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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Access to bank loans seen easier for SMEs

HCMC – The biggest concern raised by almost all enterprises at a seminar on capital for small and medium enterprises (SME) last week is difficult access to loans at commercial banks but the situation is expected to improve in the near future.

A business executive said at the seminar that commercial banks should keep their promises. He had joined a lot of similar seminars where banks promised to support SMEs, but after that he got disappointed when no bank approved his borrowing application, he said.

Nguyen Xuan Lam, director of L.V. Company, which produces auto parts, said his SME falls under the category of having priority access to bank loans in line with Government policy as his enterprise exports all output and operates in the hi-tech industry. However, no bank has lent to his business, causing its loss of contracts, he noted.

“In the past big foreign customers expressed interest in placing orders with us but we could not secure them because our facilities do not meet their requirements,” Lam said. His enterprise is borrowing capital from ACB, he said, and it needs long-term capital to build a factory.

The two are among the many businesses that have found it impossible to take out bank loans due to high interest rates and hindrances along the way.

Do Lam Dien, deputy head of corporate clients at Maritime Bank, said there existed many obstacles to SMEs’ access to bank loans, such as lack of mortgages, banks’ unwillingness to lend to SMEs, problematic tax payment reports, unsound business plans, and high lending rates.

However, the situation is seen changing for the better in the coming time. Commercial banks, seeking to boost lending, have begun to see SMEs as a potential market, and mapped out plans to tap those corporate customers.

Banks, including foreign ones, have set up a department in charge of SMEs, and most of them said SMEs are their potential clients.

Many programs targeting this segment have come out. For example, An Binh Bank has combined with IFC to support SMEs, and HDBank has earmarked VND2 trillion for financing enterprises in the coffee sector.

Nguyen Dinh Tung, deputy general director of Maritime Bank, said the bank had gauged demand of local SMEs over the past two years to work out a qualitative model to assess corporate clients, instead of the quantitative model that used to be applied.

“We will learn about SMEs as clients by accessing and interviewing them,” Tung said at the seminar.

According to the HCMC Institute for Development Studies, Vietnam now has 500,000 enterprises of which SMEs account for 97%. SMEs are responsible for about 30% of GDP, 30% of industrial output value, nearly 80% of total retail sales, and 64% of total goods transport volume every year.

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City explores new routes for river tourism

HCMC – The HCMC tourism authority will survey a new tourist route upstream the Saigon River to the neighboring province of Dong Nai early next month as the city government on Monday gave approval, an official said.

Nguyen Viet Anh, head of the Travel Division of the city’s Department of Culture, Sports, and Tourism said the city’s vice chairwoman, Nguyen Thi Hong, had allowed the department to undertake the survey following a meeting on Monday about a plan to explore some river tourist routes to develop this kind of tourism for the city.

Officials at Monday’s meeting also discussed the possibility of opening another river tour linking the city’s center, neighboring Binh Duong Province, and Cu Chi District in the city’s outskirts.

A report prepared by the tourism department after a survey in July shows that this medium-length river tour is of high potential owing to the beautiful scenery and attractions along the route.

The route should start from Bach Dang Wharf, take in Thanh Da-Binh Quoi and then Binh Duong Province’s craft villages before ending in the historical Cu Chi Tunnels.

But at Monday’s meeting, some expressed concern that this tourist route could hardly be launched later this year as had been expected due to the lack of required infrastructure facilities.

La Quoc Khanh, deputy director of the tourism department, told the meeting that there were not enough berths along the route for boats to anchor, let alone the mobilization of other transport means along the route to cater to tourists.

Khanh also complained that several bridges along the route had a low vertical clearance, preventing bigger boats from navigating underneath.

So far, the tourism department and some tour operators have surveyed a short route from Bach Dang Wharf in District 1 to District 7. “We will launch this tourism product by the year-end or early next year,” Anh of the city’s tourism department said.

The city is pining high hopes on river tourism as strong potential of the industry, which once brought into play will also help linking attractions in the city with those in other provinces.

The city government has asked the tourism authority to draft an action plan this year to develop a river tour taking tourists from HCMC to attractions in the city and to other places such as the Mekong Delta province of An Giang and Cambodia.

At Monday’s meeting, vice chairwoman Hong also agreed in principle to assign Saigontourist Holding Company to build a tourist wharf in District 1. Earlier, Hong also gave the company the go-ahead to build a tourism wharf in Nha Be District.

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First biomass plant project licensed in Phu Tho

HCMC – Authorities in the northern province of Phu Tho have awarded an investment certificate to develop a biomass power plant in Phong Chau Town of Phu Ninh District.

The project with a generation output of 40MW or about 330 million kWh a year is invested by the Vietnam Hi-tech Biomass Joint Stock Co., the Vietnam News Agency reports.

The project will use rice straws, corn stalks and other bio materials as feedstock for the power plant, which helps reduce environment pollution. The news agency reports that the project will use modern technologies from G8 countries.

The project needs some VND1.16 trillion in investment capital.

Ho Dai Dung, deputy director of the provincial Department of Planning and Investment, said that the project would be operational in 2013 and create nearly 3,500 jobs for locals.

Besides, the project will help farmers of the province to earn more from agricultural organic wastes and other garbage in rural areas.

According to experts, the use of such materials as fuel is not only environmentally friendly as it releases less CO2 when burnt than fossil fuels do, but also helps bring stable income to farmers in the country.

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Local developers launch low-cost condos

Some buyers take a look at a blueprint of Binh Duong New City displayed at the sales launching event of TDC Plaza in Binh Duong Province last week - Photo: Dinh Dung

HCMC – Two local property developers have launched their condo projects currently underway in HCMC and the southern province of Binh Duong, offering more options to homebuyers who are searching for affordable homes.

Hai Thanh Trade and Production and Vinaconex Xuan Mai companies announced on Monday to start marketing their affordable condo project named Binh Tri Dong B on Ten Lua Street in HCMC’s Binh Tan District.

The apartment building is in a residential project called Hai Thanh – Ten Lua, which covers some 6.5 hectares and is designed with 104 garden houses, 31 row houses and three 12-story buildings with 352 apartments measuring 52 to 75 square meters each.

The developer said those apartments would be offered at VND10.5 million per square meter. The total value starting from around VND550 million per apartment is believed within the reach of many people, especially white-collar workers.

The company said it had partnered with banks such as Sacombank, HDbank and Techcombank to give financial support to homebuyers, offering loans with a down payment made within 20 years.

The condo project is scheduled for completion by the first quarter of 2012.

In another project, Binh Duong Trade and Development JSC late last week launched the second phase of a sales program for its condo project named TDC Plaza under development in the southern province of Binh Duong, some 35km from HCMC.

TDC Plaza is a component in Binh Duong New City, which covers some 1,000 hectares of land encompassing six communes in Ben Cat District and Thu Dau Mot Town in the province.

The project requires some VND1,000 billion for development and is designed with five blocks of buildings with 779 apartments from 82 to 117 square meters.

Doan Van Thuan, general director of the company, said TDC Plaza would hit the market with 150 apartments in the second phase of the sales program, with prices ranging from VND15 million to VND16 million per square meter.

The company wrapped up its first phase with 100 apartments sold out. Nearly half of the buyers came from HCMC, while investors from Hanoi accounted for 30% and the rest was locals.

The developer offers potential buyers down payment of up to eight years, instead of around three years as often seen.

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Tourism authority steadfast on tour guide cards

HCMC – The Vietnam National Administration of Tourism (VNAT) stands by its decision on professional cards for tour guides, saying these employees have to obtain the new plastic cards under the new Tourism Law if they are to continue their job.

Vu The Binh, head of the Travel Department of VNAT, told the Daily that the paper-based cards expired on September 30, and no new deadline is now given.

“We need to comply with the Tourism Law. Tour guides can’t serve tourists without these professional (plastic) cards,” he said, rejecting a new request from HCMC to soften the stance to give tour guides more time to meet the requirements.

Under the new law, tour guides serving international travelers must have a bachelor’s degree, a new requirement that many professional guides fail to meet.

The HCMC Department of Culture, Sports and Tourism last week asked the Ministry of Culture, Sports and Tourism and VNAT to ease the qualification requirements to solve the situation, especially for tour guides serving guests from China, Germany and Japan.

The city’s tourism department asked VNAT to allow such tour guides to change for the new cards first and then complete the degree over the next three years.

The city’s department said that over half of the professional tour guides in HCMC catering to foreign tourists cannot change their paper-based cards for the plastic due to higher standards.

“In 2006, we once allowed the provincial tourism departments to issue temporary cards for tour guides, giving them time to complete the degree, but many people ignored the requirement. We need to follow the law,” he said.

According to the HCMC Department of Culture, Sports and Tourism, after three months of issuing new cards to tour guides, fewer than 700 guides have obtained the plastic compared to the number of 1,680 professional guides in the city.

In related news, VNAT has asked all international travel companies to change licenses before December 30. The change is required under the Tourism Law, which took effect in January last year.

VNAT said the old licenses would expire on that date.

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