BUSINESS IN BRIEF 4/4
VCB to make $1b bond issue
Vietcombank (VCB) will issue up to US$1 billion in bonds on overseas markets this year in order to facilitate the bank's foreign currency operations, Vietcombank general director Nguyen Phuoc Thanh accounced at the bank's shareholders' meeting yesterday in Ha Noi.
Thanh said foreign exchange operations played an important role in Vietcombank's business, with foreign currency deposits currently accounting for about 30 per cent of the lender's total deposits. Foreign currency lending also made up over 32 per cent of total credit activity.
"Raising medium- and long-term capital through issuing international bonds will help balance the budget for foreign currency credit operations," Thanh said.
Vietcombank posted a net profit of over VND4.2 trillion ($200.8 million) in 2011. As of December 31 of last year, the lender's total assets were worth VND367 trillion ($17.48 billion), an increase of 19.2 per cent over the previous year. Total deposits rose 16 per cent over the previous year to around VND241 trillion ($11.48 billion), while credit growth was curbed at 18.4 per cent, well below the Government ceiling of 20 per cent.
Last year, Vietcombank withdrew its investments from several enterprises, including VND589.4 billion ($28.1 million) from Shinhan Vina Bank and a combined VND374.8 billion ($17.8 million) worth of long-term investments from Gia Dinh Bank, Saigon Postel Corporation and PVTrans Pacific Joint Stock Co.
Vietcombank chairman Nguyen Hoa Binh said Vietcombank has targeted a 15-per-cent increase in profit this year to a net of VND4.93 trillion ($234.7 million). It expects to pay a dividend rate of 12 per cent, while projecting that total assets will increase by 18 per cent and total deposits by 17 per cent.
While the bad debt ratio last year stood at just over 2 per cent, the bank was determined to keep this ratio below 2.8 per cent this year, Binh said. The bank would continue to review and restructure its portfolio and would set up three subsidiaries operating this year in overseas remittances, asset management and consumer credit, he added.
Introducing Vietnam’s investment opportunities in the US
The Vietnamese Embassy in the US held a meeting with the Vietnamese Business Association (VBA) to introduce Vietnam’s current policies and its investment environment.
Ambassador to the US Nguyen Quoc Cuong praised the association’s role in helping US businesses to invest in Vietnam and Vietnamese businesses to seek opportunities in the US.
Ambassador Cuong emphasized that the Vietnamese Party and State always encourage Overseas Vietnamese people to invest in their homeland, especially in the fields of education, science and technology and infrastructure development, in order to promote Vietnam-US economic ties.
The VBA spoke highly of Vietnam’s investment environment and encouraging policies for investors. They said political stability has helped investors do business successfully in Vietnam. However, there remain some obstacles, such as weak foreign currency management, poor infrastructure and some cumbersome procedures.
US businessman Andre who is chief representative of Arteron Company, said like many other countries in the world Vietnam is confronted with a number of difficulties arising from the global economic crisis. However, the country is capable of dealing with these difficulties step by step.
Two years after its establishment, the VBA has 125 members across the US.
Son La-Hiep Hoa grid up, ready for action
The Viet Nam National Power Transmission Corporation completed the 500kV Son La-Hiep Hoa electrical grid last Saturday night, which would connect the Son La hydro-power plant and others in northwestern region to the national grid.
The nearly 270-km-long grid is one of eight projects to expand the power transmission network in the north, running through 17 districts and towns in five northern provinces of Son La, Phu Tho, Vinh Phuc, Thai Nguyen and Bac Giang. Over VND2.8 trillion ($133 million) was invested in the project.
Electricity of Viet Nam (EVN) is set to put the fifth turbine in Son La Hydro Power Plant into operation later this month to add to the supply during the dry season, a peak time for power shortages in Viet Nam.
Ninh Binh eyes investment promotion
Northern Ninh Binh Province will speed up investment promotion between now and 2020, according to local Department of Planning and Investment Director Nguyen Chi Tinh.
The province would concentrate on projects capable of spurring multi-sector development, job opportunities and socio-economic efficiency to meet growth targets, he said.
Production, administration as well as industrial and tourism infrastructure would be improved to facilitate investment, he added.
Tinh confirmed that a national-scale investment promotion programme would be implemented in Ninh Binh during the third quarter to include sectors such as beer, handicrafts and fine arts, and electronics production in the Phuc Son Industrial Zone, ecotourism complexes in Tam Diep and Nho Quang districts and building material production facilities in Gia Vien.
The province currently has 440 investment projects with a total registered capital of about VND73.24 trillion (US$3.52 billion), 27 of which are foreign direct investment projects with a total capital of $595.7 million.
Tinh noted that steel, automobile, fertiliser, mechanic, port service, footwear as well as garment and textile projects were major sectors at present, with the province having additionally lured six cement initiatives with a total capacity of around 13 million tonnes per year.
Data from Ninh Binh's official website said the province last year reached a total export value of $263.7 million, with cement, iron and construction materials being key elements. Tourism saw significant growth over the last few years, with the number of visitors totalling 3.6 million in 2011.
Firms fined for export, import violations
The Ha Noi Customs Department has found eight import-export companies in violation of legal regulations so far this year, collecting arrears of VND8 billion (US$380,000) for the State budget thanks to post-customs clearance inspections at 49 companies.
Customs recorded 190 violations and collected VND500 million ($23,000) in fines during its effort to boost inspections and curb smuggling. Notably, the office exposed 14 operations smuggling air guns into Viet Nam.
Deputy head of the department Van Ba Tin said that the customs would continue to enhance post-customs clearance inspection, especially on the value of goods, patent fees, taxable value, preferential investment, building materials, electrical goods and automobile parts.
Cooking gas distributors agree to cut prices
Members of the Viet Nam Gas Association have agreed to lower the retail price of gas by up to VND46,000 (over US$2) for a 12kg cylinder for April.
Customers will be able to purchase 12kg gas cylinders for between VND405,000 to VND410,000 (about $20), depending on the brand.
Nguyen Sy Thang, the association's president, said gas companies were told to announce the revised price from the beginning of this month.
Association members have been ordered to ensure the price reduction is passed onto consumers.
The association said global gas prices had dropped by about $160 per tonne compared to early March because of falling demand after the colder than normal winter.
In January, prices rose by VND126,000 ($6) per 12 kg following global price rises.
Meanwhile, the average cost of food has decreased 1.25 per cent against last month due to abundant supply, the General Statistics Office said.
The price of pork dropped 2.79 per cent in March against February, beef fell by 0.65 per cent and chicken by 1.82 per cent.
Economists at the Ministry of Industry and Trade's domestic market management board said keeping inflation in a single digit this year would be a challenge despite modest rises in the consumer price index this year.
Last month's CPI edged up just 0.16 per cent against February – the smallest increase for the last 20 months – mainly due to the fall in the price of food, which accounts for 40 per cent of the cost of household goods and services.
Domestic petrol prices, which rose 10 per cent early last month, pushed the CPI up by just 0.08 per cent. The rise in the fuel price is expected to push up the CPI in April.
Economists anticipate that a rally in the US and German economies and positive developments in the eurozone, would help the global cost of materials recover, which in turn would push up the price of essential goods such as petrol, rice, fertilisers and paper.
Some supermarkets have already warned that prices could rise in April.
Major supermarkets have said the cost of beer, soft drinks and cosmetics would soon increase by 10 to 15 per cent due to rising costs.
The cost of power is also likely to rise in the near future.
Despite imminent price rises, Vo Tri Thanh, the deputy director of the Central Institute for Economic Management, reportedly said the Government's goal of keeping inflation under 10 per cent this year was not overly optimistic.
Deputy Minister of Finance Vu Thi Mai said the ministry would organise numerous inspections of retail outlets to ensure the price of essential goods were reasonable.
She said functional agencies were making every effort to keep the CPI within acceptable limits during the remainder of the year to stabilise the economy and boost the country's economic growth.
Japanese group to buy Vietnamese Food Company
The Japanese Sojitz Group plans to cooperate with its fellow food agency to buy Huong Thuy Trade, Services and Production Company and use its infrastructure to expand shares in Vietnam.
Sojitz which is currently holding 25.01 per cent of Huong Thuy’s shares will buy an additional 25.99 per cent of shares while its fellow agency, Kokubu will purchase 19 per cent of shares.
Accordingly, Sojitz will become the biggest shareholder of Huong Thuy and will turn it into Sojitz’s subsidiary company.
Sojitz plans to raise Huong Thuy’s sales revenues from 4 billion yen in 2011 to 20 billion yen in 2016 and build a supply chain to Myanmar and Cambodia and then to the whole of Southeast Asia.
Huong Thuy Company in Ho Chi Minh City is Vietnam’s biggest food retailer which provides different kinds of foods and drinks for around 40,000 shops across the country.
Ethanol plant struggles to fire up
Construction of northern Phu Tho province’s ethanol factory began in 2000 and was expected to come online late last year. However, due to a lack of capital, the $80 million project re-scheduled its commissioning time although 90 per cent of the work volume and equipment installment was completed.
The cash is needed to get the main project contractor PetroVietnam Construction Joint Stock Corporation (PVC) over the finishing line. According to Bio-Petroleum and Petrochemical Joint Stock Company’s (PVB) - a subsidiary of state-run PetroVietnam, the factory is expected to produce 100,000 tonnes of ethanol per year from locally-sourced cassava and sugarcane.
The project’s investor claims its products will not only be environmentally friendly by reducing carbon dioxide emissions, but also contribute to reducing poverty among cassava and sugarcane farmers in Phu Tho. PVC representative Nguyen Huy Hoa said PVC had poured $49 million into the project and was paid by PVB with about $29.3 million.
In 2010 PetroVietnam Finance Joint Stock Corp (PVFC) and SeABank signed a credit funding contract to arrange capital for the Phu Tho-based ethanol factory with PVB. PVFC and SeABank were committed to offering a $40 million loan package for carrying out the project, in which PVFC would arrange 30 per cent of the total contract value.
Hoa said SeABank would provide a major part in the credit funding contract but the lender had not yet disbursed the loan to PVB. Recently, the Ministry of Industry and Trade urged Phu Tho provincial authorities, PVB and SeABank to sort out the impasse. The Phu Tho-based ethanol factory is among key projects of PetroVietnam, which is determined to finish its three ethanol production facilities this year.
PetroVietnam said between 2011-2015, these projects would have a total production capacity of over 300,000 tonnes of ethanol per year, in which over 200,000 tonnes would be earmarked for making gasoline, meeting 25 per cent of the whole country’s ethanol-based gasoline consumption. The remaining 100,000 tonnes would be exported.
Vietnam currently has only one operating ethanol plant, the Dong Xanh in central Quang Nam’s Dai Loc district which started production in 2009. The $30 million plant uses 300,000 tonnes of cassava and produces 100,000 tonnes of ethanol annually, as a biofuel alternative to petrol.
PHI Group to enjoy EGAT power lift
US-based PHI Group will hook up with Electricity Generating Authority of Thailand to jump into energy projects in Vietnam.
PHI Group chairman Henry Fahman said state-run Electricity Generating Authority of Thailand (EGAT) had agreed to invest in two coal-fired power projects in southern An Giang and central Quang Tri provinces, developed by it and two other Vietnamese partners. “The involvement of EGAT will make these projects more feasible,” said Fahman.
While EGAT can contribute capital and experience in running power plants, PHI Group can supply coal to power plants from coal mines in Indonesia. Furthermore, Fahman said PHI Group was able to provide a breakthrough coal-combustion-to-steam-energy system that could save 50 per cent of coal, while producing the same energy as combusted in traditional coal-fired power plants.
PHI Group early this year signed principle agreements with Vietnam’s Hoang Ngoc Joint Stock Company and Sao Nam Group to develop a 2,000 megawatt power project in An Giang and a 3,600MW power project in Quang Tri.
“For the Quang Tri power project, we are in the first stage of administrative preparations. But for the project in An Giang, we completed this first stage and will propose this investment to the Ministry of Industry and Trade for approval next month,” said Fahman.
The group two weeks ago formed Indochina Energy Ltd as a special purpose holding company for developing the power plants in Vietnam. This subsidiary signed an investment agreement with Hoang Ngoc Company, following the terms previously agreed between PHI Group and the Vietnamese company, to prepare for strategic and major institutional investors to participate in the An Giang power plant project.
“Indochina Energy will hold a 90 per cent stake in this project. In case EGAT wants to invest in this project, it will invest through Indochina Energy,” Fahman said, adding that PHI Group had worked with several international institutional investor groups in Asia and Europe that have indicated an interest in financing these power plant projects in Vietnam.
Vietnam’s power consumption growth, during 2010-2020, is projected to at least double her gross domestic product at 12 per cent per annum, according to the country’s seventh power development master plan. Until 2020, total power generation capacity is forecast to reach 75,000MW, two-thirds of which will come from thermal power plants.
Many foreign investors are still planning to invest in power projects in Vietnam, including Malaysia’s Janakuasa Bhd, South Korea’s Taekwang Power Holdings, Japan’s Sojitz and Sumitomo corporations and South China Power Grid.
During the last 15 years, only four power projects have been licenced to foreign investors under build-operate-transfer model - Phu My 3, Phu My 2.2, Mong Duong 2 and Hai Duong plants.
JFE Steel eyes up $4.5bn Guang Lian steel project
E-United Group’s plans to build a $4.5 billion steel project in Vietnam have received a massive boost with steel giant Japan’s JFE Steel Corporation saying it wants to join the party. JFE Steel, the world’s sixth largest steel-maker, said it had signed a memorandum of understanding with the E-United Group, a Taiwanese corporate engaged in steel production, medical services, education and real estate, to look at the feasibility of building integrated steelworks in Vietnam.
JFE Steel would become the majority shareholder in the plant. This is a part of JFE Steel’s plan for expansion production in South East Asia or India to meet the increasing demand for steel products in emerging countries. “E-United Group already has a construction site for a steelworks facility in the Dung Quat Economic Zone in central Quang Ngai province, [so] JFE Steel has decided to study this option before considering opportunities in other countries,” the company said in a statement.
The study will initially examine the feasibility of building and launching a steelworks with an annual capacity of 3.5 million tonnes – mainly steel sheets – by 2016. If, by the end of this year, the study reaches a favourable conclusion, JFE Steel said it would partner E-United Group to launch a steel-production operation in Vietnam.
Hsueh Hung Yi, president of Guang Lian Steel - in which E-United Group holds 90 per cent of the stake, with aim to investing in the ongoing steel project in Quang Ngai, told VIR that JFE Steel had expressed interest in studying the feasibility of this project.
“JFE has a large market and deep relationships in the world. Together with E-United Group’s market, the consumption of Guang Lian Steel’s products will be ensured. This will take us to the leading position in the world,” Hsueh said.
Guang Lian Steel facility is the second largest steel project in Vietnam after Taiwan’s Formosa Plastics Group’s $7.9 billion port and steel manufacturing complex in central Ha Tinh province’s Vung Ang Economic Zone.
Last year, Guang Lian Steel got the green light from the government to raise investment capital from $3 billion to $4.5 billion to build its steel manufacturing complex with annual capacity of 7 million tonnes of steel instead of the initial plan for five million tonnes.
Hsueh said the company had completed administrative procedures to obtain an amended investment certificate from the Dung Quat Economic Zone Management Authority, adding that it also reported the planned business with JEF Steel to the ministries of Industry and Trade and Planning and Investment.
He said the stake ratio transferred to JEF Steel would be defined after the completion of feasibility study and added JEF Steel would definitely be the major shareholder in the Quang Ngai province-based steel facility.
Carmakers anticipate 20 per cent drop in sales
The Vietnam Automobile Manufacturers' Association (VAMA) says it anticipates sales of its member companies to fall by 20 per cent this year as a result of high registration tax and many other fees.
The association claims that the automobile market has frozen after the car ownership registration tax increased to 20 per cent in January this year. The fees for getting a number plate has also increased to VND20 million ($950).
Many other fees would apply in June as proposed by the Ministry of Transport.
GM Vietnam sold only 550 cars in January 2012, 50 per cent of the sales in December 2011. Ford Vietnam sold 500 units the same month, as opposed to 1,100 in December. During the same period, Toyota Vietnam sold 1,520, a dramatic drop from 2,574.
On average, domestic automobile makers have seen sales dropping by 40-50 per cent.
The sharp fall in the sales is a big worry for local carmakers, particularly as this trend looks to continue in the coming months.
Analysts have warned that 2012 would be another difficult year for a number of car makers as the economic doldrums forces people to cut down on their spending.
Meanwhile, many commercial banks have said they will restrict loans for car buyers, while others have said they will provide car loans at rates of up to 23 per cent per year.
Akito Tachibana, General Director of Toyota Vietnam , said the economic downturn, the tightening of monetary policies and the Vietnamese dong/ US dollar rate fluctuation will also have negative impacts on the automobile market this year.
Several foreign invested automobile manufacturers have said if the sales are too slow, they would consider scaling down production and cutting down the labour force.
During the same period, the number of imported motorbikes decreased by nearly half in the first quarter of this year compared to the same period last year, according to the General Statistics Office.
The office reported that the country spent $6 million importing 4,000 units in March, bringing the total import volume of the first three months to 13,000 units worth $21 million, down 47.7 per cent in volume and 41.6 per cent in value.
Imported motorbikes started a downward trend in October of last year when for the first time only 4,000 units worth $7 million were imported due to economic difficulties and fierce domestic competition. The imports plunged to 3,000 units worth $4 million in February, a one-year low record.
It is forecast that motorbike imports in the coming months would continue this decreasing trend, especially after the Government's road maintenance fund takes effect this June. Under the new regulation, every vehicle, including motorbikes, will have to pay annual road use fees.
Viet Nam Rubber Group to remain State-owned
The Prime Minister has decided to maintain Viet Nam Rubber Group and its 22 affiliated companies as wholly State-owned enterprises. Only Rubber Finance Co would be equitised by 2015, although the State would continue to hold more than 50 per cent of charter capital. Under the plan, the Viet Nam Rubber Group would also divest from six of its subsidiaries and nine affiliates, including Sai Gon-Ha Noi Securities Co (SHS) and Long Thanh International Airport.
VN-Cambodia rice plant begins operation
A plant to process rice for export in Cambodia, which is partnered by Vietnamese and Cambodian companies, started operating in the capital’s outlying area on March 30.
The plant is invested by the Cambodia-Vietnam Foods Company (Cavifoods), which is a joint venture of the Cambodian Development and Investment Joint Stock Company, the Southern Food Corporation and the Green Trade Company.
It has an initial investment capital of 6.8 million USD and a designed processing capacity of 100,000 tonnes of rice for export per year.
The first processing line of the plant is capable of polishing 20,000 tonnes of rice annually while the second line is expected to begin trial operation in May this year.
At the inauguration ceremony, Cambodian officials said they hoped the plant will support Cambodia ’s agricultural sector in realising the goal of exporting 1 million tonnes of rice by 2015.-VNA
Beverage firm vows to protect shareholders' rights
Sai Gon Beverage Co, or Tribeco (TRI), has vowed to protect the rights and interests of existing shareholders as it delists from the HCM City Stock Exchange by making public offerings to internal shareholders.
Nguyen Xuan Luan, a member of Tribeco's management board, said TRI would announce the result of the first such offering on April 20. If Tribeco opts to continue in the form of a joint stock company after delisting, it would list shares on the unlisted public company market (UPCoM), the company said.
PetroVietnam oil profits hit record high
The PetroVietnam Group last year earned a record of over VND207 trillion (US$9.8 billion) from petroleum services, equal to 30.8 per cent of its total turnover.
The figure, which was 25 to 30 per cent higher than the set target, was released at a conference held in the southern Vung Tau City last weekend to review last year's petroleum services.
This record turnover came during the first year of a five-year plan for the 2011-15 period, creating favourable conditions for the group to achieve higher results.
As of the end of last year, PetroVietnam had built a system to provide petroleum services in several fields with a total asset value of VND140 trillion ($6.7 billion).
PetroVietnam has demonstrated its ability to operate and implement large-scale and high-tech projects which used to require hiring foreign partners, and now offers services not only the domestic sector but also the international market.
For example, it has invested in independently operating 2D and 3D viscoelastic earthquake systems along Viet Nam's continental shelf instead of hiring foreign services.
This year, PetroVietnam strives to achieve an even higher petroleum service turnover than last year.
It also set a target to use Vietnamese goods and its members' services following an instruction from the Prime Minister on utilisation of Vietnamese goods and materials in bidding projects that use State capital.
Three contracts were signed during the conference including one to purchase the Tam Dao 3 drilling rig between PetroVietnam and the Viet Nam – Russia Petroleum Joint Venture (Vietsovpetro), construction of the Tam Dao 5 drilling rig between Vietsovpetro and PetroVietnam Marine Shipyard Joint Stock Company (PVShipyard), and a joint venture agreement between PetroVietnam Drilling & Well Services Company (PVD) and multinational Citra-Sumit-Valind Investment (CSV).
Rice trader Angimex to list in HCM City
An Giang-based rice trader Angimex has filed to list 18.2 million shares on the HCM City Stock Exchange. Angimex posted a profit of VND70.4 billion ($3.3 million) last year but has estimated that this would decline to about VND54 billion ($2.57 million) this year. Angimex has charter capital of VND182 billion (US$8.6 million), and the Nguyen Kim Investment and Development Co is the controlling shareholder, with a 50.3-per-cent stake, followed by the State Capital Investment Corporation, with nearly 28.2 per cent.
Banks shoot to minimise risks, bad debt
Commercial banks are striving to applying several risk control measures, essentially improving credit quality and reducing bad debt, as they confront a worsening problem with non-performing loans.
The problem of non-performing loans turning into dead loans is predicted to worsen this year, when enterprises face more difficulties in carrying out their production and business operations.
A senior official of Asia Commercial Bank (ACB) who did not want to be named said that the bad debt problem is threatening the entire banking industry, including the ACB.
It is a problem that is really difficult to solve, and consequently, the industry's credit quality in late 2011 had dipped from early in the year, he said.
For its part, ACB is determined to improve its debt collection this year, he told the Dau Tu (Vietnam Investment Review)
To effectively utilise the 17-per cent credit growth quota assigned by the central bank, the ACB will focus on loans to the retail sector, small and medium-sized enterprises and individual customers.
The bank will also pay more attention to supervision and management of the credit risk in order to minimise bad debts, the official said.
In 2011, the bad debt ratio of Vietcombankwas 2.03 per cent, lower than the 2.30 per cent allowed by its shareholders' council, according to general director Nguyen Phuoc Thanh.
This year, the bank has set a target of keep its bad debt ratio at less than 2.8 per cent, and will try to improve its debt collection.
To realise its target, Vietcombank will continue to control credit growth, particularly of medium and long-term loans and those in foreign currency, so as to align lending with the growth of capital resources, Thanh said.
He also said that Vietcombank would closely follow the central bank's policies and carefully watch its liquidity so as to come up with proper measures to reduce bad debts.
Tran Phuong Binh, general director of the DongA Joint Stock Commercial Bank, said that given the country's current hard economic situation, most enterprises were facing difficulties in their production and trading activities.
Therefore, banks cannot avoid facing difficult situations themselves, he said.
To minimise its risks, DongA Bank has always maintained tight control over its credit quality and used VND296 billion for its credit risk contingency fund in 2011.
The result was that the bank's bad debt in 2011 was just 1.69 per cent of total outstanding loans, but it was still higher than the ratio recorded in 2010, Binh said.
He said that this year, DongA plans to focus its lending on production and trading activities related to export.
Food processor increases charter capital
Mechanics Construction and Foodstuff Co (MCF) has increased its charter capital from VND35 billion ($1.6 million) to VND80 billion (US$3.8 million), with Vinafood II holding a 60-per-cent stake in the company. MCF has targeted earnings this year of around VND700 billion ($33.3 million), a net profit of VND18.75 billion ($892,850), and a dividend payout of 15.9 per cent.
Japan transfers latest battery technology to Hanel
Japanese group Coccolo is providing the Vietnamese company Hanel with the technology to produce the world's first third-generation lithium-ion batteries from magnesium extracted from sea water.
This was the most advanced technology in the field and it was being transferred solely to Viet Nam, said Coccolo president Kazuyuki Toyosato at a recent signing ceremony in Tokyo.
These rechargeable batteries manufactured by Hanel will be shipped to Japan.
Magnesium batteries were environmentally-friendly and helped conserve energy while the ocean's magnesium reserves were virtually limitless, Yabe said.
HCM City aims to stabilise more prices
Pharmaceutical products, powdered and liquid milk, and student stationery will be added to the HCM City price stabilisation programme for this year and the next Tet (Lunar New Year festival), according to decisions signed last week by Nguyen Thi Hong, Deputy Chairwoman of HCM City People's Committee.
This year's price stabilisation programme will last from 1 April 2012 until 31 March 2013.
Powdered milk for children, pregnant women and fortified milk products will be included under the programme.
The decision follows last year's price stabilisation programme that ended on 31 March 2012. It aimed to stabilise prices of nine groups of essential goods – rice, sugar, cooking oil, livestock meat, poultry meat, eggs, processed food, vegetables and fruits, and aqua-products.
Fragrant and jasmine rice have been added to the rice group in this year's programme, as have 13 groups of locally-manufactured pharmaceutical drugs used to treat popular and chronic diseases.
According to Le Ngoc Dao, Deputy Director of HCM City Department of Industry and Trade, the volume of goods under this year's programme will account for 25 to 50 per cent of the supply of these goods in the market, increasing by 15 to 30 per cent compared with last year.
Dao said 49 enterprises have joined the programme to sell the four new categories of goods added to this year's list. Some pharmaceutical and dairy firms have declined the interest free loans that are offered by the programme.
Despite the increase in the number of enterprises joining the programme, loans provided by it have dropped to VND332 billion (US$16 million), VND104 billion lower than last year, Deputy Chairwoman Hong said.
She said goods sold under the programme must comply with quality, safety and hygiene standards and the programme must be in line with the "Vietnamese consuming Vietnamese goods" programme.
Goods under the programme must be sold to all customers, especially residents in remote areas and workers at export processing zones and industrial parks, she said.
Vinatexmart opens 2 clothes supermarkets in Ha Noi
The Viet Nam Textile Fashion Trading Co Ltd has inaugurated two clothing supermarkets in Ha Noi, one in Ha Dong Vinatexmart and the other in Ba Trieu Vinatexmart.
The three-storey Ha Dong Vinatexmart, located in Van Phuc Ward, Ha Dong District, is built on a 4,500-sq.m area with an investment capital of over VND10 billion (US$476,000).
The seven-storey Ba Trieu Vinatexmart covers an area of more than 5,000sq.m on Ba Trieu Street, with a total capital of VND15 billion ($714,000).
Chip test lab set up at National University
A laboratory for testing intellectual property cores opened at the National University of HCM City in Thu Duc District last week.
An IP core refers to a chip layout design that may be licesed to one or more chip makers but whose IP rights ves with the owner.
The VND9.2 billion (US$440,000) public lab, which will support the integrated circuit (IC) design industry, has been built by the university's IC Design Research & Education Centre.
Initially, it will help verify small and medium IP cores designed by the centre and its partners.
Techcombank best in emerging market
The Global Finance Magazine recently awarded the prize of "Best Emerging Market Bank 2012 in Asia" to the Commercial and Technology Joint Stock Bank (Techcombank).
Last year, the bank posted a pre-tax profit of VND4.2 trillion (US$200 million), up 53.2 per cent over the previous year.
Its total assets increased by 20.4 per cent, reaching VND180.8 trillion ($8.6 billion) by the end of 2011.
Global Finance is an English-language monthly financial magazine based in New York. The magazine in financial globalisation is distributed in 163 countries.
Insurer targets 14% higher profit
Bao Viet Holdings, which specialises in areas of insurance, banking and financial services, aims for a profit growth of 14 per cent this year.
The company, listed on HOSE as BVH, expects a 20 per cent increase in turnover this year, according to CEO Nguyen Thi Phuc Lam. The targets are subject to approval by its annual shareholder meeting later this month.
Lam said at a press briefing last week that the company would begin restructuring its business this year, refine the group's operating model and improve corporate governance to ensure sustained success in the future.
The group earned total pre-tax profits of VND1.521 trillion (US$72.5 million) last year, more than 17 per cent over the previous year. Its revenues of VND14,872 billion ($708 million) marked a 15.32 per cent increase over 2010.
Binh Dinh approves development plan
The People's Committee of central Binh Dinh Province approved the plan on development of 62 industrial clusters by 2020 and a vision to 2025, said Nguyen Van Thang, Deputy Director of the provincial industry and trade department.
According to the scheme, 62 clusters will cover a total area of 1,921ha. By 2015, some 36 industrial clusters will be filled up with a total expected industrial production value of VND3.5 trillion (US$166.6 million), making up 21 per cent of the provincial figure. The remainder will likely be filled up by 2025.
By the end of the first quarter of this year, 23 industrial clusters have gone into operation with a total investment capital of over VND1.78 trillion ($84.7 million).
HSBC Viet Nam sees strong growth
HSBC Viet Nam's pre-tax profits grew 40 per cent last year to VND1.97 trillion (US$94 million).
Its results announced last week show net operating turnover before loan impairment charges – of less than 1 per cent of loans – was up 44 per cent to VND2.16 trillion ($103 million).
Total assets as of December 31 were up 11 per cent to VND53.32 trillion.
The bank, the Vietnamese subsidiary of HSBC, achieved a capital adequacy ratio of 13 per cent against 9 per cent required by the State Bank of Viet Nam.
Report lists 500 fastest-growing firms
Viet Nam Report Co and online news VietnamNet will announce on April 10 the list of 500 companies with the fastest growth rate in Viet Nam.
The FAST 500 list, drawn up for the second year, is based on the growth in total assets, profits, and number of employees.
It aims to highlight effectively run companies who operated in a variety of fields across the whole country under the current difficult period.
Bank loans let farmers prosper
Ngo Thi Phu, a farmer in Yen Lap District in northern Phu Tho province, owns a 1,000-square metre-farm where she raises eight wild sows and a wild boar, earning VND150 million (US$7,200) a year.
Although the 48-year-old woman and her family worked hard for several years, it was access to a bank loan that led to them prosperity.
"In 2002, my family borrowed VND7.5 million from the Agriculture and Rural Development Bank (Agribank)," she said. "With that amount, I bought a wild sow that gave us six pigs. We sold five and kept one for breeding."
Loans have helped thousands of rural residents like Phu, including Phan Thi Duyen, who set up the Tan Uyen Brocade Co-operative in southern An Giang Province's Tan Uyen District, where brocade is a traditional product.
Recognising the market's increasing demand for brocade products, Duyen borrowed nearly VND100 million from the Viet Nam Bank for Social Policy (VBSP) to set up a brocade production co-operative, which has grown from the initial five to 19 members.
"The income of the members, most of them farmers, is on average VND1 million per month. The co-operative has helped the local farmers to fully use their idle time between crops," Duyen said.
Rural credit involves small funds given by banks or financial institutions to farmers, co-operatives or associations of rural producers.
Its main goal is to stimulate investment and help in funding the production and marketing of agricultural products.
To get credit, the borrowers must present a project, plan and budget.
In Viet Nam, Agribank and the VBSP are two among several credit institutions specialising in rural credit for farmers.
According to the State Bank of Viet Nam's Credit Department, as of December 31, 2011, total outstanding loans given to the agriculture sector and rural areas was around VND477.49 trillion ($22.93 million), a year-on-year increase of 25.26 per cent. The figure is equal to 20 per cent of the country's total loan portfolio.
Last year, while the banking sector's credit growth rate was only 13 per cent, credit injected into agriculture and rural areas grew by 25 per cent.
Investments have also resulted in farmers' incomes increasing by 30 per cent on average, and between 60 and 80 per cent in some localities.
According to economic experts, Viet Nam, like other developing countries, has to cope with capital problems, particularly in agriculture and in rural areas.
More than 70 per cent of the population continues to live in rural areas, and they depend on agricultural production. However, most farmer households are still poor due to their low incomes.
In recent years, the Government has encouraged credit organisations to further invest in agriculture and rural areas. This has improved farmers'standard of living.
Dr Cairo Newman, a senior economic expert from Denmark, told Tai Chinh Viet Nam (Vietnam Financial) newspaper that the percentage of farmers households getting access to rural credit rose from 45 per cent in 2008 to 54 per cent in 2010.
He, however, said 50 per cent of the Vietnamese farmer households had not been able to access credit resources.
Several Vietnamese experts said the market economy was still developing so farmers had few opportunities to get access to credit. They also noted that agencies allocated investment resources unequally among localities and different sectors, making access to loans more difficult. To improve the quality of rural credit, experts recommended that more research be conducted on farmer demand, access to credit resources and evaluation of farmers' use of loans.
Steelmakers face power rate hike
The Electricity of Viet Nam (EVN) has proposed a price increase on electricity consumption by steel and cement industries.
According to the Ministry of Industry and Trade (MoIT), it cost the power sector about VND2.547 trillion (US$121.3 million) to provide cheap power to the steel and cement sectors in 2010 alone. Foreign invested steel manufacturers enjoyed about VND506 billion of this sum.
During the same year, steel and cement industries consumed about 11 per cent of the country's total electricity output, accounting for 982 million KWh. They paid just VND914 per KWh which actually cost VND1,180 per KWh to produce.
Last year, the EVN increased electricity prices twice for a total 20 per cent hike, bringing the average price to VND1,304 per KWh. Households were charged VND1,400 per KWh.
An official of the Electricity Regulatory Authority of Viet Nam under the MoIT said households paid higher rates than production sectors because they had the priority for electricity use.
He said if power prices for steelmakers remained cheap, the steel industry would export more. Therefore, a possible halt in steel exports might be considered in order to curb losses incurred from such cheap electricity.
On the Construction Ministry's website, Nguyen Tien Nghi, vice chairman of the Viet Nam Steel Association (VSA) said the hike was unfair for the steel industry, citing that electricity costs accounted for only 0.7 and 5 per cent of the production costs in laminating steel and producing pig iron, respectively. This meant that electricity costs were not the most important proportion in calculating steel production costs.
A sufficient supply of electricity to meet the steel industry's demands was critical and it was agreed that electricity prices should follow the market mechanism, he said.
Nghi also said the steel industry played a key role in the construction and real estate sectors, yet as the real estate market had been sluggish, an increase in electricity prices for the steel industry alone was unacceptable. If required, the price hike should be applied to all sectors, not only steelmakers, he said.
Industry insiders and several steelmakers voiced their concerns about a possible halt in steel product exports, saying that such a halt would not result in a significant power savings.
They said that while the export volume was insignificant, the halt would result in more difficulties for the steel manufacturers as the supply was currently double the demand.
Meanwhile, stockpiled steel will meet domestic market needs for the next few months.
Exporting steel products was considered the best way for the steel industry to avoid stockpiling, they said.
The VSA has called for incentives from the Government to help steel manufacturers sell their products while reducing the trade deficit.
Cavifoods firm opens rice-milling facility
The Cambodia - Viet Nam Foods Company (Cavifoods) on March 30 opened a rice-milling plant in Phnom Penh that is expected by May to have the largest capacity and best product quality of any milling plant in the country.
When the plant opens its second production line in May, it will become fully operational, with a total capacity of 40,000 tonnes, according to Doan Anh Sang, Cavifoods chairman.
Cavifoods has three shareholders, Viet Nam's Cambodia Investment and Development Company (IDCC), Viet Nam Southern Food 2 Corp (Vinafood2) and the local company Green Trade, which represents 33 per cent, 37 per cent and 30 per cent, respectively, of the nearly US$8 million in charter capital.
The company targets exporting 250,000 tonnes per year by 2015, which would represent 25 per cent of rice exports from Cambodia, according to Tran Bac Ha, chairman of the Association of Vietnamese Investors in Cambodia and chairman of the Bank for Investment and Development of Viet Nam, a major shareholder in IDCC.
Apart from the new rice-mill, which also has a storehouse system, Cavifoods will hire processing agents.
In Cambodia, Cavifoods also trades rice, pesticides and fertilisers as well as operates agricultural services.
Cambodia's Minister of Trade Chom Proseth praised the co-operation project that helped promote his country's rice-processing industry to reach international standards, including reaching a low broken-rice rate. The latter would help increase rice exports, he added.
Cambodia's strategy is to produce 4 million tonnes of rice by 2015, of which 1 million tonnes would be exports.
Cavifoods also plans to develop a packaging factory in Cambodia, according to Sang.
Import taxes to be cut
Import taxes will be gradually cut during the next two years to meet the country's commitments to various free trade agreements, according to the Ministry of Finance.
The ministry said it had released four circulars on import tax reduction based on the implementation of the ASEAN-Japan Comprehensive Economic Partnership, the Viet Nam-Japan Economic Partnership Agreement, the ASEAN-Australia-New Zealand Free Trade Agreement and the ASEAN-India Free Trade Agreement. Commitments under the first two agreements will take effect as of April 1 while those of the two latter will take effect on April 30.
Accordingly, a number of garment product and accessory taxes will be cut from the current 13 per cent to 11 and 9 per cent in the next two years. Import taxes on film cameras will be cut from the ... current 5 per cent to 2.5 per cent in 2014 while those on several digital cameras will be exempted. Kitchen appliance, basin and bathtub rates will be cut from 19 to 14 per cent.
Conditions related to such cuts include that goods be transported directly from exporting countries, signed up to the agreements, alongside full certificates of origin.
Vietcombank (VCB) will issue up to US$1 billion in bonds on overseas markets this year in order to facilitate the bank's foreign currency operations, Vietcombank general director Nguyen Phuoc Thanh accounced at the bank's shareholders' meeting yesterday in Ha Noi.
Thanh said foreign exchange operations played an important role in Vietcombank's business, with foreign currency deposits currently accounting for about 30 per cent of the lender's total deposits. Foreign currency lending also made up over 32 per cent of total credit activity.
"Raising medium- and long-term capital through issuing international bonds will help balance the budget for foreign currency credit operations," Thanh said.
Vietcombank posted a net profit of over VND4.2 trillion ($200.8 million) in 2011. As of December 31 of last year, the lender's total assets were worth VND367 trillion ($17.48 billion), an increase of 19.2 per cent over the previous year. Total deposits rose 16 per cent over the previous year to around VND241 trillion ($11.48 billion), while credit growth was curbed at 18.4 per cent, well below the Government ceiling of 20 per cent.
Last year, Vietcombank withdrew its investments from several enterprises, including VND589.4 billion ($28.1 million) from Shinhan Vina Bank and a combined VND374.8 billion ($17.8 million) worth of long-term investments from Gia Dinh Bank, Saigon Postel Corporation and PVTrans Pacific Joint Stock Co.
Vietcombank chairman Nguyen Hoa Binh said Vietcombank has targeted a 15-per-cent increase in profit this year to a net of VND4.93 trillion ($234.7 million). It expects to pay a dividend rate of 12 per cent, while projecting that total assets will increase by 18 per cent and total deposits by 17 per cent.
While the bad debt ratio last year stood at just over 2 per cent, the bank was determined to keep this ratio below 2.8 per cent this year, Binh said. The bank would continue to review and restructure its portfolio and would set up three subsidiaries operating this year in overseas remittances, asset management and consumer credit, he added.
Introducing Vietnam’s investment opportunities in the US
The Vietnamese Embassy in the US held a meeting with the Vietnamese Business Association (VBA) to introduce Vietnam’s current policies and its investment environment.
Ambassador to the US Nguyen Quoc Cuong praised the association’s role in helping US businesses to invest in Vietnam and Vietnamese businesses to seek opportunities in the US.
Ambassador Cuong emphasized that the Vietnamese Party and State always encourage Overseas Vietnamese people to invest in their homeland, especially in the fields of education, science and technology and infrastructure development, in order to promote Vietnam-US economic ties.
The VBA spoke highly of Vietnam’s investment environment and encouraging policies for investors. They said political stability has helped investors do business successfully in Vietnam. However, there remain some obstacles, such as weak foreign currency management, poor infrastructure and some cumbersome procedures.
US businessman Andre who is chief representative of Arteron Company, said like many other countries in the world Vietnam is confronted with a number of difficulties arising from the global economic crisis. However, the country is capable of dealing with these difficulties step by step.
Two years after its establishment, the VBA has 125 members across the US.
Son La-Hiep Hoa grid up, ready for action
The Viet Nam National Power Transmission Corporation completed the 500kV Son La-Hiep Hoa electrical grid last Saturday night, which would connect the Son La hydro-power plant and others in northwestern region to the national grid.
The nearly 270-km-long grid is one of eight projects to expand the power transmission network in the north, running through 17 districts and towns in five northern provinces of Son La, Phu Tho, Vinh Phuc, Thai Nguyen and Bac Giang. Over VND2.8 trillion ($133 million) was invested in the project.
Electricity of Viet Nam (EVN) is set to put the fifth turbine in Son La Hydro Power Plant into operation later this month to add to the supply during the dry season, a peak time for power shortages in Viet Nam.
Ninh Binh eyes investment promotion
Northern Ninh Binh Province will speed up investment promotion between now and 2020, according to local Department of Planning and Investment Director Nguyen Chi Tinh.
The province would concentrate on projects capable of spurring multi-sector development, job opportunities and socio-economic efficiency to meet growth targets, he said.
Production, administration as well as industrial and tourism infrastructure would be improved to facilitate investment, he added.
Tinh confirmed that a national-scale investment promotion programme would be implemented in Ninh Binh during the third quarter to include sectors such as beer, handicrafts and fine arts, and electronics production in the Phuc Son Industrial Zone, ecotourism complexes in Tam Diep and Nho Quang districts and building material production facilities in Gia Vien.
The province currently has 440 investment projects with a total registered capital of about VND73.24 trillion (US$3.52 billion), 27 of which are foreign direct investment projects with a total capital of $595.7 million.
Tinh noted that steel, automobile, fertiliser, mechanic, port service, footwear as well as garment and textile projects were major sectors at present, with the province having additionally lured six cement initiatives with a total capacity of around 13 million tonnes per year.
Data from Ninh Binh's official website said the province last year reached a total export value of $263.7 million, with cement, iron and construction materials being key elements. Tourism saw significant growth over the last few years, with the number of visitors totalling 3.6 million in 2011.
Firms fined for export, import violations
The Ha Noi Customs Department has found eight import-export companies in violation of legal regulations so far this year, collecting arrears of VND8 billion (US$380,000) for the State budget thanks to post-customs clearance inspections at 49 companies.
Customs recorded 190 violations and collected VND500 million ($23,000) in fines during its effort to boost inspections and curb smuggling. Notably, the office exposed 14 operations smuggling air guns into Viet Nam.
Deputy head of the department Van Ba Tin said that the customs would continue to enhance post-customs clearance inspection, especially on the value of goods, patent fees, taxable value, preferential investment, building materials, electrical goods and automobile parts.
Cooking gas distributors agree to cut prices
Members of the Viet Nam Gas Association have agreed to lower the retail price of gas by up to VND46,000 (over US$2) for a 12kg cylinder for April.
Customers will be able to purchase 12kg gas cylinders for between VND405,000 to VND410,000 (about $20), depending on the brand.
Nguyen Sy Thang, the association's president, said gas companies were told to announce the revised price from the beginning of this month.
Association members have been ordered to ensure the price reduction is passed onto consumers.
The association said global gas prices had dropped by about $160 per tonne compared to early March because of falling demand after the colder than normal winter.
In January, prices rose by VND126,000 ($6) per 12 kg following global price rises.
Meanwhile, the average cost of food has decreased 1.25 per cent against last month due to abundant supply, the General Statistics Office said.
The price of pork dropped 2.79 per cent in March against February, beef fell by 0.65 per cent and chicken by 1.82 per cent.
Economists at the Ministry of Industry and Trade's domestic market management board said keeping inflation in a single digit this year would be a challenge despite modest rises in the consumer price index this year.
Last month's CPI edged up just 0.16 per cent against February – the smallest increase for the last 20 months – mainly due to the fall in the price of food, which accounts for 40 per cent of the cost of household goods and services.
Domestic petrol prices, which rose 10 per cent early last month, pushed the CPI up by just 0.08 per cent. The rise in the fuel price is expected to push up the CPI in April.
Economists anticipate that a rally in the US and German economies and positive developments in the eurozone, would help the global cost of materials recover, which in turn would push up the price of essential goods such as petrol, rice, fertilisers and paper.
Some supermarkets have already warned that prices could rise in April.
Major supermarkets have said the cost of beer, soft drinks and cosmetics would soon increase by 10 to 15 per cent due to rising costs.
The cost of power is also likely to rise in the near future.
Despite imminent price rises, Vo Tri Thanh, the deputy director of the Central Institute for Economic Management, reportedly said the Government's goal of keeping inflation under 10 per cent this year was not overly optimistic.
Deputy Minister of Finance Vu Thi Mai said the ministry would organise numerous inspections of retail outlets to ensure the price of essential goods were reasonable.
She said functional agencies were making every effort to keep the CPI within acceptable limits during the remainder of the year to stabilise the economy and boost the country's economic growth.
Japanese group to buy Vietnamese Food Company
The Japanese Sojitz Group plans to cooperate with its fellow food agency to buy Huong Thuy Trade, Services and Production Company and use its infrastructure to expand shares in Vietnam.
Sojitz which is currently holding 25.01 per cent of Huong Thuy’s shares will buy an additional 25.99 per cent of shares while its fellow agency, Kokubu will purchase 19 per cent of shares.
Accordingly, Sojitz will become the biggest shareholder of Huong Thuy and will turn it into Sojitz’s subsidiary company.
Sojitz plans to raise Huong Thuy’s sales revenues from 4 billion yen in 2011 to 20 billion yen in 2016 and build a supply chain to Myanmar and Cambodia and then to the whole of Southeast Asia.
Huong Thuy Company in Ho Chi Minh City is Vietnam’s biggest food retailer which provides different kinds of foods and drinks for around 40,000 shops across the country.
Ethanol plant struggles to fire up
Construction of northern Phu Tho province’s ethanol factory began in 2000 and was expected to come online late last year. However, due to a lack of capital, the $80 million project re-scheduled its commissioning time although 90 per cent of the work volume and equipment installment was completed.
The cash is needed to get the main project contractor PetroVietnam Construction Joint Stock Corporation (PVC) over the finishing line. According to Bio-Petroleum and Petrochemical Joint Stock Company’s (PVB) - a subsidiary of state-run PetroVietnam, the factory is expected to produce 100,000 tonnes of ethanol per year from locally-sourced cassava and sugarcane.
The project’s investor claims its products will not only be environmentally friendly by reducing carbon dioxide emissions, but also contribute to reducing poverty among cassava and sugarcane farmers in Phu Tho. PVC representative Nguyen Huy Hoa said PVC had poured $49 million into the project and was paid by PVB with about $29.3 million.
In 2010 PetroVietnam Finance Joint Stock Corp (PVFC) and SeABank signed a credit funding contract to arrange capital for the Phu Tho-based ethanol factory with PVB. PVFC and SeABank were committed to offering a $40 million loan package for carrying out the project, in which PVFC would arrange 30 per cent of the total contract value.
Hoa said SeABank would provide a major part in the credit funding contract but the lender had not yet disbursed the loan to PVB. Recently, the Ministry of Industry and Trade urged Phu Tho provincial authorities, PVB and SeABank to sort out the impasse. The Phu Tho-based ethanol factory is among key projects of PetroVietnam, which is determined to finish its three ethanol production facilities this year.
PetroVietnam said between 2011-2015, these projects would have a total production capacity of over 300,000 tonnes of ethanol per year, in which over 200,000 tonnes would be earmarked for making gasoline, meeting 25 per cent of the whole country’s ethanol-based gasoline consumption. The remaining 100,000 tonnes would be exported.
Vietnam currently has only one operating ethanol plant, the Dong Xanh in central Quang Nam’s Dai Loc district which started production in 2009. The $30 million plant uses 300,000 tonnes of cassava and produces 100,000 tonnes of ethanol annually, as a biofuel alternative to petrol.
PHI Group to enjoy EGAT power lift
US-based PHI Group will hook up with Electricity Generating Authority of Thailand to jump into energy projects in Vietnam.
PHI Group chairman Henry Fahman said state-run Electricity Generating Authority of Thailand (EGAT) had agreed to invest in two coal-fired power projects in southern An Giang and central Quang Tri provinces, developed by it and two other Vietnamese partners. “The involvement of EGAT will make these projects more feasible,” said Fahman.
While EGAT can contribute capital and experience in running power plants, PHI Group can supply coal to power plants from coal mines in Indonesia. Furthermore, Fahman said PHI Group was able to provide a breakthrough coal-combustion-to-steam-energy system that could save 50 per cent of coal, while producing the same energy as combusted in traditional coal-fired power plants.
PHI Group early this year signed principle agreements with Vietnam’s Hoang Ngoc Joint Stock Company and Sao Nam Group to develop a 2,000 megawatt power project in An Giang and a 3,600MW power project in Quang Tri.
“For the Quang Tri power project, we are in the first stage of administrative preparations. But for the project in An Giang, we completed this first stage and will propose this investment to the Ministry of Industry and Trade for approval next month,” said Fahman.
The group two weeks ago formed Indochina Energy Ltd as a special purpose holding company for developing the power plants in Vietnam. This subsidiary signed an investment agreement with Hoang Ngoc Company, following the terms previously agreed between PHI Group and the Vietnamese company, to prepare for strategic and major institutional investors to participate in the An Giang power plant project.
“Indochina Energy will hold a 90 per cent stake in this project. In case EGAT wants to invest in this project, it will invest through Indochina Energy,” Fahman said, adding that PHI Group had worked with several international institutional investor groups in Asia and Europe that have indicated an interest in financing these power plant projects in Vietnam.
Vietnam’s power consumption growth, during 2010-2020, is projected to at least double her gross domestic product at 12 per cent per annum, according to the country’s seventh power development master plan. Until 2020, total power generation capacity is forecast to reach 75,000MW, two-thirds of which will come from thermal power plants.
Many foreign investors are still planning to invest in power projects in Vietnam, including Malaysia’s Janakuasa Bhd, South Korea’s Taekwang Power Holdings, Japan’s Sojitz and Sumitomo corporations and South China Power Grid.
During the last 15 years, only four power projects have been licenced to foreign investors under build-operate-transfer model - Phu My 3, Phu My 2.2, Mong Duong 2 and Hai Duong plants.
JFE Steel eyes up $4.5bn Guang Lian steel project
E-United Group’s plans to build a $4.5 billion steel project in Vietnam have received a massive boost with steel giant Japan’s JFE Steel Corporation saying it wants to join the party. JFE Steel, the world’s sixth largest steel-maker, said it had signed a memorandum of understanding with the E-United Group, a Taiwanese corporate engaged in steel production, medical services, education and real estate, to look at the feasibility of building integrated steelworks in Vietnam.
JFE Steel would become the majority shareholder in the plant. This is a part of JFE Steel’s plan for expansion production in South East Asia or India to meet the increasing demand for steel products in emerging countries. “E-United Group already has a construction site for a steelworks facility in the Dung Quat Economic Zone in central Quang Ngai province, [so] JFE Steel has decided to study this option before considering opportunities in other countries,” the company said in a statement.
The study will initially examine the feasibility of building and launching a steelworks with an annual capacity of 3.5 million tonnes – mainly steel sheets – by 2016. If, by the end of this year, the study reaches a favourable conclusion, JFE Steel said it would partner E-United Group to launch a steel-production operation in Vietnam.
Hsueh Hung Yi, president of Guang Lian Steel - in which E-United Group holds 90 per cent of the stake, with aim to investing in the ongoing steel project in Quang Ngai, told VIR that JFE Steel had expressed interest in studying the feasibility of this project.
“JFE has a large market and deep relationships in the world. Together with E-United Group’s market, the consumption of Guang Lian Steel’s products will be ensured. This will take us to the leading position in the world,” Hsueh said.
Guang Lian Steel facility is the second largest steel project in Vietnam after Taiwan’s Formosa Plastics Group’s $7.9 billion port and steel manufacturing complex in central Ha Tinh province’s Vung Ang Economic Zone.
Last year, Guang Lian Steel got the green light from the government to raise investment capital from $3 billion to $4.5 billion to build its steel manufacturing complex with annual capacity of 7 million tonnes of steel instead of the initial plan for five million tonnes.
Hsueh said the company had completed administrative procedures to obtain an amended investment certificate from the Dung Quat Economic Zone Management Authority, adding that it also reported the planned business with JEF Steel to the ministries of Industry and Trade and Planning and Investment.
He said the stake ratio transferred to JEF Steel would be defined after the completion of feasibility study and added JEF Steel would definitely be the major shareholder in the Quang Ngai province-based steel facility.
Carmakers anticipate 20 per cent drop in sales
The Vietnam Automobile Manufacturers' Association (VAMA) says it anticipates sales of its member companies to fall by 20 per cent this year as a result of high registration tax and many other fees.
The association claims that the automobile market has frozen after the car ownership registration tax increased to 20 per cent in January this year. The fees for getting a number plate has also increased to VND20 million ($950).
Many other fees would apply in June as proposed by the Ministry of Transport.
GM Vietnam sold only 550 cars in January 2012, 50 per cent of the sales in December 2011. Ford Vietnam sold 500 units the same month, as opposed to 1,100 in December. During the same period, Toyota Vietnam sold 1,520, a dramatic drop from 2,574.
On average, domestic automobile makers have seen sales dropping by 40-50 per cent.
The sharp fall in the sales is a big worry for local carmakers, particularly as this trend looks to continue in the coming months.
Analysts have warned that 2012 would be another difficult year for a number of car makers as the economic doldrums forces people to cut down on their spending.
Meanwhile, many commercial banks have said they will restrict loans for car buyers, while others have said they will provide car loans at rates of up to 23 per cent per year.
Akito Tachibana, General Director of Toyota Vietnam , said the economic downturn, the tightening of monetary policies and the Vietnamese dong/ US dollar rate fluctuation will also have negative impacts on the automobile market this year.
Several foreign invested automobile manufacturers have said if the sales are too slow, they would consider scaling down production and cutting down the labour force.
During the same period, the number of imported motorbikes decreased by nearly half in the first quarter of this year compared to the same period last year, according to the General Statistics Office.
The office reported that the country spent $6 million importing 4,000 units in March, bringing the total import volume of the first three months to 13,000 units worth $21 million, down 47.7 per cent in volume and 41.6 per cent in value.
Imported motorbikes started a downward trend in October of last year when for the first time only 4,000 units worth $7 million were imported due to economic difficulties and fierce domestic competition. The imports plunged to 3,000 units worth $4 million in February, a one-year low record.
It is forecast that motorbike imports in the coming months would continue this decreasing trend, especially after the Government's road maintenance fund takes effect this June. Under the new regulation, every vehicle, including motorbikes, will have to pay annual road use fees.
Viet Nam Rubber Group to remain State-owned
The Prime Minister has decided to maintain Viet Nam Rubber Group and its 22 affiliated companies as wholly State-owned enterprises. Only Rubber Finance Co would be equitised by 2015, although the State would continue to hold more than 50 per cent of charter capital. Under the plan, the Viet Nam Rubber Group would also divest from six of its subsidiaries and nine affiliates, including Sai Gon-Ha Noi Securities Co (SHS) and Long Thanh International Airport.
VN-Cambodia rice plant begins operation
A plant to process rice for export in Cambodia, which is partnered by Vietnamese and Cambodian companies, started operating in the capital’s outlying area on March 30.
The plant is invested by the Cambodia-Vietnam Foods Company (Cavifoods), which is a joint venture of the Cambodian Development and Investment Joint Stock Company, the Southern Food Corporation and the Green Trade Company.
It has an initial investment capital of 6.8 million USD and a designed processing capacity of 100,000 tonnes of rice for export per year.
The first processing line of the plant is capable of polishing 20,000 tonnes of rice annually while the second line is expected to begin trial operation in May this year.
At the inauguration ceremony, Cambodian officials said they hoped the plant will support Cambodia ’s agricultural sector in realising the goal of exporting 1 million tonnes of rice by 2015.-VNA
Beverage firm vows to protect shareholders' rights
Sai Gon Beverage Co, or Tribeco (TRI), has vowed to protect the rights and interests of existing shareholders as it delists from the HCM City Stock Exchange by making public offerings to internal shareholders.
Nguyen Xuan Luan, a member of Tribeco's management board, said TRI would announce the result of the first such offering on April 20. If Tribeco opts to continue in the form of a joint stock company after delisting, it would list shares on the unlisted public company market (UPCoM), the company said.
PetroVietnam oil profits hit record high
The PetroVietnam Group last year earned a record of over VND207 trillion (US$9.8 billion) from petroleum services, equal to 30.8 per cent of its total turnover.
The figure, which was 25 to 30 per cent higher than the set target, was released at a conference held in the southern Vung Tau City last weekend to review last year's petroleum services.
This record turnover came during the first year of a five-year plan for the 2011-15 period, creating favourable conditions for the group to achieve higher results.
As of the end of last year, PetroVietnam had built a system to provide petroleum services in several fields with a total asset value of VND140 trillion ($6.7 billion).
PetroVietnam has demonstrated its ability to operate and implement large-scale and high-tech projects which used to require hiring foreign partners, and now offers services not only the domestic sector but also the international market.
For example, it has invested in independently operating 2D and 3D viscoelastic earthquake systems along Viet Nam's continental shelf instead of hiring foreign services.
This year, PetroVietnam strives to achieve an even higher petroleum service turnover than last year.
It also set a target to use Vietnamese goods and its members' services following an instruction from the Prime Minister on utilisation of Vietnamese goods and materials in bidding projects that use State capital.
Three contracts were signed during the conference including one to purchase the Tam Dao 3 drilling rig between PetroVietnam and the Viet Nam – Russia Petroleum Joint Venture (Vietsovpetro), construction of the Tam Dao 5 drilling rig between Vietsovpetro and PetroVietnam Marine Shipyard Joint Stock Company (PVShipyard), and a joint venture agreement between PetroVietnam Drilling & Well Services Company (PVD) and multinational Citra-Sumit-Valind Investment (CSV).
Rice trader Angimex to list in HCM City
An Giang-based rice trader Angimex has filed to list 18.2 million shares on the HCM City Stock Exchange. Angimex posted a profit of VND70.4 billion ($3.3 million) last year but has estimated that this would decline to about VND54 billion ($2.57 million) this year. Angimex has charter capital of VND182 billion (US$8.6 million), and the Nguyen Kim Investment and Development Co is the controlling shareholder, with a 50.3-per-cent stake, followed by the State Capital Investment Corporation, with nearly 28.2 per cent.
Banks shoot to minimise risks, bad debt
Commercial banks are striving to applying several risk control measures, essentially improving credit quality and reducing bad debt, as they confront a worsening problem with non-performing loans.
The problem of non-performing loans turning into dead loans is predicted to worsen this year, when enterprises face more difficulties in carrying out their production and business operations.
A senior official of Asia Commercial Bank (ACB) who did not want to be named said that the bad debt problem is threatening the entire banking industry, including the ACB.
It is a problem that is really difficult to solve, and consequently, the industry's credit quality in late 2011 had dipped from early in the year, he said.
For its part, ACB is determined to improve its debt collection this year, he told the Dau Tu (Vietnam Investment Review)
To effectively utilise the 17-per cent credit growth quota assigned by the central bank, the ACB will focus on loans to the retail sector, small and medium-sized enterprises and individual customers.
The bank will also pay more attention to supervision and management of the credit risk in order to minimise bad debts, the official said.
In 2011, the bad debt ratio of Vietcombankwas 2.03 per cent, lower than the 2.30 per cent allowed by its shareholders' council, according to general director Nguyen Phuoc Thanh.
This year, the bank has set a target of keep its bad debt ratio at less than 2.8 per cent, and will try to improve its debt collection.
To realise its target, Vietcombank will continue to control credit growth, particularly of medium and long-term loans and those in foreign currency, so as to align lending with the growth of capital resources, Thanh said.
He also said that Vietcombank would closely follow the central bank's policies and carefully watch its liquidity so as to come up with proper measures to reduce bad debts.
Tran Phuong Binh, general director of the DongA Joint Stock Commercial Bank, said that given the country's current hard economic situation, most enterprises were facing difficulties in their production and trading activities.
Therefore, banks cannot avoid facing difficult situations themselves, he said.
To minimise its risks, DongA Bank has always maintained tight control over its credit quality and used VND296 billion for its credit risk contingency fund in 2011.
The result was that the bank's bad debt in 2011 was just 1.69 per cent of total outstanding loans, but it was still higher than the ratio recorded in 2010, Binh said.
He said that this year, DongA plans to focus its lending on production and trading activities related to export.
Food processor increases charter capital
Mechanics Construction and Foodstuff Co (MCF) has increased its charter capital from VND35 billion ($1.6 million) to VND80 billion (US$3.8 million), with Vinafood II holding a 60-per-cent stake in the company. MCF has targeted earnings this year of around VND700 billion ($33.3 million), a net profit of VND18.75 billion ($892,850), and a dividend payout of 15.9 per cent.
Japan transfers latest battery technology to Hanel
Japanese group Coccolo is providing the Vietnamese company Hanel with the technology to produce the world's first third-generation lithium-ion batteries from magnesium extracted from sea water.
This was the most advanced technology in the field and it was being transferred solely to Viet Nam, said Coccolo president Kazuyuki Toyosato at a recent signing ceremony in Tokyo.
These rechargeable batteries manufactured by Hanel will be shipped to Japan.
Magnesium batteries were environmentally-friendly and helped conserve energy while the ocean's magnesium reserves were virtually limitless, Yabe said.
HCM City aims to stabilise more prices
Pharmaceutical products, powdered and liquid milk, and student stationery will be added to the HCM City price stabilisation programme for this year and the next Tet (Lunar New Year festival), according to decisions signed last week by Nguyen Thi Hong, Deputy Chairwoman of HCM City People's Committee.
This year's price stabilisation programme will last from 1 April 2012 until 31 March 2013.
Powdered milk for children, pregnant women and fortified milk products will be included under the programme.
The decision follows last year's price stabilisation programme that ended on 31 March 2012. It aimed to stabilise prices of nine groups of essential goods – rice, sugar, cooking oil, livestock meat, poultry meat, eggs, processed food, vegetables and fruits, and aqua-products.
Fragrant and jasmine rice have been added to the rice group in this year's programme, as have 13 groups of locally-manufactured pharmaceutical drugs used to treat popular and chronic diseases.
According to Le Ngoc Dao, Deputy Director of HCM City Department of Industry and Trade, the volume of goods under this year's programme will account for 25 to 50 per cent of the supply of these goods in the market, increasing by 15 to 30 per cent compared with last year.
Dao said 49 enterprises have joined the programme to sell the four new categories of goods added to this year's list. Some pharmaceutical and dairy firms have declined the interest free loans that are offered by the programme.
Despite the increase in the number of enterprises joining the programme, loans provided by it have dropped to VND332 billion (US$16 million), VND104 billion lower than last year, Deputy Chairwoman Hong said.
She said goods sold under the programme must comply with quality, safety and hygiene standards and the programme must be in line with the "Vietnamese consuming Vietnamese goods" programme.
Goods under the programme must be sold to all customers, especially residents in remote areas and workers at export processing zones and industrial parks, she said.
Vinatexmart opens 2 clothes supermarkets in Ha Noi
The Viet Nam Textile Fashion Trading Co Ltd has inaugurated two clothing supermarkets in Ha Noi, one in Ha Dong Vinatexmart and the other in Ba Trieu Vinatexmart.
The three-storey Ha Dong Vinatexmart, located in Van Phuc Ward, Ha Dong District, is built on a 4,500-sq.m area with an investment capital of over VND10 billion (US$476,000).
The seven-storey Ba Trieu Vinatexmart covers an area of more than 5,000sq.m on Ba Trieu Street, with a total capital of VND15 billion ($714,000).
Chip test lab set up at National University
A laboratory for testing intellectual property cores opened at the National University of HCM City in Thu Duc District last week.
An IP core refers to a chip layout design that may be licesed to one or more chip makers but whose IP rights ves with the owner.
The VND9.2 billion (US$440,000) public lab, which will support the integrated circuit (IC) design industry, has been built by the university's IC Design Research & Education Centre.
Initially, it will help verify small and medium IP cores designed by the centre and its partners.
Techcombank best in emerging market
The Global Finance Magazine recently awarded the prize of "Best Emerging Market Bank 2012 in Asia" to the Commercial and Technology Joint Stock Bank (Techcombank).
Last year, the bank posted a pre-tax profit of VND4.2 trillion (US$200 million), up 53.2 per cent over the previous year.
Its total assets increased by 20.4 per cent, reaching VND180.8 trillion ($8.6 billion) by the end of 2011.
Global Finance is an English-language monthly financial magazine based in New York. The magazine in financial globalisation is distributed in 163 countries.
Insurer targets 14% higher profit
Bao Viet Holdings, which specialises in areas of insurance, banking and financial services, aims for a profit growth of 14 per cent this year.
The company, listed on HOSE as BVH, expects a 20 per cent increase in turnover this year, according to CEO Nguyen Thi Phuc Lam. The targets are subject to approval by its annual shareholder meeting later this month.
Lam said at a press briefing last week that the company would begin restructuring its business this year, refine the group's operating model and improve corporate governance to ensure sustained success in the future.
The group earned total pre-tax profits of VND1.521 trillion (US$72.5 million) last year, more than 17 per cent over the previous year. Its revenues of VND14,872 billion ($708 million) marked a 15.32 per cent increase over 2010.
Binh Dinh approves development plan
The People's Committee of central Binh Dinh Province approved the plan on development of 62 industrial clusters by 2020 and a vision to 2025, said Nguyen Van Thang, Deputy Director of the provincial industry and trade department.
According to the scheme, 62 clusters will cover a total area of 1,921ha. By 2015, some 36 industrial clusters will be filled up with a total expected industrial production value of VND3.5 trillion (US$166.6 million), making up 21 per cent of the provincial figure. The remainder will likely be filled up by 2025.
By the end of the first quarter of this year, 23 industrial clusters have gone into operation with a total investment capital of over VND1.78 trillion ($84.7 million).
HSBC Viet Nam sees strong growth
HSBC Viet Nam's pre-tax profits grew 40 per cent last year to VND1.97 trillion (US$94 million).
Its results announced last week show net operating turnover before loan impairment charges – of less than 1 per cent of loans – was up 44 per cent to VND2.16 trillion ($103 million).
Total assets as of December 31 were up 11 per cent to VND53.32 trillion.
The bank, the Vietnamese subsidiary of HSBC, achieved a capital adequacy ratio of 13 per cent against 9 per cent required by the State Bank of Viet Nam.
Report lists 500 fastest-growing firms
Viet Nam Report Co and online news VietnamNet will announce on April 10 the list of 500 companies with the fastest growth rate in Viet Nam.
The FAST 500 list, drawn up for the second year, is based on the growth in total assets, profits, and number of employees.
It aims to highlight effectively run companies who operated in a variety of fields across the whole country under the current difficult period.
Bank loans let farmers prosper
Ngo Thi Phu, a farmer in Yen Lap District in northern Phu Tho province, owns a 1,000-square metre-farm where she raises eight wild sows and a wild boar, earning VND150 million (US$7,200) a year.
Although the 48-year-old woman and her family worked hard for several years, it was access to a bank loan that led to them prosperity.
"In 2002, my family borrowed VND7.5 million from the Agriculture and Rural Development Bank (Agribank)," she said. "With that amount, I bought a wild sow that gave us six pigs. We sold five and kept one for breeding."
Loans have helped thousands of rural residents like Phu, including Phan Thi Duyen, who set up the Tan Uyen Brocade Co-operative in southern An Giang Province's Tan Uyen District, where brocade is a traditional product.
Recognising the market's increasing demand for brocade products, Duyen borrowed nearly VND100 million from the Viet Nam Bank for Social Policy (VBSP) to set up a brocade production co-operative, which has grown from the initial five to 19 members.
"The income of the members, most of them farmers, is on average VND1 million per month. The co-operative has helped the local farmers to fully use their idle time between crops," Duyen said.
Rural credit involves small funds given by banks or financial institutions to farmers, co-operatives or associations of rural producers.
Its main goal is to stimulate investment and help in funding the production and marketing of agricultural products.
To get credit, the borrowers must present a project, plan and budget.
In Viet Nam, Agribank and the VBSP are two among several credit institutions specialising in rural credit for farmers.
According to the State Bank of Viet Nam's Credit Department, as of December 31, 2011, total outstanding loans given to the agriculture sector and rural areas was around VND477.49 trillion ($22.93 million), a year-on-year increase of 25.26 per cent. The figure is equal to 20 per cent of the country's total loan portfolio.
Last year, while the banking sector's credit growth rate was only 13 per cent, credit injected into agriculture and rural areas grew by 25 per cent.
Investments have also resulted in farmers' incomes increasing by 30 per cent on average, and between 60 and 80 per cent in some localities.
According to economic experts, Viet Nam, like other developing countries, has to cope with capital problems, particularly in agriculture and in rural areas.
More than 70 per cent of the population continues to live in rural areas, and they depend on agricultural production. However, most farmer households are still poor due to their low incomes.
In recent years, the Government has encouraged credit organisations to further invest in agriculture and rural areas. This has improved farmers'standard of living.
Dr Cairo Newman, a senior economic expert from Denmark, told Tai Chinh Viet Nam (Vietnam Financial) newspaper that the percentage of farmers households getting access to rural credit rose from 45 per cent in 2008 to 54 per cent in 2010.
He, however, said 50 per cent of the Vietnamese farmer households had not been able to access credit resources.
Several Vietnamese experts said the market economy was still developing so farmers had few opportunities to get access to credit. They also noted that agencies allocated investment resources unequally among localities and different sectors, making access to loans more difficult. To improve the quality of rural credit, experts recommended that more research be conducted on farmer demand, access to credit resources and evaluation of farmers' use of loans.
Steelmakers face power rate hike
The Electricity of Viet Nam (EVN) has proposed a price increase on electricity consumption by steel and cement industries.
According to the Ministry of Industry and Trade (MoIT), it cost the power sector about VND2.547 trillion (US$121.3 million) to provide cheap power to the steel and cement sectors in 2010 alone. Foreign invested steel manufacturers enjoyed about VND506 billion of this sum.
During the same year, steel and cement industries consumed about 11 per cent of the country's total electricity output, accounting for 982 million KWh. They paid just VND914 per KWh which actually cost VND1,180 per KWh to produce.
Last year, the EVN increased electricity prices twice for a total 20 per cent hike, bringing the average price to VND1,304 per KWh. Households were charged VND1,400 per KWh.
An official of the Electricity Regulatory Authority of Viet Nam under the MoIT said households paid higher rates than production sectors because they had the priority for electricity use.
He said if power prices for steelmakers remained cheap, the steel industry would export more. Therefore, a possible halt in steel exports might be considered in order to curb losses incurred from such cheap electricity.
On the Construction Ministry's website, Nguyen Tien Nghi, vice chairman of the Viet Nam Steel Association (VSA) said the hike was unfair for the steel industry, citing that electricity costs accounted for only 0.7 and 5 per cent of the production costs in laminating steel and producing pig iron, respectively. This meant that electricity costs were not the most important proportion in calculating steel production costs.
A sufficient supply of electricity to meet the steel industry's demands was critical and it was agreed that electricity prices should follow the market mechanism, he said.
Nghi also said the steel industry played a key role in the construction and real estate sectors, yet as the real estate market had been sluggish, an increase in electricity prices for the steel industry alone was unacceptable. If required, the price hike should be applied to all sectors, not only steelmakers, he said.
Industry insiders and several steelmakers voiced their concerns about a possible halt in steel product exports, saying that such a halt would not result in a significant power savings.
They said that while the export volume was insignificant, the halt would result in more difficulties for the steel manufacturers as the supply was currently double the demand.
Meanwhile, stockpiled steel will meet domestic market needs for the next few months.
Exporting steel products was considered the best way for the steel industry to avoid stockpiling, they said.
The VSA has called for incentives from the Government to help steel manufacturers sell their products while reducing the trade deficit.
Cavifoods firm opens rice-milling facility
The Cambodia - Viet Nam Foods Company (Cavifoods) on March 30 opened a rice-milling plant in Phnom Penh that is expected by May to have the largest capacity and best product quality of any milling plant in the country.
When the plant opens its second production line in May, it will become fully operational, with a total capacity of 40,000 tonnes, according to Doan Anh Sang, Cavifoods chairman.
Cavifoods has three shareholders, Viet Nam's Cambodia Investment and Development Company (IDCC), Viet Nam Southern Food 2 Corp (Vinafood2) and the local company Green Trade, which represents 33 per cent, 37 per cent and 30 per cent, respectively, of the nearly US$8 million in charter capital.
The company targets exporting 250,000 tonnes per year by 2015, which would represent 25 per cent of rice exports from Cambodia, according to Tran Bac Ha, chairman of the Association of Vietnamese Investors in Cambodia and chairman of the Bank for Investment and Development of Viet Nam, a major shareholder in IDCC.
Apart from the new rice-mill, which also has a storehouse system, Cavifoods will hire processing agents.
In Cambodia, Cavifoods also trades rice, pesticides and fertilisers as well as operates agricultural services.
Cambodia's Minister of Trade Chom Proseth praised the co-operation project that helped promote his country's rice-processing industry to reach international standards, including reaching a low broken-rice rate. The latter would help increase rice exports, he added.
Cambodia's strategy is to produce 4 million tonnes of rice by 2015, of which 1 million tonnes would be exports.
Cavifoods also plans to develop a packaging factory in Cambodia, according to Sang.
Import taxes to be cut
Import taxes will be gradually cut during the next two years to meet the country's commitments to various free trade agreements, according to the Ministry of Finance.
The ministry said it had released four circulars on import tax reduction based on the implementation of the ASEAN-Japan Comprehensive Economic Partnership, the Viet Nam-Japan Economic Partnership Agreement, the ASEAN-Australia-New Zealand Free Trade Agreement and the ASEAN-India Free Trade Agreement. Commitments under the first two agreements will take effect as of April 1 while those of the two latter will take effect on April 30.
Accordingly, a number of garment product and accessory taxes will be cut from the current 13 per cent to 11 and 9 per cent in the next two years. Import taxes on film cameras will be cut from the ... current 5 per cent to 2.5 per cent in 2014 while those on several digital cameras will be exempted. Kitchen appliance, basin and bathtub rates will be cut from 19 to 14 per cent.
Conditions related to such cuts include that goods be transported directly from exporting countries, signed up to the agreements, alongside full certificates of origin.
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