Saturday, February 5, 2011

Air travel surges 20 percent in 9 months

The aviation market in the first nine months saw a year-on-year increase
of more than 20 percent in the number of passengers, estimated the
Civil Aviation Administration of Vietnam.


The administration estimated that roughly 15 million passengers went
through the country's airports in the first nine months of this year, of
which Vietnam Airlines, Jetstar Pacific and Vietnam Air Service Co
(Vasco) accounted for more than 11 million.


In the
first nine months, the administration also estimated that roughly
340,000 tonnes of goods were transported via air, an increase of 36
percent over the same period last year.


Industry
insiders forecast the country's aviation market in the last quarter will
continue to surge due to an increased number of flights licensed by the
aviation authorities for foreign airlines including Turkish Airlines,
Poland 's LOT and Qatar Airways.


Vo Huy Cuong,
director of the administration's Air Transport Department, attributed
the steady growth to the continuing strong expansion of the domestic
segment backed by flagship carrier Vietnam Airlines.


Cuong said that Vietnam Airlines and its subsidiary Vasco still account
for the lion's share of around 80 percent of the domestic market while
the rest is covered by Jetstar Pacific.


With the
introduction of Air Mekong and Blue Sky Air recently, which lifts the
number of operational airlines in the country to nine, it is expected
that the competition in the domestic aviation market will increase.


The administration expects that the country's overall aviation market
will grow roughly 20 percent in 2010, higher than the 14 percent figure
it projected earlier this year, thanks to more domestic services and a
significant increase in the number of international visitors.


The administration's statistics showed that roughly 26.2 million
passengers and 445,800 tonnes of cargo were transported by air last
year, four times higher than in 2000./.

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State to develop fertiliser plan

State to develop fertiliser plan

The control of fertiliser production and distribution systems, to be
approved this month, is expected to benefit both farmers and businesses.


Speaking at a conference on Oct. 12 outlining fertiliser production
development for the next 10 years, the Deputy Minister of Industry and
Trade (MIT), Nguyen Hai Nam , said fertiliser is a strategic product
that helps ensure national food security.


Although
the Government has cooperated closely with the Vietnam Fertiliser
Association in planning fertiliser production and quality, farmers are
still faced with shortages and "price fever" when demand soars before
planting, said Phung Ha, head of MIT's Department of Chemicals.


Secretary of the association Nguyen Hac Thuy said there has been no
clear development strategy for the fertiliser industry and that demand
is unpredictable.


According to the association,
farmers lose 1.2 trillion VND (60 million USD) each year due to the
low-quality and fake fertiliser products.


This
year, the nation's demand for fertiliser is forecast to reach 9.1
million tonnes, but domestic production can satisfy only 60 percent of
this.


A report from An Giang University's Economics
Faculty claims farmers have to buy fertilisers at prices 30-40 percent
higher than those offered by producers. They often have to buy
low-quality products from small firms because State authorities can only
supervise large fertiliser companies.


Ha said one
of the reasons fertiliser prices are often unstable was that
distribution systems develop spontaneously. Products come to farmers
through many middlemen.


Ha said when planning is
approved, fertiliser distribution systems will develop based on the
establishment of agricultural economic areas, demand in each area, the
characteristics of local economic activities and farmers' purchasing
practices.


Under the plan, from now to 2015,
fertiliser distribution centres will be set up in Lao Cai, Phu Tho, Bac
Giang, Hai Duong, Ninh Binh, Nghe An, Da Nang, Binh Dinh, Dac Lac, Lam
Dong, Long An, An Giang, Can Tho and Kien Giang.


Ha
said to make planning more efficient, State agencies should change
their ways of management. He added that producers must be granted
certificates setting out conditions for business required by the
Ministry of Industry and Trade. Otherwise they should not be allowed to
trade.


He said this would help weed out small-scale companies using old technology and those producing low-quality fertiliser./.

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IFC eyes An Binh Bank investment

The International Finance Corporation (IFC) plans to forge a long term partnership with An Binh Bank (ABB).


IFC, a financial arm of the World Bank, will provide a long term 75 million USDloan to the bank.


The IFC is considering investing up to 50 million USD in the bank by
purchasing senior and convertible debt instruments. The investment is
expected to help the bank maintain a healthy Capital Adequacy Ratio
(CAR), while improving its loan portfolio.


A reliable
source from An Binh Bank said that the two sides were in the process of
negotiating the 50 million USD investment deal.


The
corporation also plans to provide a 25 million USD loan to the bank to
help support climate change initiatives and enhance financing for
eligible projects in the Energy Efficiency (EE) and Cleaner Production
(CP) sectors. These projects are congruent with the IFC's financial
strategy for Vietnam and are in line with the WB's efforts to use
market mechanisms to mitigate climate change's impacts in Vietnam .


IFC has been working with An Binh Bank on several projects to support
small and medium sized enterprises (SMEs) and to finance enterprises
that are committed to protecting the environment and conserving energy.
IFC also promises to help An Binh Bank to improve its technological
infrastructure and corporate governance.


By the end of
last month, the bank had total assets worth 36.26 trillion VND (1.85
billion USD) and a total outstanding loan worth 17.95 trillion VND
(920.51 million USD). The bank earned 546.2 billion VND (28 million USD)
in pre-tax profit during the first nine months of the year, a 94.1
percent increase against the same period last year.


An
Binh Bank has 3.48 trillion VND (178.46 million USD) in charter capital,
and the financial institute plans to increase its charter capital to
3.83 trillion VND (196.41 million USD) by the year's end.


Last week the IFC bought 10 percent stake, worth 190 million USD, in Vietinbank./.

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Vietnam steps up drive to tamp down inflation

HANOI - Vietnam is redoubling its efforts to tamp down inflation in the final months of 2010 amid concerns that rising prices will add to the downward pressure on the dong and get uncomfortably high ahead of a big political meeting.

A Reuters poll published on Thursday showed economists in Vietnam and outside expect consumer prices to rise 8.5 percent this year, exceeding a government target of 8 percent. They also saw the dong weakening into next year.

With end-of-year inflation pressures set to build, Prime Minister Nguyen Tan Dung issued a directive this week for government ministries and provincial authorities to strengthen measures to stabilize prices in the fourth quarter.

The finance ministry, meanwhile, took another step last week towards much-criticized price controls by naming 150 companies, including several foreign firms, that will be required to register new prices.

Annual inflation in September jumped to 8.92 percent from 8.18 percent in August, stoking fears of a return to high inflation, even though economists mostly attributed it to one-off factors.

"Obviously the action of the prime minister and the ministry of finance is reflecting at least partially the huge concern and the reaction of the population to the very high consumer price index in September, and expectations that it will continue to rise in October," said former government adviser Le Dang Doanh.

Dragon Capital, a Vietnam fund management firm, said in a report this week September's figure was "a bit unsettling", prompting it to raise its full-year CPI forecast to 8.9 percent from 7.8 percent.

"Inflation needs to be handled because it is a key driver of currency weakness -- the other one being the trade deficit, which is probably flatlining now, but is still big," it said.

Limited effect

The dong has slipped some 2.3 percent on unofficial markets since Aug. 18 when the central bank devalued the currency for the third time since last November.

The currency has come under renewed pressure, in part due to the meteoric rise in world and domestic gold prices, but confidence in the dong is anyway chronically weak in Vietnam.

With third-quarter gross domestic product growth at a comfortable 7.16 percent from a year earlier, on target to meet the government's goal of 6.5 percent for 2010, economists say the authorities have shifted their focus to inflation.

But Jonathan Pincus, head of the Fulbright Economics Teaching Program in Ho Chi Minh City and a former U.N. economist, said the government was taking the wrong approach.

"Reducing the fiscal deficit and tightening monetary policy are necessary now to take pressure off the currency in the short term and reduce expectations of inflation," he said.

"Administrative measures will not achieve these goals, since the problem is not, as the government often assumes, high levels of profit. Rather, profits are squeezed because input and financing costs are rising for domestic firms, while the scope for price increases is limited by the availability of cheap imports."

Still, Doanh said the government's efforts were understandable.

"It's very sensitive," he said. "We are approaching the Lunar New Year and approaching the Party Congress. If on the brink of the Party Congress the consumer price index is accelerating, I think it's a big problem."

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Toyota may end Corolla exports from Japan due to yen

TOKYO - Toyota Motor Corp is considering halting exports from Japan of the Corolla sedan from around 2013 and shifting that output overseas due to the yen's strength, the Tokyo Shimbun daily reported on Thursday.

The yen's rise to a 15-year high against the dollar is threatening the competitiveness of Japanese exports and prompting manufacturers to consider shifting more output outside Japan.

The Corolla is one of Toyota's best-selling models and is built in 15 countries. In 2009, Toyota made about 235,000 Corollas in Japan -- nearly 60 percent of those exported -- and 815,000 abroad. Toyota is due to start producing the Corolla at its new Mississippi plant from autumn 2011 after the closure of a California factory formerly owned with General Motors Co.

Toyota spokesman Paul Nolasco said the company was constantly looking to optimize its global production structure, but that no decision had been made regarding the shift of export-bound Corollas outside Japan.

"At the current exchange rate, the more Corollas Toyota ships overseas, the more money it loses," Advanced Research analyst Koji Endo said. He added that to make money on the compact Corolla model, Toyota would have to shift production overseas or drastically reduce costs, or both.

Tokyo Shimbun reported that the world's largest car maker was also considering shifting production of all Corolla cars sold in Japan to one of its subsidiaries. Toyota currently builds the model at its own Takaoka factory, and at two units, Kanto Auto Works and Central Motor Co.

In a similar move aimed at making its domestic operations more competitive, Nissan Motor Co said this month it may turn one of its Japanese factories into a new subsidiary, allowing it to broach wage negotiations with labor unions and seek lower prices from suppliers.

Most automakers have vowed not to close any assembly plants in Japan but executives have warned that suppliers may be forced to shift production abroad in a threat to jobs in Japan's fragile economy.

"Maybe they don't realize just how much damage poses on companies," Mitsubishi Motors Corp President Osamu Masuko told reporters on Thursday.

"I guess we have to speed up our efforts to deal with the strong yen. Shifting production overseas takes time, but for example we can vastly increase purchases of auto components from abroad. That can be done in the near term."

Toyota is aiming to make its domestic factory lines more flexible and introduce other changes to be able to break even at a dollar rate of 90 yen and capacity utilization of 70 percent, equivalent to daily production of 12,000 units.

The dollar was trading near 81 yen on Thursday.

A production shift away from Japan would mean even more capacity in Japan would go unused unless Toyota is able to fill the hole with other cars.

Overall production of vehicles in Japan plunged 31.5 percent in 2009 to 7.93 million units, below 10 million for the first time in eight years. Exports fell by a much sharper 46 percent as automakers sought to limit foreign exchange losses.

Shares of Toyota closed up 3 percent at 2,930 yen, while the benchmark Nikkei average gained 1.9 percent.

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Vietnam public debt rises to $600 per capita

With Vietnam's total public debts at 51.7 percent of GDP, each Vietnamese owes nearly US$600, according to the “global debt clock” in the UK-based magazine, The Economist.

The clock, available at http://www.economist.com/content/global_debt_clock, does not stop ticking, adding several hundred thousand dollars every second.

At 9:30 am in Vietnam today, the global debt had risen to $39.95 trillion from $39.79 trillion at 3:00 pm Tuesday.

Vietnam's debt was $50,935,068,493 (US$50.9 billion), meaning its 87.6 million people each owe $581.45.

Since 2001, when it was a mere $106 per capita and 26.6 percent of GDP, the figure has been rising.

The forecast for 2011 is slightly optimistic since, though the debt will increase by nearly $6 billion, as a ratio of GDP it will fall to 50.9 percent. The per capita figure will be $638.

The US, Canada, and Western Europe lead the ranking. Every French citizen, for instance, bears a debt of nearly $32,000 while in Greece it is $34,000.

The International Monetary Fund warned recently that unemployment, high public debt, and a weak banking system will be a threat to global prosperity.

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World Bank arm eyes stake in ABBank

The World Bank’s International Finance Corp said in its website that it is plans to invest in An Binh Commercial Joint Stock Bank.

It will buy convertible bonds for around US$50 million and provide a $25 million loan to the bank, including $5 million from its Clean Technology Fund.

The investment will help ABBank, as An Binh is known, ensure capital adequacy which has recently been raised to 9 percent of assets, the international norm for banks under the Basel II agreement.

The $25 million loan is meant to help businesses undertake environmental protection and energy saving activities, and is consistent with the World Bank’s goal of using the market mechanism to mitigate the impacts of climate change in Vietnam.

ABBank has a tie-up with the IFC for two programs -- consultancy for small and medium-sized enterprises and support for firms committed to environmental protection and energy saving.

IFC also pledged to provide supports on technique, customer consultancy and improve corporate management for the local bank.

ABBank has a chartered capital of VND3.5 trillion ($179.5 million) which is likely to rise to VND3.83 trillion following a proposed bonus issue at the end of this year at the rate of one share to every 10 held.

Its main shareholders include the Electricity of Vietnam Group with 24 percent, Malaysia’s Maybank (20 percent), and its chairman, Vu Van Tien (17 percent).

The bank has assets of VND36.26 trillion and outstanding loans of around VND18 trillion.

In the first nine months it reported a pretax profit of VND546.2 billion, a year-on-year rise of 94 percent.

Last week the IFC also signed a memorandum of understanding to invest in the Vietnam Commercial Joint Stock Bank for Industry and Trade (VietinBank).

VietinBank said the IFC plans to buy a 10 percent stake for $190 million.

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