Survey targets industrial investors

Workers of the Nidec Co operate lathes in HCM City's high-tech park. A survey will assess the impact of foreign investment on industrial development. — VNA/VNS Photo Van Khanh

HA NOI — The Viet Nam Industrial Investor Survey 2010 was officially launched yesterday by the Ministry of Planning and Investment's Foreign Investment Agency (FIA) and the UN Industrial Development Organisation (UNIDO).

The survey, which will be conducted from October 25, 2010 to January 15, 2011, is expected to provide policy-makers with data for assessing the impact of the foreign-invested sector on Viet Nam's economic development by looking specifcally at the impact of foreign investment on the development of domestic enterprises.

The survey will analyse the performance of these enterprises and their assessment of the local business climate and also help enhance the investment capacity of the national institutions.

It will be conducted in nine cities and provinces where the majority of domestic and foreign-invested enterprises are based.

Over 1,640 manufacturing, processing and construction firms - 60 per cent of which are foreign-invested - will be selected randomly from a total of 6,830 firms across Ha Noi, Vinh Phuc, Bac Ninh HCM City, Hai Phong, Da Nang, Binh Duong, Dong Nai and Ba Ria - Vung Tau.

The survey's findings will be consolidated on the web-based interactive Viet Nam Investment Monitoring Platform that enables authorities and enterprises to make enquiries to better understand the domestic investment environment.

FIA director Do Nhat Hoang invited all enterprises to participate in the survey, saying that it would create a chance for participants to get free access to business partners, suppliers and potential customers who have taken part in the UNIDO international network of investment and technological promotion offices.

With UNIDO's technical and financial supports, the survey is expected to be conducted every two years.

In addition to the Investment Monitoring Platform, FIA is joining hands with UNIDO and the Viet Nam Chamber of Commerce and Industry to develop the Supplier and Partnership Exchange (SPX), which is intended to strengthen the linkages between foreign and domestic enterprises in sectors such as metal processing, plastics and footwear.

The survey's data and the SPX will be integrated to support domestic firms in promoting investment and linking them with foreign-invested and large-scale enterprises, said Nilguen Tas, a UNIDO representative in Viet Nam. — VNS

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Inflation undercuts growth gains

HA NOI — Viet Nam is quickly recovering from the financial crisis and can easily attain its targeted growth rate for this year, although inflation remains a huge challenge, said the World Bank in its East Asia and Pacific Economic Update yesterday.

Titled ‘Robust Recovery, Rising Risks', the half-yearly update gives assessments and outlooks on economies in the Asia-Pacific region.

"The target for real GDP growth in 2010 is an easily attainable 6.5 per cent," said the report on Viet Nam.

"The recovery has consolidated in recent months."

The country escaped from the global financial crisis "better than could have been anticipated" thanks to a sizeable stimulus package during the last two years.

However, World Bank economists also noted that it's time for the country to phase out its stimulus programme, given the much improved global economic environment.

On the other hand, it will be difficult to keep the inflation rate below 7 per cent in line with targets set by the National Assembly, notes the report.

"On a monthly basis, inflation started accelerating in the last quarter of 2009," reads the update.

The World Bank attributes the inflation risk to "higher commodity prices, devaluation of the dong, and adjustments in energy prices".

As for the budget deficit, the report predicts a substantial contraction compared with last year, given an overall deficit of slightly more than 6 per cent of GDP as translated from the national 2010 budget plan.

"Viet Nam's debt is likely to remain sustainable if the current economic recovery continues and authorities revert to a budget deficit in the order of 3 to 4 per cent."

The World Bank's economists also urged local regulators to increase interest rates to counter foreign currency and gold speculation.

"Gold speculation by local investors had led to worrying price spikes, affecting market sentiment," says the report.

The rising inflationary pressures and the return of large capital flows presents an emerging policy challenge and a risk to macro-economic stability, said the report in a warning to regional governments.

"The exchange rate in Viet Nam is not over-valued," said Deepak Mishra, a leading economist of the World Bank in Viet Nam, dispelling concerns over the dong's devaluation.

On the other hand, country director of World Bank Viet Nam Victoria Kwakwa recommended the country build more confidence in its macro-economic management . — VNS

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Vietnam Airlines cancels 30 flights due to downpours

HCMC – Vietnam Airlines on Monday said that torrential rains in central Vietnam in the past days had forced it to cancel at least 30 flights to Vinh and Chu Lai, but it pledged more flights than usual soon to transport stranded passengers.

The national flag air carrier aborted 28 services to and from Vinh City and two from and to Chu Lai in Quang Nam Province from October 15 to 18. Meanwhile, Jetstar Pacific said it had to divert two flights from Tan Son Nhat Airport to Noi Bai Airport instead of landing in Vinh on October 17 and 18.

Vietnam Airlines conducted two flights from Vinh to HCMC on Monday, using Airbus A321, and plans four services out of its normal schedule between the central city and HCMC on Tuesday.

The carrier plans to resume six daily flights between HCMC and Vinh and two daily services between Hanoi and Vinh as usual from Tuesday. Vietnam Airlines said it had prepared for Typhoon Megi, which is forecast to reach the Eastern Sea on Tuesday afternoon and may affect the flights bound for central Vietnam.

The carrier called for passengers to check the latest information about its flights to the region on its website at www.vietnamairlines.com and booking offices.

Jetstar Pacific told the Daily that it was keeping itself abreast of developments of Super Storm Megi in order to have proper plans to operate its flights to central Vietnam and mitigate impact on passengers.

Vietnam’s civil aviation regulations clarify flight cancellations due to storms are unavoidable so airlines do not have to pay compensation for affected passengers. Airlines often help passengers travel by road to their planned destinations if they have to divert their planes to a new destination because of bad weather.

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Deposit rates inch down to reluctant 11%

A customer scrutinizes deposit rates offered by Vietnam Asia Commercial Bank. Deposit rates are now at the same level of 11% for terms from one to 36 months - Photo: Thuy Trieu

HCMC – Almost all commercial banks have complied with a pledge made earlier to reduce their deposit rates, but signs of reluctance are seen in the new move when lenders quote the same rate of 11% for deposits of all terms.

Since late last week, banks have cut their rates for Vietnam dong deposits to a maximum of 11% per year for terms starting from one month instead of the previous level of 11.2% under their commitments with the Vietnam Banks Association.

Some big banks such as Asia Commercial Bank, Vietnam Export Import Commercial Bank and Vietcombank have revised their deposit rates for Vietnam dong with the highest rate standing at 11% per year.

On Monday, many other banks also followed suit.

The new common rate is believed to put smaller banks at a disadvantage in competition with larger institutions. Furthermore, operating costs will also be higher as banks may attract short-term funds only when offering the same interest rate.

That means banks will have to rely on promotions to lure depositors.

At Vietnam Asia Commercial Bank, those who deposit at least VND20 million for six, nine, or 12 months can enjoy a lot of incentives such as added rate for depositors older than 50 years, bonus cash depending on the deposit value, and vouchers to buy goods.

Therefore, depositors now do not need to compare interest rates offered by different banks but will look at available promotion programs.

However, lower borrowing rates will make it possible for banks to cut lending rates as well, a move sought by the Government and the central bank.

Dam The Thai, deputy general director of HDBank, said that if all banks agree to lower deposit rates, the capital cost will fall, offering lenders a chance to cut their lending rates.

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Honda replaces faulty part for 2,154 scooters

Honda LEAD scooters at a product launch in Vietnam in a file photo - Photo: Quoc Hung

HCMC - Honda Vietnam Co., the leading motorcycle maker in Vietnam, will replace a faulty fuel tank part for 2,154 LEAD scooters though it has yet to receive any complaint from customers.

According to a Honda internal test, the defect with a fuel tank bolt does not threaten the motorcycle safety and operation but the company has decided to replace the bolt.

Honda Vietnam said this error affects one lot only.

The replacement is applicable to the LEAD motorcycles with frame numbers between RLHJF240 AY 038651 and RLHJF240 AY 041170 for white stripe and between RLHJF240 AY 715610 and RLHJF240 AY 716800 for gold stripe.

Replacement work is done at HEAD agencies at no cost until the end of this month. HEADs will contact customers by phone and letter.

The company launched the LEAD in late 2008, which is similar in design to the Honda SCR scooter made in China.

The 108cc scooter is manufactured at the company’s second plant in the northern province of Vinh Phuc and hit the market in early January 2009.

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ADB finds dollars dull SE Asian financial controls

Vietnam has made progress in dealing with dollarization but more efforts are needed to enhance confidence in the local currency, the Asian Development Bank said in a statement last week.

The Manila-based bank just published a study about the economic impact of having multiple currencies circulate in Vietnam, Laos and Cambodia. In these countries, the bank found, foreign currencies are widely used, particularly the US dollar.

“The share of foreign currencies ranges from around 20 percent of all currency in circulation in Vietnam, about 50 percent in Lao PDR, and more than 90 percent in Cambodia,” the bank said.

ADB said that, aside from certain benefits, the use of multiple currencies reduces economic authorities’ control over monetary and exchange rate policies.

“Dollarization blunts the tools for macroeconomic stabilization, especially monetary and exchange rate policy, that a country like Vietnam needs in order to tackle a variety of economic and developmental challenges, such as rising inflation,” said Jayant Menon, Principal Economist in ADB’s Office of Regional Economic Integration.

“Vietnam has made good progress in de-dollarization,” says Ayumi Konishi, ADB Country Director. “Yet, authorities, especially the State Bank of Vietnam, are fully aware that administrative measures alone cannot be effective… it is essential to enhance people’s confidence in Vietnamese dong through sustainable and high economic growth, stabilization of the foreign exchange rate, reforms in monetary policies, and strengthening of the capacity of financial institutions.”

The study also suggested that “sharing information and experiences would help the monetary authorities of Cambodia, Lao PDR, and Vietnam to find a solution to the dollarization issue.” The three countries have a lot to gain from closer cooperation, it added.

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Dung Quat refinery faces year-end surplus

PetroVietnam, the nation's state-owned oil and gas group, has said that its Dung Quat refinery will face a surplus of around 157,200 cubic meters this year even if local fuel traders try their best to purchase its products.

Petrolimex, a subsidiary of PetroVietnam that owns more than a 50 percent share of the domestic fuel market, plans to buy 273,100 cubic meters this month and at least another 407,300 cubic meters in the next two months, VnExpress reported Monday.

Other traders, including PV Oil, Petec and the jet fuel firm Vinapco, also announced plans to purchase Dung Quat’s products.

PetroVietnam said that, by the end of December, fuel companies will not be able to use up all of their inventory.

On October 4, the group announced that Dung Quat, Vietnam’s first oil refinery, had 750,000 tons of oil and gasoline products in stock and not enough space to store them.

The plant has been running at full capacity, or 30 percent higher than the plan for this year.

The Ministry of Industry and Trade has ordered PetroVietnam to balance supply and demand in the domestic market next year.

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