Power firms may be given more freedom in pricing

Vietnam may allow power companies to adjust prices on a quarterly basis as the country plans to create a more market-based pricing scheme for its power sector.

According to new regulations drafted by the Ministry of Industry and Trade, power wholesalers will be allowed to raise their prices accordingly if production costs increase by more than 1 percent from the previous quarter. In case of a price hike of more than 10 percent, the government will take measures to stabilize the market.

Power companies will be required to set aside parts of their profits for a price stabilization fund which will be used to offset future losses when production costs surge. The fund resembles a stabilization fund used by fuel traders.

Vietnam’s government currently allows power prices to change once a year. The most recent change was a 6.8 percent hike in March based on higher input costs for power production.

The new regulations are expected to be approved by the end of this year and new power prices will be announced in March 2011.

Officials at the Industry and Trade Ministry and state power utility Electricity of Vietnam (EVN) have said that the increase will be small and will not have any significant impact on daily life or production.

According to the Vietnam Energy Association, current power prices of around 5 US cents per kilowatt-hour are not attractive enough to encourage investment in the sector, as manufacturers only earn profits at prices of about 7-8 cents per kWh.

EVN posted a loss of more than VND3 trillion in the first six months this year because retail prices were set so low, the association said.

An EVN official said a more market-based pricing mechanism could help improve the companies financial situation and make it easier to secure loans.

Related Articles

• Power firms may be given more freedom in pricing
• Assoc insists on power price hike despite protests
• Spanish firms see Vietnam as good production base
• Foreign sea leases deprive locals of living
• IMF boss sees low risk of 'currency war'

Power firms may be given more freedom in pricing

Vietnam may allow power companies to adjust prices on a quarterly basis as the country plans to create a more market-based pricing scheme for its power sector.

According to new regulations drafted by the Ministry of Industry and Trade, power wholesalers will be allowed to raise their prices accordingly if production costs increase by more than 1 percent from the previous quarter. In case of a price hike of more than 10 percent, the government will take measures to stabilize the market.

Power companies will be required to set aside parts of their profits for a price stabilization fund which will be used to offset future losses when production costs surge. The fund resembles a stabilization fund used by fuel traders.

Vietnam’s government currently allows power prices to change once a year. The most recent change was a 6.8 percent hike in March based on higher input costs for power production.

The new regulations are expected to be approved by the end of this year and new power prices will be announced in March 2011.

Officials at the Industry and Trade Ministry and state power utility Electricity of Vietnam (EVN) have said that the increase will be small and will not have any significant impact on daily life or production.

According to the Vietnam Energy Association, current power prices of around 5 US cents per kilowatt-hour are not attractive enough to encourage investment in the sector, as manufacturers only earn profits at prices of about 7-8 cents per kWh.

EVN posted a loss of more than VND3 trillion in the first six months this year because retail prices were set so low, the association said.

An EVN official said a more market-based pricing mechanism could help improve the companies financial situation and make it easier to secure loans.

Related Articles

• Power firms may be given more freedom in pricing
• Assoc insists on power price hike despite protests
• Spanish firms see Vietnam as good production base
• Foreign sea leases deprive locals of living
• IMF boss sees low risk of 'currency war'

Small firms steered towards higher interest consumer loans

Small companies are complaining that they are not able to access loans to do business unless they accept higher interest rates.

Nguyen Hai Son, who owns a small transport company in Hanoi, said he wanted to apply for a bank loan to buy three new cars to expand his business.

Son visited three banks and he was told that a corporate loan would only cover half of the cars' value. For a larger loan of up to 90 percent of the value, he was advised to take out consumer loans instead.

The problem is the interest rates on consumer loans are higher, at 16-18 percent a year compared to 13.5 percent on business loans. Son said his company is now stuck with either accepting high interest payments or being given much less money than needed.

Many other small companies also said they have been encouraged to get consumer loans to do business.

The government earlier this year ordered banks to bring down interest rates to make sure local businesses have enough capital. Borrowing costs are set to be cut to 12 percent and the deposit rate to 10 percent by the end of this year.

To ensure their profit targets are met, many banks have tried to boost consumer lending so that they can charge high interest rates.

Tran Xuan Quang, deputy general director of Bao Viet Bank, said banks do not have large amount of funds available for lending, so they try to choose clients who can bring them more profit.

Moreover, it would be easy for a business to meet consumer loans requirements, he said.

Economist Nguyen Duc Thanh of the Hanoi National University said small businesses are not large clients and it’s hard to tell whether their owners will use the loan for consumer or business purposes. As a result, they can be treated by bank rather harshly.

According to the central bank’s branch in Ho Chi Minh City, consumer loans as of the end of August accounted for 5.2 percent of total loans in the city.

Related Articles

• Small firms steered towards higher interest consumer loans
• Power firms may be given more freedom in pricing
• Spanish firms see Vietnam as good production base
• Timber-product exporters sign $3b deals
• Greenback firmer on signs of rising demand

Early warning system on anti-dumping cases kicks off

HCMC – The website to give early warnings on anti-dumping investigations against Vietnam’s exports bound for the U.S. and EU was officially launched last Wednesday by Ministry of Industry and Trade.

Trinh Tuan Anh, head of International Cooperation Board in Vietnam Competition Authority of the ministry, told the Daily via the phone that the website keeps local enterprises informed of potential risks of anti-dumping investigations against Vietnamese exports.

Commodities put under consideration include textile and garment, footwear, seafood, furniture and electric cables imported by the U.S. and the EU.

Based on legal regulations of importing countries, the system gives red warning as the highest warning level, or yellow for lower risk and green for no risk. Besides, the web also provides information on anti-dumping duties and timeline of cases.

The system is expected to be updated and adjusted regularly based on data of the U.S. and EU imports from Vietnam, Anh said.

Bach Van Mung, director general of the Vietnam Competition Administration Department under the ministry, had earlier said that the early-warning system was expected to help reducing anti-dumping cases against Vietnamese exporters. The official, however, did not deny the possibility of wrong warnings.

The project of running the system is implemented in three phases. Anh said the second phase will begin in this November to give early warnings on risks of anti-dumping against products of ten industries exported to five markets. The warning will later cover 20 industries and ten markets.

Le Danh Vinh, deputy minister of Industry and Trade, was quoted by the government website www.chinhphu.vn on Wednesday as saying that local exporters are facing more than 34 anti-dumping and countervailing cases.

Related Articles

• Early warning system on anti-dumping cases kicks off
• Cashew traders yet to embrace trading center system
• Indian textile exhibition kicks off Wednesday
• Lawrence S. Ting Fund gives VND8.8 billion birthday gift
• Assoc insists on power price hike despite protests

Early warning system on anti-dumping cases kicks off

HCMC – The website to give early warnings on anti-dumping investigations against Vietnam’s exports bound for the U.S. and EU was officially launched last Wednesday by Ministry of Industry and Trade.

Trinh Tuan Anh, head of International Cooperation Board in Vietnam Competition Authority of the ministry, told the Daily via the phone that the website keeps local enterprises informed of potential risks of anti-dumping investigations against Vietnamese exports.

Commodities put under consideration include textile and garment, footwear, seafood, furniture and electric cables imported by the U.S. and the EU.

Based on legal regulations of importing countries, the system gives red warning as the highest warning level, or yellow for lower risk and green for no risk. Besides, the web also provides information on anti-dumping duties and timeline of cases.

The system is expected to be updated and adjusted regularly based on data of the U.S. and EU imports from Vietnam, Anh said.

Bach Van Mung, director general of the Vietnam Competition Administration Department under the ministry, had earlier said that the early-warning system was expected to help reducing anti-dumping cases against Vietnamese exporters. The official, however, did not deny the possibility of wrong warnings.

The project of running the system is implemented in three phases. Anh said the second phase will begin in this November to give early warnings on risks of anti-dumping against products of ten industries exported to five markets. The warning will later cover 20 industries and ten markets.

Le Danh Vinh, deputy minister of Industry and Trade, was quoted by the government website www.chinhphu.vn on Wednesday as saying that local exporters are facing more than 34 anti-dumping and countervailing cases.

Related Articles

• Early warning system on anti-dumping cases kicks off
• Cashew traders yet to embrace trading center system
• Indian textile exhibition kicks off Wednesday
• Lawrence S. Ting Fund gives VND8.8 billion birthday gift
• Assoc insists on power price hike despite protests

GDP accelerates to 6.52% in three quarters

CPI increases 1.31 % in September

HCMC – Vietnam’s gross domestic product growth rate has accelerated to 6.52% year-on-year in the January-September period, and the economy is headed for 6.7% for the whole year, the Ministry of Planning and Investment said on Monday.

In its report released on Monday for a regular meeting, the ministry noted that the economy has gained growth momentum, with the GDP growth rate moving faster one quarter after another, according to local media covering the meeting.

In fact, the economy posted an annualized GDP growth rate of 5.83% in the first quarter, 6.4% in the second quarter, and now 6.52% for the three quarters combined. This rate is higher than the targeted 6.5% growth rate endorsed by the National Assembly early this year.

Construction and manufacturing as a whole posted the strongest growth, at 7.29% year-on-year in the January-September period, followed by the service sector with 7.24%, while agriculture inched up 2.89%. The growth rates of all the three sectors are higher than those in the same period of last year, according to the ministry’s report.

While maintaining an upbeat tone about the economy this year, the ministry also highlights challenges to be addressed in the rest of the year. These include the uptrend of prices at home and abroad -- which may stoke up inflation -- the high interest rate charged by commercial banks that makes life harder for enterprises, and high trade deficit.

* September’s consumer price index surged 1.31 % against the previous month, attributed mainly to a dramatic increase of education services prices and depreciation of Vietnam Dong against the U.S. dollar, the General Statistics Office reported on Friday.

CPI in August increased by 0.23 % over the previous month, so increases in September were earlier forecast at between 0.8 and 1 %.

CPI in this month rose 6.46% compared to December, 2009. Vietnam targets to curb inflation this year at 7% to 8%, but this target is difficult to reach due to an uptrend in commodities prices in the rest of the year and higher import demands.

Related Articles

• GDP accelerates to 6.52% in three quarters
• Song of the gibbons
• HCMC to relay grand sale program to November
• Preparations for congress reviewed
• International University announces Master scholarships

ASEAN-BIS to take place in Hanoi next month

HANOI – The ASEAN Business and Investment Summit, or ASEAN BIS 2010, will be held in Hanoi City from October 26-28 on the sidelines of the 17th ASEAN Summit.

The event, themed “Towards the ASEAN Community: From vision to action”, will offer an opportunity for leading businesses in the ASEAN region to seek partners and cooperation opportunities as well as expanding their investment activities. It is organized by ASEAN Chambers of Commerce and Industry (ASEAN-CCI), the East Asia Business Council, the Greater Mekong Sub-region Business Forum and the Vietnamese government.

Around 800 to 1,000 government officials, policy makers, economic experts and business leaders are expected to join the ASEAN BIS 2010.

Speaking at the press briefing on Monday, Doan Duy Khuong, vice chairman of the Vietnam Chamber of Commerce and Industry and President of the ASEAN - Business Advisory Council (ASEAN-BAC), said the ASEAN BIS 2010 will be where a nation or a business define its position in the region and the world. They will have chances to realize their advantages and shortcomings and set up suitable business strategies, he said

This year, Vietnam will organize many direct dialogues with strategic partners of ASEAN nations such as Australia, New Zealand, India, Japan, South Korea and Russia.

The organizers will also grant the ASEAN Business Awards (ABA) to outstanding ASEAN businesses that have contributed to regional economic growth and prosperity on October 28.

Related Articles

• ASEAN-BIS to take place in Hanoi next month
• Agricultural exports rise 22.3% in first nine months
• Danang targets double-digit growth for next 5 years
• Hanoi T&T win first V-League after scoreless draw
• ASEM 8 highlights life improvement