms will be approved online by the end of this year, according to the HCM City's Customs Department.

To reach the goal, more than 1,600 businesses took part in a training course on electronic customs in the city yesterday.

Electronic customs will be used in the customs' sub-departments since the beginning of next month.

With electronic customs, all goods will be checked by the customs office and customers will be informed via the internet.

Under the new system, customers no longer need to bring their application forms to customs' sub-departments and wait for approval.

For customers, they only need a printed and sealed application form, then go to the customs sub-department and receive their goods.

"Seventy per cent of electronic customs will be done automatically," said Tran Ma Thong,deputy head of the municipal customs department.

Customs officials will check procedures and exchange information with colleagues through a computerised network.

With the new system, goods will be classified easily, and customs officials will know whether they need to have goods checked.

This new method will restrict contact between customs offices and customers to limit bribery as well as save expenses and time for companies.

The department has already upgraded its technical infrastructure, including servers, lease lines and software.

In case of a breakdown, the customs offices will use manual methods and add a database to the computer network later.

The HCM City's Tan Cang customs sub-department and Hai Phong Customs Department began using electronic customs on a pilot basis in October 2005. Four-hundred HCM City companies have joined the project.

The Tan Cang customs sub-department accepts an average of 150 electronic customs application forms each day.

Since early this year, the sub-department has approved 3,200 application forms with turnover of US$3.7 billion, and contributed VND6 trillion ($310 million) to the state budget. — VNS

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Vietnam starts FTA talks with Russia, Belarus, Kazakhstan

HCMC - The first working session of the research team to support a free trade agreement (FTA) between Vietnam and a customs union grouping Russia, Belarus and Kazakhstan started on Monday in Hanoi, said a top official.

The session, which was convened after 10 months of researching efforts, yielded one document on assignments for the team in the coming time and a draft platform to study impacts of the FTA on the countries, said Dang Hoang Hai, who led the Vietnamese team to the session.

On the part of the visitors, the customs union research team was led by E.E Mairova, vice director general of the Department for Trade Negotiations under Russia’s Ministry of Economic Development, and joined by economic officials of the three countries, said Hai, who is director general of the Europe Market under Vietnam’s Ministry of Industry and Trade.

“They are not yet FTA negotiations but (such documents are) important to do next steps to hasten the progress,” Hai told the Daily via the phone on Monday, adding that the next discussion is expected to start in December 2010 in Moscow. The FTA negotiations only start when an agreement between the leaders of the countries is reached.

Hai said that he had no idea about what sectors would be discussed because the progress is still limited to the feasibility study. Meanwhile, according to Vietnam News Agency, the FTA negotiations are expected to discuss tariff barriers, services and investment, and intellectual property. 

Hai added that the potential free trade agreement would be the first FTA for Russia.

“Russia has decided to start its first-ever FTA with Vietnam because the South East Asian country is its strategic partner. In addition, Russia wants to increase its presence in Asia as well as ASEAN,” Hai explained.

The FTA is expected to boost trade between the countries. Among them, Vietnam can increase exports of farm products, seafood, and garments to Russia, while the latter can spur exports of fertilizers, gas, nuclear energy, vehicles and heavy industry products.

In an official visit by Prime Minister Nguyen Tan Dung to the Russia in December 2009, the two countries’ leaders made an agreement on starting feasibility studies for the free trade agreement between Vietnam and the customs union.

It is forecasted that two-way trade between Vietnam and Russia will gain nearly US$3 billion this year and touch the target of US$10 billion in the future.

Vietnam has up to now signed some FTAs, including membership in the ASEAN free trade area, as well as FTAs between ASEAN and China, Japan, Korea, India, Australia and New Zealand.

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Banks say cutting rates still a challenge

HCMC – Several bankers say it still proves difficult to cut interest rates in the rest of the year, borrowing and lending alike, as instructed by the Government although their current capital has got a spur following amendments to Circular 13.

The general director of a bank in HCMC’s District 1 said that his bank would not lower the lending rate any more between now and the end of the year as its profit up to date was so low compared to the year’s target. In addition, given current deposit rates, mobilization in Vietnam dong at the bank cannot increase much so the possibility of trimming the rate would be low, he added.

Another banker in HCMC said the rate cut would be minimal if any.

After Circular 13 was amended, which effectively means quantitative easing, the amount of current capital has increased as banks can use part of corporate deposits under call terms for lending, a practice banned under the circular.

However, “although there is the possibility of lower lending rates, the reduction will not be substantial,” explained the banker, who serves as deputy director of the HCMC branch of a big bank.

In September, Vietnam Banks Association had meetings with banks in Hanoi and HCMC to encourage them to reduce interest rates under the Government’s requirement. The association encouraged banks to cut mobilization rates to 11% from October 15 from the current 11.2% per year.

Early this month, the association has sent a document asking banks to comply with the requirement, but Duong Thu Huong, the association’s general secretary, told the Daily that banks would look at each other before making any rate cut decision due to fear of losing depositors.

“Banks are very much hesitant over the rate cut as demanded by the association,” Huong said.

In fact, commercial banks have launched a lot of promotion programs to lure depositors. Besides, according to the leader of a joint-stock bank, several lenders even negotiate deposit rates with clients at this time.

However, Huong also said that besides amending the Circular 13, the interest rates are also determined by the country’s inflation rate this year, which usually gains a faster pace towards the year’s end, as seen in the September CPI at 1.31%.

In addition, deposit rates for the U.S. dollar and gold are increasing, making it harder to cut the rate in Vietnam dong. Therefore, Vietnam Bank Association has asked banks to lower their dollar and gold rates also.

Many banks said that their deposits in gold have strongly increased after the interest rates have increased to 1%-2% per year.

According to the third quarter report of the State Bank of Vietnam, lending rates in Vietnam dong for agricultural sector, exporters, small and medium enterprises are around 12%-12.5% at State-owned banks and 12.5%-13.5% at joint-stock banks while rates for other loans are from 13% to 15% per year. However, only banks’ close corporate clients can enjoy those rates while others are charged at least one percentage point higher.

The report also said that mobilization and lending rates could not decrease to the levels asked by the Government (deposit rate at 10% and lending rate at 12%) due to high pressure on inflation and banks’ difficulties in mobilizing fund.

The new report of the National Financial Supervisory Commission said that after changes to Circular 13, the capital flow has got bigger but basically it is still restricted by the loans-to-deposit ratio at 80% for banks.

In 2009, banks’ outstanding loans accounted for 96.93% of total mobilization, and the ratio was 92.96% in the first half this year. Reducing the ratio further to 80% from October 1 has also proved a hard nut to crack for many banks.

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Banks say cutting rates still a challenge

HCMC – Several bankers say it still proves difficult to cut interest rates in the rest of the year, borrowing and lending alike, as instructed by the Government although their current capital has got a spur following amendments to Circular 13.

The general director of a bank in HCMC’s District 1 said that his bank would not lower the lending rate any more between now and the end of the year as its profit up to date was so low compared to the year’s target. In addition, given current deposit rates, mobilization in Vietnam dong at the bank cannot increase much so the possibility of trimming the rate would be low, he added.

Another banker in HCMC said the rate cut would be minimal if any.

After Circular 13 was amended, which effectively means quantitative easing, the amount of current capital has increased as banks can use part of corporate deposits under call terms for lending, a practice banned under the circular.

However, “although there is the possibility of lower lending rates, the reduction will not be substantial,” explained the banker, who serves as deputy director of the HCMC branch of a big bank.

In September, Vietnam Banks Association had meetings with banks in Hanoi and HCMC to encourage them to reduce interest rates under the Government’s requirement. The association encouraged banks to cut mobilization rates to 11% from October 15 from the current 11.2% per year.

Early this month, the association has sent a document asking banks to comply with the requirement, but Duong Thu Huong, the association’s general secretary, told the Daily that banks would look at each other before making any rate cut decision due to fear of losing depositors.

“Banks are very much hesitant over the rate cut as demanded by the association,” Huong said.

In fact, commercial banks have launched a lot of promotion programs to lure depositors. Besides, according to the leader of a joint-stock bank, several lenders even negotiate deposit rates with clients at this time.

However, Huong also said that besides amending the Circular 13, the interest rates are also determined by the country’s inflation rate this year, which usually gains a faster pace towards the year’s end, as seen in the September CPI at 1.31%.

In addition, deposit rates for the U.S. dollar and gold are increasing, making it harder to cut the rate in Vietnam dong. Therefore, Vietnam Bank Association has asked banks to lower their dollar and gold rates also.

Many banks said that their deposits in gold have strongly increased after the interest rates have increased to 1%-2% per year.

According to the third quarter report of the State Bank of Vietnam, lending rates in Vietnam dong for agricultural sector, exporters, small and medium enterprises are around 12%-12.5% at State-owned banks and 12.5%-13.5% at joint-stock banks while rates for other loans are from 13% to 15% per year. However, only banks’ close corporate clients can enjoy those rates while others are charged at least one percentage point higher.

The report also said that mobilization and lending rates could not decrease to the levels asked by the Government (deposit rate at 10% and lending rate at 12%) due to high pressure on inflation and banks’ difficulties in mobilizing fund.

The new report of the National Financial Supervisory Commission said that after changes to Circular 13, the capital flow has got bigger but basically it is still restricted by the loans-to-deposit ratio at 80% for banks.

In 2009, banks’ outstanding loans accounted for 96.93% of total mobilization, and the ratio was 92.96% in the first half this year. Reducing the ratio further to 80% from October 1 has also proved a hard nut to crack for many banks.

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Office rent continues downward trend

HCMC – The average office rent in HCMC continued its downtrend as supply increased further in the third quarter of this year, posing more pressure on rent and occupancy benefiting tenants, according to Savills Vietnam.

The market research company released its quarterly report last Thursday, noting that office rent dropped some 3% compared to the previous quarter since property owners were anxious about the risk of oversupply.

The market witnessed asking rents in Grade A office segment dropped 3% to US$57, Grade B was down 2% to US$33 and Grade C also fell 2% to US$22 per square meter per month. However, average occupancy remained stable at 85% thanks to the arrival of new tenants and a shift from private houses to professionally-managed buildings.

Tran Nhu Trung, associate director of research and consulting for Savills Vietnam, said oversupply and competition would continue to drag down rents and occupancy across all the three grades. The competitive rental market, however, will give more chances to tenants in selecting quality serviced buildings.

Savills, however, projected that demand for office space, in the mid and long-term, would continue to increase given the expected high growth of the city’s economy. Grade A office buildings are waiting for a new wave of foreign direct investment inflow, while Grade B and Grade C buildings depend much on the health of domestic investment.

The city’s office market has 154 office buildings at all grades, offering nearly a million square meters of office spaces, with Grade B office more dominant with a 50% market share.

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