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VN Buss. News (Apr. 14, 1997)
Troubles at Huy Hoang raise concerns over Vietnam's private sector
Asian Cash Rice Steady Amid Active Vietnamese Shipments
S. Korea: Sam Yang To Build Dyeing Plant In Vietnam
Vietnam's Debts to Korea Rise
Five private banks form "aligned bank" in Vietnam
Troubles at Huy Hoang raise concerns over Vietnam's private
sector
By Frederik Balfour
Hanoi (AFP) - Vietnam's largest private company, Huy Hoang, has asked
for a government bailout, raising questions about the viability of the
country's fledgling private sector.
An official from the company told AFP that Ho Chi Minh City
authorities had agreed to consider two alternate proposals from Huy
Hoang that would involve a cash infusion from state-owned enterprises
in exchange for a stake in the company.
Huy Hoang's request for government help exposes the fragility of the
Vietnamese private sector and underscores the dangers when high risk,
high return investments do not pan out.
It could also prove awkward for Hanoi, which is under foreign pressure
to speed reforms of state owned enterprises, as the rescue plan is
tantamount to a deprivatisation.
According to a company official, Huy Hoang chief Le Van Kiem requested
city authorities to set up a joint venture with his company to "build
a state capitalistic economic model."
However, while foreign businessmen close to the company said they were
told the same thing, they say a serious cash crunch is the real reason
behind the request.
"They are seeking a way to inject cash into a high profile company.
Kiem is a big shot and everyone knows the state doesn't want another
scandal, " said one foreign businessman close to Huy Hoang.
Huy Hoang has been held up as Vietnam's showcase private company. It
received a 3.9 million dollar convertible loan from Dublin-listed
Vietnam Fund. It is also the only Vietnamese private company to
receive funds from the International Finance Corporation, which took
an equity stake in a joint venture ceramics factory between Huy Hoang
and the Ongko Group of Indonesia.
"It's a blue chip Vietnamese company. If the state is taking
significant pieces of a private company is that supposed to be a good
thing?" asked the foreign investor.
Other foreign observers note that Kiem's sterling connections in Hanoi
have enabled the 51-year-old entrepreneur build Huy Hoang into
probably the country's largest private enterprise.
Kiem has embodied Vietnam's new entrepreneurial elite, sporting a
diamond encrusted Rolex watch and a fleet of imported cars including
five Mercedes Benzes and Vietnam's first Rolls Royce limousine.
However, and a series of property deals gone sour have left the
company in a precarious position.
Huy Hoang also holds a stake in Vietnam Joint Stock Bank for Private
Enterprises (VP Bank), which defaulted on a three million dollar
deferred letter of credit.
According to Kiem, the government came up with a similar rescue plan
for the cash strapped bank.
While Huy Hoang's proposal amounts to a partial deprivatisation -- a
likely solution will involve Huy Hoang selling 30 percent of the
company to the state -- the government is keen to prevent another
scandal.
Earlier this month, the directors of two private companies, Minh
Phuong Garment Co. Ltd. and Epco Ltd. trading company, were arrested
on charges of defrauding a state-owned bank of nearly 18 million
dollars.
Four people were also condemned to death for their role in the 40
million dollar Tamexco trading company scandal late last month.
There have been conflicting reports about Huy Hoang's finances. Press
reports earlier this month said the company had recorded substantial
losses last year, but foreign investors who have seen the company's
books -- which have not been subjected to international audit -- said
it was profitable.
Kiem founded Huy Hoang in 1989, and has built two garment plants and
won numerous lucrative construction deals. The group reportedly had 50
million dollars in assets and 40 million dollars in sales in 1995.
___________________________________
Asian Cash Rice Steady Amid Active Vietnamese Shipments
SINGAPORE (Dow Jones)--Physical rice offers are largely unchanged late
Monday in Asia amid active shipments of Vietnamese rice, trade sources
said.
Already contracted are shipments of Vietnamese 5% broken rice to Iran,
of 35% broken rice as food aid to North Korea, and of 2.5% and 5%
broken rice to Peru, trade sources in Ho Chi Minh city said.
One of them said the party in Peru likely concluded the deal for 5%
broken rice at $243/ton, FOB.
April Vietnamese shipments are likely to reach or surpass the amount
shipped in March, according to a source with a cargo surveyor in Ho
Chi Minh city.
In March, Vietnam shipped out 297,640 tons of rice, up from a
miserable 80,100 tons in February, he said.
Meanwhile, as reported late Friday, Pakistani rice shipments for the
week April 5-11 amounted to 29,005 tons, down from 32,371 tons shipped
the previous week.
Still, with some help from firm basmati rice prices and continued
demand, Pakistani IRRI-6 non-basmati rice prices could rise from next
week onwards, said a source with an exporter in Karachi.
He said there was a 2% price increase in 385 basmati rice prices to
$445-$450/ton last week, which could affect prices of IRRI-6 rice.
'We're still getting the enquiries and the l/cs (letters of credit)
are coming,' the Karachi source said, adding he concluded IRRI-6 rice
sales with parties in Muscat and Dubai last week.
As rice supply in Dubai is good, the Karachi trade source said Dubai
parties should be re-exporting the rice to other nearby countries.
Pakistani offers for 25% broken rice are steady at $215-$220/ton while
in India, the grade is largely offered unchanged at $245/ton.
No offers are heard from Thailand, owing to the Songkran Festival
holiday which lasts through April 15.
-By Joyce Teo 65-421-4825
___________________________________
S. Korea: Sam Yang To Build Dyeing Plant In Vietnam
SEOUL (DJ) -- South Korea's Sam Yang Corp. (Q.SYA) said Monday it
received approval from the Vietnamese government to set up a wholly
owned dyeing plant near Ho Chi Minh City.
The textile maker plans to invest a total of US$12 million for the
plant to be constructed in the industrial complex of Tuyha in Dongnai,
according to an official at Sam Yang.
The venture, called SY Vina Co., will have an annual dyeing capacity
of 32.4 million yards once it initiates operation at the end of this
year, the official said.
Stocks of Sam Yang fell 100 won to close the day at 22,400 won on
volume of 47,570 shares.
Sam Yang Corp., which began as a sugar processor in 1924, is now South
Korea's leading producer of polyester goods. It has also advanced into
other areas such as chemicals and pharmaceuticals.
Headquarters: 263 Yonji-dong, Chongno-ku, Seoul.
Significant Developments: The company shifted to a loss of 19.7
billion won during the latest fiscal year ended June 30, 1996, due to
a rise in raw material prices.
Sam Yang in 1994 started operations at a joint venture in Vietnam to
produce about 2.8 million yarns of polyester textiles a year. It also
plans to raise polyester staple fiber output at a joint-venture plant
in Pakistan. It will build a dyeing plant in Vietnam with an annual
capacity of 32.4 million yards. The plant is slated to begin operation
by the end of 1997.
It plans to start operation at its pharmaceutical plant in Taejon,
some 150 kilometers south of Seoul, in 1997 to build up its presence
in the industry.
The company agreed with sister company, Samyang Genex Co., and VivoRx
of the U.S. to jointly develop new ways of using the anti-cancer agent
taxol in medicine. Samyang and VivoRx will also jointly sell the taxol
medicine worldwide.
Samyang is planning to advance into the cable television industry by
taking an equity in a CATV broadcasting company in Pucheun, in the
outskirts of Seoul.
All figures are in won:
Yr Ended Yr Ended Yr Ended
(Loss) 6/30/96 6/30/95 6/30/94
Net Profit(19.7 bln) 14.64 bln 7.33 bln
Sales 1.14 tln 1.1 tln 769.68 bln
Div. - cash 100 600 600
- shares 2 omitted omitted
(for every 100 held)
-
Currency history (dlr vs. won)
6/30/96 6/30/95 6/30/94
Closing Avg.810.60 758.10 805.50
___________________________________
Vietnam's Debts to Korea Rise
The Korea Herald
With the Vietnamese foreign exchange situation badly deteriorating,
Korean exporters that made credit transactions are finding it
difficult to collect payments.
According to the Korea Trade-Investment Promotion Agency (KOTRA)
yesterday, Vietnamese businesses are asking that their payments
outstanding be delayed from 60 days to up to 360 days as their foreign
currency market is in a quagmire.
Since adopting an open-door policy, Vietnam has been tackling a
chronic foreign exchange shortage because it is desperately expanding
facility and infrastructure investment. Moreover, the bad situation
further deteriorated last year as Southeast Asian nations experienced
sluggish exports in general.
Accordingly, nonpayment or delay of payment by Vietnamese companies
are expected to continue for the time being, KOTRA forecast.
According to a KOTRA estimate, Korean companies are owed more than
$100 million from their Vietnamese counterparts, with steel,
petrochemical and textile companies being the biggest victims.
The spreading trend of nonpayment made Korean companies hold an
emergency meeting in Hanoi Thursday to work out countermeasures.
Kotra said, ``We have experienced in Iran and Iraq that delay in
payments eventually ended in nonpayment. Hence, businesses and the
government should actively come forward to settle the issue.''
___________________________________
Five private banks form "aligned bank" in Vietnam
Hanoi (AFP) - Five joint stock banks in Vietnam have formed an
"aligned bank" to cooperate on co-guarantees and overseas remittances,
an official from the banks said Monday.
Vietnam Commercial Joint Stock Bank for Private Enterprises (VP Bank),
Dai Nam Bank, Nam Do Bank, Mekong Bank and Que Do bank have signed a
memorandum of understanding to share resources,risks and information,
although each bank will retain its current financial structure.
VP Bank, which hit the news earlier this year when it defaulted on a
three million dollar deferred letter of credit, is capitalised at
about 18 million dollars, while the other four banks are capitalised
at between two and three million dollars.
"This is not a dramatic development. It's just a first step to the
consolidation of the banking industry which is undercapitalised," said
an official of a foreign investment fund with a stake in VP Bank.
"This is an agreement to cooperate rather than compete," he said.
VP was the first domestic bank authorised to sell its shares to
foreigners.
"Its broadly a very good thing for the bank," he said.
Vietnam has 54 joint-stock banks, most of which are undercapitalised
and overexposed, banking analysts say.
By forming a non-equity cooperation, the five banks have taken the
first step to eventually merging, the foreign investor said.