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VN Business News (Mar. 6-7, 97)
Mar 07: Vietnam's state industry makes vague profit
Mar 07: Vietnam to Develop Rubber Industry
Mar 06: Thailand may grant Vietnam loan for low-income housing
Mar 06: Vietnam's Asia Commercial Bank Named Visa Card Issuer
Mar 06: Vietnamese government says will not devalue the dong
Mar 06: ADB grants Vietnam 50 million dollar loan in rural credit project
Friday, Mar 07, 1997 [38]... Back to headlines
_[INLINE] Vietnam's state industry makes vague profit _
HANOI (Reuter) -- Almost four out of five of Vietnam's state-owned
businesses, the driving force behind Hanoi's ambitions to build
communism using a capitalist-style economy, are making a profit,
official media said on Friday.
The Communist Party's Nhan Dan newspaper said 78 percent of
state-owned businesses made profits last year and only 17 percent lost
money -- making the public sector the most successful area of the
economy, in statistical terms.
The remaining five percent was not accounted for.
The newspaper said Vietnam's 6,250 state-owned companies made 14,000
billion dong ($1.22 billion) last year, or an average of $196,319
each.
But it added, without explanation, that 40 percent of these profits
were going towards payment of interest on domestic and foreign loans.
``Well, it certainly sounds very encouraging,'' said a senior
Hanoi-based economist. ``But it's difficult to gauge what this means
without knowing the system of accounting being used.''
Vietnam's ruling Communist Party enshrined the principle that
state-owned enterprises should occupy a leading role in the economy,
in a five-year policy manifesto unveiled last year.
Hanoi says the measure is aimed at ensuring the success of a
market-economy with a socialist orientation.
International economists, however, expressed concern that the measure
was more in line with traditional socialist doctrine than the
free-market reforms launched by Vietnam in the late 1980s.
Vietnam's state sector is widely viewed as grossly inefficient,
suffering outdated technology, poor management skills, and
insufficient capital for investment.
According to General Statistics Office data, output growth for state
industry stood at 11.7 percent in 1996 compared with 21.4 percent for
foreign-invested businesses and 49.7 percent for privately-owned
Vietnamese firms.
According to government officials profit rates for the foreign
invested sector are slightly more than 40 percent.
Figures for the domestic non-state sector were not available but
Friday's official Saigon Giai Phong newspaper said at least 20 percent
of such enterprises in Ho Chi Minh City -- the country's main economic
hub -- were making a loss.
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Friday, Mar 07, 1997 [39]... Back to headlines
_[INLINE] Vietnam to Develop Rubber Industry_
HANOI (Xinhua News) -- Vietnamese government has drawn up a plan to
expand the area of rubber plantations to 700,000 hectares in the
country by 2010, local press reported today.
Rubber plantations in central highlands and southeastern provinces had
a total growing area of 288,236 hectares at the end of last year.
Vietnam produced 150,000 tons of rubber latex in 1996 with 90,000 ton
for export.
The Agricultural Ministry has asked the state to give priority to the
development of rubber industry and other sectors, in a bid to expand
the area of rubber plantations to 480,000 hectares and increase the
output of dry latex to 280,000 tons by the turn of the century.
Besides, the ministry has worked out plans for 18 rubber planting and
processing projects with a combined investment of 245.2 million U.S.
dollars.
The ministry hopes that the projects may attract cooperation from both
domestic and international enterprises. Enditem
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Thursday, Mar 06, 1997 [40]... Back to headlines
_[INLINE] Thailand may grant Vietnam loan for low-income housing _
Thailand may provide a low-interest loan of 100 million baht to help
Vietnam build housing as part of a slum clearance scheme in Ho Chi
Minh City.
Deputy Foreign Affairs Minister Pitak Intrawithayanunt said the
government would consider the request made by Thai contractors for the
5.7-billion-baht project.
It was possible the loan could be extended by the Export-Import Bank
of Thailand, he added.
Preecha Chuaychoo, general manager of Hicrete-Vietson Co, a Thai-
Vietnamese joint venture making building materials in Ho Chi Minh
City, told Mr Pitak that he had been approached by Vo Viet Thanh,
acting chairman of the local people's committee, to help build the
project.
An official proposal from Ho Chi Minh authorities was likely in a few
weeks, he added.
Mr Preecha lodged his request at a trade meeting entitled, "Thailand
and Vietnam Trade and Investment Opportunities", held in Ho Chi Minh
City on Saturday.
It was attended by 50 Thai businessmen and civil servants and presided
over by Mr Pitak who led a 110-member delegation to inspect Route 9
linking Mukdahan in northeastern Thailand with Sawannakhet in Laos and
Danang and Hue in Vietnam.
The delegation included diplomats from many Asian countries including
Japanese Ambassador to Thailand Hirashi Ota, Cambodian Ambassador to
Thailand Roland Eng, Thai parliamentarians, representatives for state
agencies and journalists.
Mr Preecha told the meeting his company had been asked to help build
1,500 flats as part of a project to rehouse 30,000 families currently
in slums. Each block of flats would have five storeys each of four
units.
Foreign investors had shown little interest as the project was not
commercially viable, he said, adding it would be good if Thailand
could provide the loan as a humanitarian gesture. It would also help
his company win the contract, as it could supply materials worth 50
million baht.
City authorities had already built 2,000 units as part of the project
and 1,100 families had moved in, he said.
If the government agreed to provide the loan, work could start by the
middle of this year and be completed on schedule before 2000, he said.
-- Bangkok Post
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Thursday, Mar 06, 1997 [42]... Back to headlines
_[INLINE] Vietnam's Asia Commercial Bank Named Visa Card Issuer_
HANOI (Dow Jones News) -- Asia Commercial Bank (ACB), a joint-stock
bank headquartered in Ho Chi Minh City, has been named the second
authorized issuer of Visa cards in the nation.
The first actual card issuance from both ACB and state-owned Bank for
Foreign Trade of Vietnam (Vietcombank) is expected to occur in the
'next few months,' a Visa International spokeswoman said in a
telephone interview from Ho Chi Minh City Thursday.
Vietcombank, the largest commercial bank in the country, became the
first Vietnamese financial institution authorized to issue Visa cards
in 1996.
Currently, about 1,700 merchants in Vietnam accept Visa cards.
In terms of value, more than 50% of charges made on payment cards in
Vietnam are made on Visa cards, the spokeswoman said.
Although the initial Vietnamese issue of Visa cards will begin soon,
Visa International recognizes that the development of the local market
will be a long-term project, the organization said in a statement.
Visa will become the second major payment card to be issued in
Vietnam. The first Vietnamese Mastercards were issued last March.
Vietcombank and ACB are both authorized Mastercard issuers as well.
About 1,500 to 3,000 Visa credit cards are expected to enter
circulation in Vietnam in the first 12 months that Vietcombank and ACB
are issuing cards, said Richard Chang, Visa International's senior
manager for Indochina.
Visa's emphasis initially will be on trying to sign up more businesses
to accept the card, Chang said in a telephone interview from Ho Chi
Minh City.
About 98% to 99% of payment card charges in Vietnam now come from
foreigners, Chang said. His hope, he said, is that charges made by the
Vietnamese will increase to about 10% of the total figure in the next
three years.
Total credit charges in Vietnam for all major card brands totaled
about $164 million in 1996, up about 13% from 1995, Chang said.
This marked a significant deceleration of charge growth from the year
before. In 1995, the total value of credit card charges increased by
40% to 50% from 1994.
For 1997, early evidence suggests total charge growth could increase
more than 20% from last year, Chang said.
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Thursday, Mar 06, 1997 [43]... Back to headlines
_[INLINE] Vietnamese government says will not devalue the dong _
HANOI (AFP) -- Vietnam Thursday said it had no plans to devalue the
dong, despite speculation among foreign bankers triggered by a fall in
the currency against the dollar of about 3.5 percent this week.
"The position of the Vietnamese government is not to devalue the
Vietnamese dong," a foreign ministry spokesman told a press briefing.
"The State Bank of Vietnam (SBV) will continue to regulate the
exchange rate in accordance with the demand and supply relationship.
"We won't let the Vietnamese dong and the US dollar undergo big
changes." At the beginning of the week the SBV widened the interbank
trading band from one to five percent above and below the official
exchange rate it sets daily. The result was a nearly four percent drop
in the value of the dong, from 11,200 to the dollar the previous
Friday to 11,500 Monday.
The interbank rate is the rate banks use to buy and sell dollars from
each other.
On Thursday, the dong had dropped as low as 11,650 to the dollar,
testing the floor established by the new trading band but then
strengthened as pressure to unload the currency subsided, bankers
said. Thursday's official rate was 11,097 dong per dollar.
"There is no more upward pressure (on the price of dollars)," said
David Pollitt, treasury manager of Hongkong Bank's Ho Chi Minh City
branch.
He said this illustrated the government decision to allow wider daily
fluctuations in the dong had achieved its purpose of closing the gap
between official and black market rates.
Before the decision, black market rates were as much as 500 dong or
4.5 percent higher than the official rates pegged daily by the central
bank. On Thursday the two rates were nearly identical, he said.
"It looks like tomorrow they should all be around the same
level.That's what they said they were aiming to do," he said.
A Hanoi-based foreign banker said the Vietnamese dong had become
overvalued in the past three years as the government had not allowed
it to depreciate to compensate for the difference between local and US
inflation rates.
The dong's stability at about 11,000 per dollar since 1994, combined
with high local inflation, had caused the dong to appreciate 10 to 15
percent in real terms against the dollar, said the banker.
The currency's weakness has become an increasing concern among foreign
bankers, who said they were alarmed at Vietnam's yawning trade deficit
which last year reached four billion dollars, or about 17 percent of
gross domestic product.
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Thursday, Mar 06, 1997 [44]... Back to headlines
_[INLINE] ADB grants Vietnam 50 million dollar loan in rural credit
project_
HANOI (AFP) -- The Asian Development Bank (ADB) has approved a 50
million dollar concessional loan to Vietnam to help support rural
credit, an ADB official said Thursday.
A major portion of the loan, 32 million dollars, will be given to
Vietnam's Bank for Agriculture (VBA), allowing the bank to increase
its capital by 10 percent. VBA is one of four state-owned banks,
designed primarily to provide credit in rural areas.
The remaining portion of the credit will be used for rural credit
projects.
The loan will carry an annual interest rate of one percent over 20
years with a five year grace period, the official said.
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