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VN business news (Apr 5-6)
May 06: Viet banks likely to be stuck with overdue debts
May 06: Crysler pullout from Vietnam fires up local partner
May 06: China, Vietnam sign credit deal to boost border trade
May 06: Vietnam government slams ministry for slow aid disbursals
May 06: Vietnamese Mekong river delta records record winter crop
May 06: Fujitsu to build 120.6 million dollar Vietnam computer component plant
May 06: Asian Cash Rice Mixed; Buyers Favor Cheaper Vietnamese Rice
May 06: Hanoi the EU to discuss textile quotas
May 06: Vietnamese premier urges passage of trade law to prepare for WTO:
report
May 05: Diary - Vietnam To Hold Business Opprtunities Conference
May 05: Malaysia Property Co/Others To Build Vietnam Office Tower
May 05: Vietnam Issues New Advertising Code For Drugs, Cosmetics
May 05: Irrigation Works Help Central Vietnam
May 05: Vietnam Revises Code Regulating FDI Consultants
May 05: Vietnam's Power, Fertiliser Sectors To Use Gas
Viet banks likely to be stuck with overdue debts
VIETNAM's central bank governor has said commercial banks stand little
chance of reducing overdue debt on their books because many corporate
borrowers are in dire financial straits, the Nguoi Lao Dong newspaper
said yesterday.
The newspaper quoted governor Cao Si Kiem as telling the National
Assembly deputies that of the 53 trillion dong (S$6.6 billion) in
commercial bank loan assets, 6.8 per cent was outstanding debt.
"According to the governor, there is little possibility of reducing
the overdue debts because of financial difficulties faced by
enterprises, whose capital is 80 per cent bank borrowings."
"Outstanding debt" is a catch-all phrase which includes bad and
doubtful loans, terms unheard of in Vietnam until recent moves to
gradually adopt Western-style accounting practices.
Mr Kiem said 1.62 per cent of the commercial banking system's
outstanding debts could be classified as doubtful.
He added that outstanding debt at the country's privately held banks,
which are known as joint-stock banks, was more than 10 trillion dong.
Mr Kiem said the most indebted firms were Nam Dinh textiles, the Union
of Sericultural Enterprises, trading company Tamexco,
garments-to-construction company Minh Phung, the EPCO conglomerate and
agriculture and foodstuffs company Thuan Hung. Four of them have come
under scrutiny in recent months for alleged fraud, which has fed
growing concerns about the health of the banking system in general. --
Reuter
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Crysler pullout from Vietnam fires up local partner
Hanoi (dpa) - U.S. carmaker Chrysler's expected pullout from Vietnam
has sparked calls for compensation from the local partner, after tiny
market sales made the multinational rethink its investment.
``They've granted assembly licences to anybody and their brother who
wants to build a vehicle in Vietnam,'' Chrysler spokeswoman Jodi
Armstrong was quoted as saying in the state-controlled Vietnam
Investment Review.
Local partner in the proposed 192 million dollars joint venture,
Vietnam Engineering and Agriculture Machinery Corporation (VEAM), says
it won't pay its 30 per cent share of the costs of the venture with
the American car giant.
Estimating that about one million dollars has been spent on market
research, fees, and a feasibility study, VEAM Director General Do
Hoang Thinh said: ``if they ask us to (pay) 30 per cent of the one
million dollars we would say no because they broke the deal.
``We are really disapponted and surprised that we have not been
informed of their withdrawal.''
Chrysler's chief representative in Vietnam, Vance Peacock, who
relocated to Bangkok three months ago, is expected to lead a
delegation to Vietnam this month to announce the official withdrawal.
Low sales volume made the company rethink its plans after Hanoi
allowed licences for 14 car assemblers after originally promising,to
restrict the sector to six.
The 14 plants would provide production capacity of 181,000 units per
year, in a market which only sold 12,000 new cars last year.
South Korean carmaker Hyundai is expected to take over the licence and
construct a 220 million dollars plant in Dong Nai province, northeast
of Ho Chi Minh City.
The Korean company desperately wants a piece of Vietnam's nascent auto
market, after having its original plant scrapped early this year due
to ``low and inappropriate technology transfer''.
All is not lost for VEAMm, however, as the state-owned company already
has joint ventures with Toyota and Ford about to start production in
northern Vietnam as well as a motorbike manufacturing project underway
with Honda.
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China, Vietnam sign credit deal to boost border trade
BEIJING (AFP) - China's Industrial and Commercial Bank has signed an
agreement with Vietnam to pave the way for bill settlement in local
border trade, Xinhua reported Thursday.
The agreement with the Guangxi branch of the bank and an unidentified
Vietnamese bank allows organisations with export and import rights on
both sides of the border to issue bills of credit for settlement in
either yuan, dong or US dollars.
"The agreement was the direct result of expanding trade ties between
the two countries as the former means of cash settlement was proving
inadequate for the foreign trade business," the news agency said.
The border crossing on the Beijing-Hanoi railway re-opened in Guangxi
in February 1996 after an 18-year closure prompting a massive boost in
border trade.
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Vietnam government slams ministry for slow aid disbursals
HANOI (AFP) - The director of Vietnam's government office has slammed
the Ministry of Planning and Investment for dragging its feet on aid
projects and investment approvals, a report said Tuesday.
The criticism levelled by Lai Van Cu echo the sentiments of
international donors including Japan, Vietnam's largest bilateral
donor, the World Bank, and the Asian Development Bank (ADB).
He blamed the glacial pace of Overseas Development Assistance projects
and direct investments on a bloated bureacracy, inefficent bidding
procedures, and inconsistent customs regulations, the English language
Vietnam News reported.
His comments follow press reports that a 30 million dollar project
approved by the ADB in 1995 to upgrade Saigon Port in Ho Chi Minh City
was ensnarled in costly delays.
Vietnam is the ADB's largest aid recipient, and is expected to receive
about 400 million dollars per year from the organization to the year
2000.
Another ADB project to spend 65 million dollars on a water
rehabilitation project in Ho Chi Minh City has been put on the bank's
"watchlist" because no progress has occured since 1993.
At a meeting in March, Rajat Nag, the ADB program manager for Vietnam,
Laos, Cambodia Thailand and Myanmar (Burma), called the disbursement
rate very poor, noting that Vietnam must make significant project
implementation improvements or risk jeopordizing the flow of funds.
"The implementation record is of really great concern," he said,
noting that only six to seven percent of loans committed had been
disbursed.
Since multilateral lending resumed to Vietnam in 1993, aid providers
have pledged nearly 6 billion dollars in funds, of which only a
fraction has actually been realised.
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Vietnamese Mekong river delta records record winter crop
HANOI (AFP) - Vietnam's southern Mekong river delta harvested its best
winter crop on record this year with total rice production reaching
nearly seven million tonnes, press reports said Tuesday.
The Mekong delta, known as the southern "rice-bowl" of Vietnam
recorded 6.8 million tonnes in rice output in its winter crop this
year, the highest output for the region so far, the official Nhan Dan
daily said.
However the bumper crop has also caused prices to plummet, and the
government has been tackling with the problem of unsold paddy, Vo-Tong
Xuan, director of the Mekong Delta Farming Systems Institute told AFP.
Many Vietnamese rice farmers were stuck with unsold rice as a result
of slumping world prices. Farmers are being paid just 1100 dong (about
10 cents) per kilo of rice paddy, some 20 percent less than a year
ago.
"The whole process is absurd. Most provincial food companies are
losing money, and private traders are undermining the farmers.
"The banks have money but don't want to lend to the state companies
(to purchase excess rice) and this history repeats itself every year,"
he said. Vietnam rice exports in the first four months of 1997 were
more than 831,000 tonnes of rice, up 14 percent over the same period
last year.
Press reports quoting Minister of Agriculture and rural development
Nguyen Cong Tan as saying Saturday that total rice production of
Mekong delta provinces this year could amount to 15.5 million tonnes.
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Fujitsu to build 120.6 million dollar Vietnam computer
component plant
HANOI (AFP) - The computer components arm of Japan's Fujitsu Ltd.
plans to spend 120.6 million dollars to build a printed wiring boards
plant in southern Vietnam, a company executive said Tuesday.
Fujitsu Computer Products of Vietnam, a wholly owned subsidiary of the
Japanese trading giant, will construct the plant in Bien Hoa
Industrial Zone 2, located 30 kilometres (18 miles) outside of Ho Chi
Minh City.
Fujitsu is building the plant adjacent to an existing 78.2 million
dollar facility which began producing electronic circuit boards last
July.
The company is awaiting approval from the Ministry of Planning and
Investment to amend its licence to allow for the expanded capital.
Construction is expected to take eight months.
All production is destined for export, primarily to Japan, Thailand
and the Philippines.
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Asian Cash Rice Mixed; Buyers Favor Cheaper Vietnamese Rice
SINGAPORE (Dow Jones)--Asian physical rice offers are mixed late
Tuesday, with offers in Thailand higher and 25% broken rice offers in
Vietnam lower, trade sources said.
Thai 25% broken rice is now offered at $255/ton, up from $260/ton
Friday, while offers for Vietnamese 25% broken are $198-$200/ton, down
from Monday's $200-$205/ton. Markets in Thailand were closed Monday
for a national holiday.
Buyers from Africa aren't keen on Thai 25% broken rice, preferring to
buy the lower priced Vietnamese 25% broken, said a Bangkok-based
trader.
Although Vietnamese 25% broken rice is priced lower than the Thai 25%
broken, some buyers are still waiting for price falls before
purchasing, said a Ho Chi Minh-based trader.
'Its unlikely prices can fall further,' he said.
The higher grade Thai 100%B rice is offered at $325/ton, down from
Friday's $330/ton, and the higher grade Vietnamese 5% broken is
offered at $240/ton, down from $245-$250/ton Monday.
Offers for Pakistani 25% broken rice are at $230/ton, up slightly from
$225-$230/ton Monday, a Karachi-based trader said.
Indian 25% broken rice is offered at $255/ton, up from $245/ton
Monday, said a New Delhi-based trader.
-By Bernice Han 65-421-4824
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Hanoi the EU to discuss textile quotas
HANOI (AFP) - Vietnam and the European Union will hold "exploratory
discussions" at the end of this month in Hanoi on a bilateral textile
agreement a source said Tuesday.
Vietnam sent Brussels a formal request to renegotiate an accord under
which Vietnamese textiles and garments are subject to EU import
quotas, Pierre Amilhat, EU advisor in Hanoi, told AFP.
"We will study their initial request and see how create the present
accord (which expires at the end of the year) is working," he said.
While Vietnam, which is desperate to boost its textile exports, is
requesting a bigger quotas, Amilhat said it "should not hope for huge
concessions".
"The global situation is difficult for the EU because the garment
industry is fragile and has lost a lot of employment because Asian
production won't stop growing," he added.
Countries such as Portugal are particularly sensitive to competition
from Asian producers, he said.
Textile and garment exports from Vietnam to the EU are the second
largest item after shoes. Total textile exports to the EU last year
were about 400 million dollars.
Vietnam feels that its quotas, which were established bilaterally with
the EU in 1992 and renegotiated in 1995, are inferior to those
accorded to Indonesia and Thailand, which began exporting sooner.
"We hope that Vietnam will benefit fully from the present accord
because a certain number of quotas aren't being utilised, while others
have been exceeded," he said.
___________________________________
Vietnamese premier urges passage of trade law to prepare for
WTO: report
HANOI (AFP) - Vietnamese Prime Minister Vo Van Kiet has urged National
Assembly members to pass a trade law that will help pave the way to
accession to the World Trade Organization, a report said Tuesday.
But several deputies had expressed reluctance to pass the bill which
was still incomplete and confusing, the English-language Vietnam News
reported.
Delegates to the lawmaking body are rushing to cope with a heavy
agenda of laws to be tabled before the month-long session ends on
Saturday and had suggested delaying a final vote until a more
comprehensive bill could be drafted, the report said.
According to the Nhan Dan daily, many deputies said the draft law's
contents were unbalanced and contained ambiguous and repetitive
clauses.
Deputies wondered how such a law could be implemented if they
themselves could not understand its contents, the paper said.
But the prime minister, who is widely seen as a reform-minded leader,
is keen on moving ahead with preparations for WTO, and the Ministry of
Trade has set a tentative entry target date of 2000.
According to United Nations Development Program economist Jean-Luc
Bernasconi, joining WTO will require a sea-change in the country's
institutions, legal structure and economic orientation.
He noted a Geneva-based working group issued a list of 1,500 questions
in response to a memorandum on Vietnam's trade regime which the
Ministry of Trade submitted to the WTO secretariat last year.
"This is a record number of questions. Even Russia's application only
prompted 490 questions. The trade regime is very opaque. I think the
year 2000 is unrealistic," he said.
He noted that the widesweeping reforms needed to implement WTO
requirments are likely to meet stiff resistance from some quarters of
the government as they require drastic reform in the state sector.
"There is a general feeling of need for greater integration into the
world economy, but it will meet some resistance from the government,"
he said.
A western diplomat who wished not to be identified said Vietnam had
already fallen behind on committments to the Asean Free Trade Area
which requires it dismantle its protective tariffs and trade barriers
by 2006.
"They don't even have a timetable on tariff reductions or any program.
They are going to come under a lot of criticism," he said.
___________________________________
Diary - Vietnam To Hold Business Opprtunities Conference
KUALA LUMPUR (Bernama) - Vietnam's Chamber of Commerce and Industry
will organise a conference on "Doing Business With Vietnam under New
Investment, Commercial and Tax Laws" from June 6 to 9 in Hanoi and Ho
Chi Minh City.
Forerank Management & Consultants Sdn Bhd, which is organising a trip
for Malaysian business executives to the conference, said it would be
a valuable opportunity for foreigners to be updated on the latest
legal developments affecting business and investments in Vietnam.
Participants will be informed on Vietnam's priority areas for
development and investment opportunities for foreign companies.
Senior officials of the ministry of planning and investment, ministry
of trade, ministry of finance, World Bank, Asian Development Bank and
International Finance Corporation will speak at the conference.
Forerank said Monday, Vietnam, once a developing country in South East
Asia, is now looking for more investors.
Vietnam's gross domestic product grew by 9.3 percent last year while
inflation amounted to a low of 4.5 percent.
Last year, foreign investment capital from 326 foreign companies
amounted to US$8.532 billion (US$1_RM2.50), up 18.2 percent from 1995.
Forerank said Vietnam's GDP is expected to grow between 9.0 and 10
percent annually until the end of the century.
Those who are interested in attending the conference can contact
Foreerank at Tel. No. 03-6279355.
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Malaysia Property Co/Others To Build Vietnam Office Tower
KUALA LUMPUR, Bernama - Malaysian-based property development company,
Metroplex Bhd, said it has entered into a joint venture agreement with
two companies to undertake the development of a 27-storey office tower
in Ho Chi Minh City, Vietnam.
Metroplex said in a statement Monday that the two companies are
Vietnamese firm Salgontourist (ST) and TR Properties Sdn Bhd (TRP), a
wholly-owned subsidiary of Malaysian Helicopter Services Bhd.
The office tower, to be called The Piano, will be of a five-star
standard and includes a small up-market retail area. Costing about
US$40 million (RM100 million), the project will be funded partly
through shareholders' fund and partly through bank borrowings to be
arranged by Metroplex and TRP.
In another statement, Metroplex managing director Chan Teik Huat
described as erroneous a foreign wire report dated April 29, 1997 that
the company is involved in a proposed rescue plan for Reef Casino
Trust, owner of the Cairns Casino in Northern Queensland, Australia.
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Vietnam Issues New Advertising Code For Drugs, Cosmetics
HANOI (VNA) - Foreign companies and individuals trading in
pharmaceutical products must now coordinate with an authorised
Vietnamese pharmaceutical agency to organise workshops to promote
their products, according to a new Ministry of Health (MOH)
regulation.
The authorised Vietnamese agencies include the Pharmacists'
Association, the Medical Association, hospitals and pharmaceutical
organisations, the regulation says.
MOH also bans advertisements for medicines and cosmetics which are not
registered with the Vietnamese authorities or whose licenses have
expired or are cancelled.
Advertising is forbidden for addictive, as well as therapeutic
medicines for tuberculosis, mental disorders, sexually transmitted
diseases, sleeping disorders, cancer, diabetes and stimulants.
An advertisement for medicines or cosmetics is allowed to run for a
maximum of 5 days in a daily newspaper, on 50 radio broadcasts in 5
days and on 40 television programs in 8 days.
A permit for advertising cosmetics is valid for a maximum of one year.
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Irrigation Works Help Central Vietnam
HANOI (VNA) - The Ministry of Agriculture and Rural Development (MARD)
has developed 12 major irrigation projects in Central Vietnam,
including nine projects in Quang Binh, Quang Tri, and Thua Thien-Hue,
since 1976.
In order to build reservoirs, the ministry has invested VND 1,050
billion (roughly US$95 million) in digging 17.3 billion cu. metres of
land, paving 470,000 cu. metres of tiles and bricks, and concreting
119,000 cu. metres. As a result, 47,690 ha of rice and substantial
crops were watered, yielding great benefits to the project localities.
Preliminary studies for building two more reservoirs, to be named Bang
and Ta Trach, have recently been conducted. According to the surveys,
construction costs are estimated at VND 1,000 billion. The government
was also urged to disburse more money into irrigating the central
provinces.
Over the past 20 years, the irrigation projects management board,
under MARD, has made a considerable contribution to new irrigation
systems. Apart from helping the ministry mastermind investment and
supervise construction crews, the board also discovered errors in
design and assisted MARD with adjusting other designs at construction
sites, saving billions in State money.
The board recently received the Third Class Labour Medal in
recognition of its services.
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Vietnam Revises Code Regulating FDI Consultants
HANOI (AAP) - The Ministry of Planning and Investments (MPI) Decision
No. 98-BKH/PLDT, has issued a new regulation on foreign investment
consultant services.
The regulation replaces Decision No. 209/HTDT-VP of April 14, 1990,
from the former State Committee for Co-operation and Investment
(SCCI), which is now the MPI.
The new regulations, made up of five chapters and 18 articles, contain
general provisions that define foreign investment consultancy as
operations that offer consultancy services to investors relevant to
the formulation, construction and implementation of projects for
foreign direct investment (FDI) in Vietnam.
MPI will grant licences, called Consultant Certificates, for foreign
investment consultant services to Vietnamese enterprises that meet the
requirements stipulated in this Statute.
Eligible for licences are enterprises established according to the
Company Law and enterprises of political and socio-political
organisations.
Vietnamese enterprises meeting these conditions are eligible on the
following grounds - they have been established in accordance with the
law and registered with competent authorities for consultant services;
and have ethical values and professional qualifications in such
domains as law, economics, engineering, technology, and foreign
languages.
Moreover, the consultant firm must be able to solve problems in
designing construction works, technology transfer, finance, imports
and exports, and labour supply, apart from having sufficient capital,
technical, and material base to provide consultant services to foreign
investment projects.
The regulations came into force as of April 19, 1997.
All enterprises licensed for foreign consultant services prior to this
date must apply for Consultant Certificates with MPI.
The regulations, however, do not apply to foreign law firms, branches
and other foreign consultant companies in Vietnam.
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Vietnam's Power, Fertiliser Sectors To Use Gas
HANOI (VNA) - The government has set up an inter-branch group between
the Ministry of Planning and Investment, the Vietnam Oil and Gas
Corporation, Electricity of Vietnam, and the Chemicals and Fertilizer
Corporation to map out an investment programme to exploit and utilise
gas in the power and fertilizer industries.
Some US$3.2 billion will be needed for the programme in the 1996-2000
period from all capital sources, including domestic capital, ODA
(Official Development Assistance) funds and foreign investment capital
using joint venture, business cooperation contract, BOT
(Build-Operate-Transfer), or 100-percent foreign investment, formulae.
Exploitation of the Lan Do and Lan Tay gas deposits in Lot 06 on the
southern continental shelf, the southern Con Son Basin, the
construction of a gas pipeline to bring gas from these two gas
deposits to Phu My in the southern central province of Ba Ria-Vung Tau
and the building of a power-fertilizer complex in Phu My have been
approved.
Under the project, Petro Vietnam, BP (Great Britain), and Statoil
(Norway) have invested some US$937 million in a joint venture to
exploit between 2.5-3 billion cu.m. of gas per year from Lan Do and
Lan Tay, starting in early 1999.
They are now negotiating the construction of a business cooperation
contract gas pipeline which is planned to stretch 390 km and have
capacity of 2.5-3 billion cu.m. of gas per year which can be increased
to 5-6 billion cu.m. Construction is estimated to cost US$350 million.
In Ba Ria-Vung Tau province, the Phu My 2 thermal electric power plant
has been completed, using associated gas from the Bach Ho oil field.
Bidding has opened for Phu My 1, another thermal power plant expected
to turn out 900 MW and consume 900-1,000 million cu.m. of gas a year.
Phu My 3, a power-fertilizer complex with a capacity of 600 MW and
750,000 tonnes of urea fertilizer, using 900 million cu.m. of gas a
year, is now being built. Investment for the complex is estimated at
US$680 million.
Preparations for a feasibility study are now being for the Phu My 4
thermal electric power plant.
The four plants will need a combined 3-3.5 billion cu.m. of gas a
year.
Vietnam's continental shelf is estimated to hold between 1,000-3,000
billion cu.m. of gas reserves, and the Vietnamese government is
calling for foreign investors in gas exploration and exploitation as
well as construction of gas pipelines and gas industries.
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