Exporters say loan subsidy program of little use to them

Workers fold blazers for export at a garment factory in Ho Chi Minh City.

Exporters said they do not benefit much from a government loan subsidy program since not many of them qualify for bank loans.

Speaking at a conference in Ho Chi Minh City Tuesday, Vo Truong Thanh, general director of Truong Thanh Furniture Corporation, said it is banks who have benefited from the loan subsidy program, which has helped get credit flowing again.

Truong Dinh Tuyen, a monetary advisory board member, agreed, saying that the program does not mean as much to exporters as it does to banks.

The government is using VND17 trillion (US$970 million) from an economic stimulus package to provide a 4-percent interest subsidy on loans to companies that export, import or produce essential goods.

The State Bank of Vietnam said commercial banks expect to lend companies around VND400 trillion ($23 billion) in February and March.

But exporters said some commercial banks are too cautious to lend businesses under the program.

Businesses are required to repay existing loans, including those not due yet, before they can borrow afresh at subsidized rates, Nguyen Duc Thanh, president of the Vietnam Cashew Association, said.

Few businesses qualify for a new loan while many have had to shut down due to a cash crunch, he told the conference.

Of the country’s 220 cashew processors, 85 percent are ineligible for loans under the program, Bloomberg last week quoted Thanh as saying.

Chu Van An, deputy general director of Minh Phu Seafood Company based in southern Ca Mau Province, said the loan procedures are complicated.

Banks refuse to provide loans for paying value added tax, saying the loans are only meant for working capital, he said, claiming this contradicts what the central bank told businesses.

Tran Quoc Manh, deputy chairman of the HCMC Handicraft and Wood Industry Association, said the loan subsidy program means nothing to many businesses since they already have unpaid loans and no longer have assets for collateral.

Nguyen Van Tan, director of the Hanoi-based Thong Tan Foodstuffs Trade and Processing Company, told Tuoi Tre newspaper his company is unable to apply for new loans because all its assets are already pledged.

It wants to repay the loan but has no money since customers have yet to pay for shipments made before Tet (the lunar New Year) at the end of last January.

Around 20 percent of small and medium-sized enterprises in Vietnam are facing critical cash and management problems and are likely to go bankrupt without financial support, Tien Phong newspaper Wednesday quoted Cao Sy Kiem, president of the Vietnam Association for small- and medium-sized enterprises (SMEs), as saying.

But many company executives at the meeting said that larger businesses also need cheap loans.

Thanh of Truong Thanh Furniture Corporation suggested that the loan subsidy program should be expanded to include more companies. The company, based in southern Binh Duong Province, now targets only SMEs with not more than VND20 billion in capital and 500 workers.

He said SMEs do not earn as much from exports or create as many jobs as large businesses.

To help exporters

Deputy Minister of Industry and Trade Nguyen Thanh Bien told delegates that his ministry would ask the government to tweak its stimulus plan to benefit exporters more.

For instance, businesses with effective new projects should be provided credit to repay their old loans, he said.

Thanh of the Vietnam Cashew Association said most exporters have been hit hard by the global downturn and need government support to promote their products and look for new markets.

Exports fell 5.1 percent year on year to $8.02 billion in the first two months, according to the General Statistics Office.

The government has forecast export growth to slow down to 13 percent this year from a scorching 29.5 percent in 2008 because of the economic downturn in important markets like the US, Europe and Japan. Exports were worth $62.9 billion last year.

The government should also depreciate the dong to support exporters, Tuyen said.

The government is considering how to devalue the dong without stimulating speculation, Tuyen, who is also a former trade minister, told companies demanding a weaker dong at the meeting.

The central bank devalued the currency by 3 percent on December 25. The dollar can trade within a 3 percent band on either side of a rate fixed daily against the dong.


The government has included some non-bank finance companies in its loan subsidy program after they warned they may lose customers to banks.

The program, which was available to only commercial banks and people’s credit funds, will now be extended to include non-bank finance companies — except those providing consumer loans and credit cards and those with bad debts exceeding 5 percent — according to a statement posted on the government’s website on Tuesday.

The Vietnam Banks Association had asked the government Monday to include non-bank financial firms.

The government targets economic growth of at least 6.5 percent this year, compared with last year’s 6.2 percent, the slowest pace in nine years.

It said it would spend VND300 trillion (US$17 billion) this year to halt a slowdown in economic growth amid the global financial crisis. The amount, almost a quarter of the country’s $71 billion GDP, would be used to develop infrastructure, spur exports and fund other social development projects.

Source: TN, Agencies (With additional reporting by Minh Quang)

Binh Phuoc asked to make a big leap in economic growth

LookAtVietnam – The southern border province of Binh Phuoc should fully exploit its natural resources, including land, forests, and minerals to make a breakthrough in economic development, said National Assembly Chairman Nguyen Phu Trong.

During a visit to the province on March 11-12, Mr Trong acknowledged the socio-economic achievements that the local Party, administration and people have made since Binh Phuoc was re-established in January 1997.

He analysed difficulties and challenges facing Vietnam and Binh Phuoc in 2009 and asked the province to effectively implement the Party’s resolution on agriculture, farmers and rural development as well as the Government’s measures to maintain steady economic growth and ensure social welfare.

“Along with economic development, the province should seek ways to improve local people’s physical and spiritual lives and harmoniously settle pressing social issues such as housing, employment, education, health care and environmental protection, while creating an attractive investment environment for domestic and foreign businesses,” said Mr Trong.

He expressed hope that the local Party, administration and people of different ethnic groups would fully tap their potential to develop on a par with other provinces in the southern key economic region.

He acknowledged the province’s proposals concerning the management and use of forest land, infrastructure construction and the development of rural electricity, tourism, the border economy and industrial zones.

He said the National Assembly will examine and decide key issues within the scope of authorisation and send other contents to relevant agencies.

While staying in Binh Phuoc, Mr Trong visited the families of social policy beneficiaries, ethnic groups, village chiefs and soldiers at border guard stations.

Binh Phuoc, which has a 240km long borderline with Cambodia, is home to approximately 850,000 residents of 41 ethnic groups. It is relatively rich in natural resources, land, forests and minerals.

Despite economic difficulties last year, the province still achieved a high economic growth rate of 14 percent, double the national average.


Viewers and advertisers flock to cable television

The office of Saigontourist Cable Television Company in Ho Chi Minh City’s District 1

Since subscription television arrived in Vietnam in 1992, cable TV has boomed, generating substantial profits for providers.

The first cable TV provider in the country was a joint venture between a Ho Chi Minh City-based tourism company and the national broadcaster, Vietnam Television.

However, Saigontourist Cable Television Company, commonly known as SCTV, was not an instant success. Local viewers were slow to change their TV-is-free mindset and, at first, few people were willing to pay for better transmission quality and more channels, including foreign channels.

It took SCTV many years to attract subscribers, mainly in HCMC and some neighboring provinces.

Nguyen Tan Khoa, deputy head of SCTV’s planning and investment division, said the company now had about 300,000 subscribers, which means the company earns VND20 billion to VND26 billion (US$1.14 million-$1.48 million) from monthly subscription fees, not counting earnings from advertisements.

After SCTV, several other pay-TV providers appeared on the scene, including offshoots of two leading networks in Vietnam, Vietnam Television and Ho Chi Minh City Television. Since the government allowed state media organizations to do business independently three years ago, almost all networks have set up their own cable TV arms.

TV stations are not the only ones seeking a share of the pay -TV market. The state-owned Vietnam Posts and Telecommunications Group, which invested $200 million in Vietnam’s first satellite VINASAT-1, has cooperated with Vietnam Multimedia Corporation to provide digital and satellite TV services. The latter started broadcasting its three high-definition channels on Tuesday.

Attracting more subscribers is certainly the priority but selling more advertising is equally important.

Luu Vu Hai, a senior official of the Ministry of Information and Communications, said there were about 100 channels in Vietnam, with three stations owning more than eight channels each.

Analysts said the appearance of many cable channels, especially entertainment and leisure channels, had helped meet a high demand for advertising of businesses.

A report of a market research firm in HCMC said in October 2007, when the economy was growing at a fast pace, all television networks in Hanoi, HCMC, Can Tho and Da Nang earned $33.8 million from advertising. Vietnam Television alone received $11.6 million.

Many cable channels allow program producers to buy air time from the network and onsell it to advertisers. This has created a rush of media companies wanting the right to sell advertising spots on the channels.

For instance, a manager of a media company, who wished to be unnamed, said since November last year the company had been allotted 60 percent of the air time on VCTV12, a lifestyle cable television of Vietnam Television. In exchange, the company needs to generate an annual profit of around VND6 billion ($344,000) for the network, he said.

SuperStar Corporation has worked together with both SCTV and Vietnam Television to develop Yeah1, a cable channel for teenagers. SuperStar said it would expand the project and provide more services under the name Yeah1, including a website, a theme park and a magazine for teens. DFJ VinaCapital L.P., a $25 million venture capital fund managed jointly by Draper Fisher Jervetson and VinaCapital, has recently announced that it would invest in the project.

“TV is the fastest medium to help us approach our customers,” said Dao Phuc Tri, managing director of SuperStar.

Tri said his company has set aside reserve funds in case earnings from advertisement are affected by the economic downturn.

“At this point we are only focusing on building the brand by improving the quality of the channel. After that we will start thinking about earning money.”

Source: TBKTSG

Foreigners allowed to buy apartments in Vietnam from today

The luxury apartment block The Manor in Hanoi. Foreigners are allowed to buy apartments in commercial housing projects in Vietnam starting today.

Starting today, foreigners who meet specific eligibility criteria can own apartments in Vietnam under a National Assembly resolution ratified last May.

According to the Construction Ministry, around 10,000 of 80,000 foreigners living and working in Vietnam are eligible to buy property, specifically apartments in commercial housing projects.

The resolution stipulates five groups of foreign individuals and organizations that are eligible to own houses in Vietnam for terms of up to 120 years.

These include individuals who invest directly in Vietnam or who are hired for management positions by local or foreign-invested companies in the country; foreigners who receive certificates of merit or medals from the president or government for their contributions to the country; foreigners who work in socioeconomic fields, hold a bachelor’s degree or higher and who possess special knowledge and skills that Vietnam needs; foreigners who are married to Vietnamese residents; and foreign-invested enterprises operating in Vietnam that need to buy houses for their employees.

Most foreigners working in Vietnam currently have to hire apartments at high rents of between US$600 and $1,000 per month.

Lawyer Nguyen Van Hong, who works as a legal consultant for an Australian company in Hanoi, said many of his foreign friends had recently asked him to help them to buy an apartment.

Director Tran Minh Thong of a property company in Hanoi also said many foreigners have asked to buy apartments at the Trung Hoa – Nhan Chinh residential zone in Cau Giay District.

Experts said the move to allow foreigners to own apartments and other social housing projects could have positive impacts on the property market which has slowed down recently.

In force

The resolution is among several documents that will take effect today.

In the economic sector, wholly-owned foreign firms are allowed to join the local distribution and retail market from today under Vietnam’s commitment to the World Trade Organization

Also from today, local enterprises start to pay lower corporate tax of 25 percent, down from 28 percent. They are also allowed to pay tax later than previously.

The personal income tax law will also take effect from 2009, which stipulates that the taxable income threshold is VND4 million ($238) monthly for both locals and foreigners working in Vietnam, with taxpayers allowed deductions of VND1.6 million ($95) for each dependent.

In social sectors, the government starts to provide unemployment insurance under a decree that stipulates that Vietnamese employees who have signed contracts of a least a year will be eligible to get unemployment insurance and will receive compensation of 180 percent of a month’s salary for each year they have worked when losing her/his job.

Under a decision by the Prime Minister, civil servants and soldiers who have low incomes will be paid a monthly support of VND360,000 ($21) apiece in the first four months of this year.

The basic salary at state-owned enterprises will be increased to between VND650,000 ($37) and VND800,000 ($46), from between VND540,000 ($31) and VND620,000 ($35), while those of FDI enterprises will be increased to between VND920,000 ($53) and VND1.2 million ($69), from VND800,000 ($46) and VND1 million ($57).

In HCMC, the new land price adjustment will be implemented from today, with the highest price in District 1’s Dong Khoi, Le Loi and Nguyen Hue streets rising to VND81 million ($4,600) from VND67.5 million ($3,860) per square meter, while the lowest price is in Can Gio District’s Thieng Lieng residential area at VND110,000 ($6.30) per square meter.

Registration fees for cars with less than ten seats in HCMC will rise to 10 percent up from 5 percent.

Reported by Xuan Toan – Minh Nam

Major southern bridges, highways to be completed this year

The Rach Mieu Bridge that connects Ben Tre and Tien Giang provinces is set to open on January 19

Several infrastructure projects in the southern region are set for completion this year and work has been expedited on construction sites to ensure they adhere to the schedule.

The Transport Ministry plans to inaugurate the Rach Mieu Bridge that connects Ben Tre and Tien Giang provinces on January 19.

The VND1.4 trillion (US$80 million) suspension bridge, which has been under construction since 2002, is the country’s first Vietnamese-designed and built cable bridge crossing the Tien River. It measures 2.9 kilometers in length and 12 meters in width.

The build-operate-transfer (BOT) project was financed to the tune of 58 percent by the government budget and the remaining 42 percent was invested by the Transport Ministry’s Civil Construction Engineering Corporation (Cienco) No.1, Cienco No. 5 and Cienco No. 6.

Under the BOT model, ownership of an asset reverts to the government after a set period of time.

In Ho Chi Minh City, the project to widen the Cong Ly Bridge that connects Phu Nhuan District’s Nguyen Van Troi Street and District 3’s Nam Ky Khoi Nghia Street, is expected to be completed by the year-end.

The Cong Ly Bridge that links Phu Nhuan District’s Nguyen Van Troi Street and District 3’s Nam Ky Khoi Nghia Street, a major route in HCMC, will be completed by the end of 2009

The project includes construction of a 30-meter wide bridge and installation of underground cables for power, telephone and information lines. The contractor will complete paving the surface and sidewalks and planting trees by the second quarter.

Several important bridges on the East-West Highway project are also scheduled for completion in 2009.

The new Khanh Hoi Bridge will connect District 4’s Nguyen Tat Thanh Street with District 1’s Ton Duc Thang Street, instead of Ho Tung Mau Street as it did earlier.

The new Calmette overpass includes an intersection of six streets at its center. Two major sections from District 1’s Calmette Street and District 4’s Hoang Dieu Street are scheduled to be completed before the Tet holidays, while the remaining sections connecting to the East-West

Highway and Thu Thiem underground tunnel will be completed by the year-end.

Construction of the Phu My Bridge connecting District 2 and District 7 is expected to be completed in September. The 2,031- meter bridge crossing the Saigon River will be the city’s longest, with an estimated traffic flow of around 100,000 vehicles daily. The bridge has a clearance of 45 meters for waterway traffic, allowing vessels of up to 30,000 tons to reach the city’s ports.

The Nguyen Van Cu Bridge that connects District 1, District 4, District 5 and District 8 over Ben Nghe Canal will be completed by the first quarter of the year, says Director of the municipal Transport Department’s urban traffic management division No. 1, Le Quyet Thang. The bridge section connecting District 4 and District 8 is scheduled to complete soon after the Tet holidays.

The bridge will ease traffic congestion on the Nguyen Tri Phuong, Y and Cha Va bridges, he said.

Eighty percent of the construction of the HCMC-Trung Luong Highway, which runs through Long An and Tien Giang provinces, has been completed. The highway will open to traffic in mid-2009 on the Tan Tao-Cho Dem-Trung Luong section. The remaining sections that connect Binh Thuan Street to Cho Dem in HCMC will be completed by the year-end.

The 62-kilometer highway will allow speed limits of up to 120 kilometer per hour (kph) on one 40- kilometer stretch and up to 80 kph on the remaining part.

This highway is the first one in southern provinces that has been designed and constructed by local engineers.

Source: TN, Agencies

2009 export target unlikely to be met, says minister

A worker with Binh Minh Coffee carries a sack of robusta coffee beans bound for export at the company’s warehouse in Hanoi last month.

With the global economy mired in difficulties in 2009, Vietnam may find it hard to achieve its export growth target of 13 percent, a government minister has said.

“It will be difficult… due to lower prices of many major export items such as crude oil, rice, rubber and coffee,” Minister of Industry and Trade Vu Huy Hoang told reporters on the sidelines of his ministry’s yearend meeting in Hanoi Wednesday.

Some export items, including farm products, seafood, textile and garment and footwear, are also likely to face competition from other Asian countries, while demand in key markets like the US and Europe is decreasing.

Oil exports would fall 13.7 percent to 12 million tons this year, Hoang said. But their value could plummet 56 percent, he said. Crude oil is Vietnam’s largest source of foreign exchange earnings.

“Crude exports are [also] expected to decline because the country will use some for its [newly built] Dung Quat refinery,” he said in an interview in Hanoi Wednesday.

Dung Quat, Vietnam’s first refinery, will use about 6.5 million tons of oil a year when it opens on February 25.

Mineral exports are expected to fall 50.2 percent to US$5.92 billion, and agricultural, forestry and fishery product exports by 4.8 percent to $12.23 billion, according to the Ministry of Industry and Trade.

But Prime Minister Nguyen Tan Dung said at the meeting, “We are determined to achieve export growth of 10-13 percent.”

The ministry said it would continue to focus on traditional export markets like the US, Europe, China, Japan and Russia but also enter new ones like the Middle East, Latin America and Africa.

Domestic market

“If businesses exploit the domestic market, they will not only overcome difficulties but also have a solid base to expand abroad,” Dung said.

Vietnam has a population of around 86 million and GDP per capita of $1,040. In Hanoi and Ho Chi Minh City, the average income last year was respectively $1,500 and $2,500.

“The world is in a recession… and it is difficult to find customers abroad,” the Prime Minister said, adding state corporations must be supportive of other businesses.

The trade deficit may widen to around $19.2 billion in 2009, with the global recession hurting exports and imports rising faster than previously expected, minister Hoang said.

Imports would rise 13 percent to $90.3 billion and exports to $71 billion, he said. The ministry had earlier forecast imports to rise by just 2.4 percent to $84 billion, and the trade gap to be just $17 billion.

The 2008 deficit was a record $17.5 billion, according to revised data released Wednesday. It was revised from a previous figure of $17 billion announced by the General Statistics Office last week.

While exports are still cited as having risen 29.5 percent to $62.9 billion, imports have risen 28.3 percent, rather than 27.5 percent as announced earlier, to $80.42 billion.

Import of goods for production needs increased, the office said in a report accompanying the revised figures.

“However, import of raw materials for production during the final months of the year showed a tendency to decrease quickly, showing evidence of the leveling off of investment and production,” it said.

“Meanwhile, import of consumer goods showed a tendency to increase in the last months of the year.”

Reported by Ngan Anh – Minh Quang (With inputs from Bloomberg)

PM calls for stronger welfare program to fight crisis

Teachers and students at a makeshift classroom in the village of Muong Ly, considered one of the poorest villages in Muong Lat District, Thanh Hoa Province.

The social welfares ministry should beef up its social welfare programs in preparation for the economic difficulties that the nation will have to face next year, Prime Minister Nguyen Tan Dung said Sunday.

He said the Ministry of Labor, Invalids and Social Affairs should ensure additional support for the poor, increase the numbers of skilled labor and have policies to assist the unemployed.

The premier was addressing a meeting organized in Ho Chi Minh City over the weekend to discuss its plans for 2009.

He said economic problems next year would affect social issues, so fighting the downturn was among the main tasks.

Dung instructed the ministry to expedite implementation of its plans, including poverty alleviation support for 61 poorest districts nationwide, building houses for the poor, providing unemployment insurance, and vocational training for the unemployed.

Earlier, the Government had earmarked VND3 trillion (US$177.4 million) for the 61 poorest districts and VND3.5 trillion ($207 million) for building homes for the poor.

The PM also instructed the ministry to find effective solutions for laborers who lose their jobs under the impact of the economic downturn, and pass regulations on employers’ responsibilities toward their workers.

The country should target having 50 percent of its labor force trained by 2010 through vocational training programs, to eliminate poverty, he said.

“The current statistics of 35 percent of trained labor cannot achieve high productivity and competitiveness of quality products.”

Dung also said the government, MOLISA and other ministries should support enterprises and ensure employment by lowering bank interest rates and reducing taxes.

Solving unemployment

Small and medium enterprises would benefit from low interest rate loans to maintain production and retain their employees, the Minister of Labor, Invalids and Social Affairs, Nguyen Thi Kim Ngan, said on Saturday.

She said such loans would favor those enterprises with a large number of employees and would focus on the sectors with high risk of unemployment, including textile and apparel, leather shoes, food processing and agricultural products.

Local authorities should monitor difficulties facing the enterprises to offer timely support, especially to those with a high possibility of retrenching employees or being unable to pay salaries.

The labor ministry recently issued a policy to create a pool of trained labor to meet the demand of enterprises, and has already disbursed VND72 billion ($4.26 million) for this effort.

Minister Ngan also said the government’s move to raise workers’ basic salary and offer unemployment insurance from next month was aimed at reducing the difficulties faced by employees. She noted that 300,000 laborers could lose their jobs in 2009.

Ngan said the Ministry had also established a fund to support exported laborers being jobless due to impacts of global downturn on other countries.

Early this month, around 200 workers had to return from Taiwan after their contracts were annulled.

However, Ngan said concerned agencies would continue to improve laborers’ skills toward maintaining the target of sending 1.7 million workers abroad in 2009.

The foreign exchange remitted by overseas workers was around $1.7 billion last year, and was an important source of funds in the nation’s efforts to eliminate poverty, she added.

Source: Agencies

Tourism sector aims to retrieve lost ground

Foreign visitors at an information center in Ho Chi Minh City Friday. Tourism arrivals have dropped sharply of late, prompting authorities to launch a huge promotion campaign targeting across the board price cuts.

A large scale promotion campaign to try and staunch the sharp decline in visitor arrivals will need a concerted, cooperative and proactive effort by all stakeholders, industry officials say.

The primary thrust of the campaign, set to be launched on January 1 and run until September 2009, will be to effect across the board cuts in prices and improved service quality.

This would be vital to the nation’s ability to cope with the competition posed by regional countries, said Nguyen Manh Cuong, deputy head of the Vietnam National Administration of Tourism (VNAT).

The campaign announcement comes in the wake of a 22 percent drop year-on-year in the number of foreign visitors last month, and a statement earlier this month by Minister of Culture, Sports and Tourism Hoang Tuan Anh saying that the sector would face zero growth or even worse next year.

The tourism sector employs more than 10 percent of country’s workforce.

Cuong noted that although Vietnam was not as good as its neighboring countries in promoting tourism, the upcoming campaign could at least help the local sector overcome current difficulties, which are compounded by stiff competition from neighboring countries.

Thailand, for instance, has launched a 1.9-billion-baht (US$54.86-million) public relations campaign called “Apologies Thailand” in an attempt to woo tourists back to the country following the recent political crisis.

Vu The Binh, a senior official at VNAT, noted Thailand has cut hotel prices to as low as $25 per night and even offered 100,000 free air tickets to bring back tourists, which means Vietnamese tour operators would face very harsh competition.

Binh asked local businesses to work together to make the campaign work, instead of waiting for other companies to lower prices first as they often do.

He said VNAT has chosen leading travel agencies and hotels to take part in the campaign and they have pledged to cut prices to attract more tourists, especially those from Vietnam’s main tourism markets.

The national tourism agency said a website on the campaign will also be created where visitors can find links to websites of participating tour operators.

Deputy Minister of Culture, Sports and Tourism, Tran Chien Thang, said the ministry has proposed the government to halve the value added tax for travel agencies, hotel and restaurants to 5 percent so that they can lower their prices.

The ministry has also requested the introduction of a visa-on-arrival system and VAT refund scheme for tourists.

Many agencies and hotels said it was not too difficult to slash prices by about 30 percent. Some of them started doing it a few months ago, but with modest results.

On Thursday, 30 hotels in Ho Chi Minh City agreed to cut room rates by at least 30 percent next year to support the campaign.

A hotel manager, who wished to be unnamed, said it would be a huge success if cutting prices by 20 percent could increase occupancy rates to 80 percent from 50 percent.

Binh said national flag carrier Vietnam Airlines would offer 30-50 percent discounts on its fares to help lower tour prices and many businesses providing related services have also registered for the campaign.

Nguyen Van Tran, general director of APEX Company, said with the price cuts by hotels and airlines, travel agencies could offer cheaper tour packages to tourists.

Tran said his working group, which focuses on the Japan market, would begin to advertise tour packages at new prices to their partners in January. Prices would be about 30 percent lower than at present, he said.

Luu Nhan Vinh, director of the Vietnam Tourism Company in Hanoi, said once the campaign is launched, VNAT needs to ensure that registered companies really cut their prices to maintain its credibility.

If companies advertised their products at lower prices but did not keep their promises, tourists would lose faith, Vinh said.

Saigontourist Company Director Vo Anh Tai said there are always people who want to travel, but amid the economic slowdown, they will not accept to pay prices that have not been lowered.

La Quoc Khanh, deputy director of Ho Chi Minh City Department of Culture, Sports and Tourism, said if the marketing works well in main markets including Japan, Australia, Western Europe, South Korea and China, the tourism sector could attract 80 percent of the visitors it needs.

Local retailers have also expressed their enthusiasm for the campaign. Dinh Thi My Loan, general secretary of the Vietnam Retail Association, said all association members want to cooperate with businesses in the tourism industry.

They would meet to discuss detailed plans for this “meaningful cooperation,” Loan said, adding that local retailers are well aware of the current situation and would accept lower margins to offer the best prices to customers.

Source: TN, Agencies

Central bank weakens dong to drive exports, economy

An Asia Commercial Bank branch in Ho Chi Minh City Thursday. Commercial banks said their dollar supply has fallen since moneychangers offer higher rates for the greenback.

The central bank Thursday fixed the dong’s rate 3 percent down against the dollar to boost exports, as the country’s economy expanded at its slowest pace in nine years and the trade deficit widened.

The State Bank of Vietnam fixed the daily reference rate at 16,989 dong to the dollar from 16,494 Wednesday.

Policy makers have retained the currency trading band at 3 percent a day, said Nguyen Quang Huy, head of the bank’s foreign-exchange department.

Gross domestic product grew 6.2 percent in 2008, after expanding by a record 8.5 percent last year, the government said in a statement Wednesday.

Export growth slowed in the last three months as stagnating global economies cut back on the import of Vietnamese garments and coffee as currencies in neighboring markets weakened.

Vietnam’s currency has fallen 5.5 percent this year against the dollar compared with an 18 percent slide in the Indian rupee, 14 percent decline for the Indonesian rupiah and a 13 percent slump in the Philippine peso.

The move is necessary since the government is trying to boost exports, said Do Ngoc Quynh, chairman of the Vietnam Bond Forum in Hanoi and head of currency and debt trading at the Bank for Investment and Development of Vietnam, the nation’s second-biggest lender by assets.

“Other currencies in the region have declined considerably against the dollar, but the dong hasn’t dropped that much.”

The currency has tumbled 35 percent since the end of 1994.

“The State Bank of Vietnam will take necessary action to maintain the dong at this rate,” the bank said in a statement on its website.

Following the central bank’s decision, local banks started adjusting their foreign exchange rates.

The dong was quoted at 17,260/17,400 per dollar on Vietcombank’s website Thursday afternoon, up from 16,985/16,989 Wednesday.

The dong traded at 17,200 to 17,300 a dollar at Vietinbank, or Vietnam Bank for Industry and Trade.

Free-market rate

At moneychangers’ in Hanoi, or the so-called black market, the currency traded at between 17,230 and 17,520, local newswire VnExpress reported.

Commercial banks said their dollar supply has fallen since moneychangers offer higher rates for the greenback.

Nguyen Phuoc Thanh, general director of Vietcombank, the country’s largest lender, said dollar banks’ inflows have tumbled since export earnings are down as are remittances, foreign portfolio investment and tourism arrivals.

He admitted that the dollar is being traded at much higher prices on the black market than at banks, who are unable to attract sellers despite fixing the buying price at the allowed ceiling rate.

Meanwhile, the plunge in global prices has boosted imports, according to Thanh.

Nguyen Duc Vinh, chief executive officer of the Hanoi-based Technological and Commercial Joint Stock Bank, or Techcombank, said after the banks’ recent cuts in lending rates and extension of loans, more import contracts are being signed, keeping demand for the dollar high.

A HCMC-based footwear company said it had failed to buy US$50,000 to pay for imported consignments despite continuously contacting banks for the past week.

While commercial banks do not have enough dollars for selling to businesses, they have a surplus of dollars set aside for lending after some of their customers failed to prove they could raise dollars for repayment.

Bui Thi Mai, general director of the Hanoi Building Bank, or Habubank, said, as a result, though banks are unable to find customers for dollar loans, they remain cautious.

“If there is an assurance that the exchange will be stable at a certain level, businesses and banks can calculate their risks and the dollar supply will increase since speculation will reduce,” she explained.

Trade deficit widens, inflation slows

Vietnam’s trade deficit widened to a record $17 billion in 2008, from $14.1 billion last year, according to preliminary figures provided by the government Thursday.

The current account deficit may grow to $12.1 billion, or 12.3 percent of GDP, next year from an estimated 11.7 percent this year, according to a Credit Suisse Group research report dated December 17.

“The dong is facing downward pressure due to the current-account deficit,” said Yuichi Izumi, an economist at Nomura Securities Co. in Tokyo. “The State Bank wants to guide the dong lower to support exports.”

A slowdown in the rise of consumer prices may have provided more room for the central bank to weaken the dong.

Consumer prices are estimated to fall 0.68 percent this month from November, only the third decline since March 2007, on the back of lower food and fuel prices, according to figures released by the General Statistics Office Thursday.

Consumer prices rose 19.9 percent in December from a year earlier. The annual inflation rate was 24.2 percent in November after reaching 28.3 percent in August, the highest since at least 1992.

Overall, food and beverage prices, which account for nearly 43 percent of the goods basket used to calculate the consumer price index, fell 0.13 percent in December, with grain prices declining 2.36 percent.

Prices in the category including transportation fell 6.77 percent from November, according to the statistics office report.

Plummeting world oil prices have led to a sharp cut in retail prices for gasoline.

The government has cut petrol prices twice this month, adding to a series of reductions since August that have left the most commonly used grade of gasoline 42 percent cheaper from its peak last July.

Prices in the category including construction materials declined 2.36 percent month-on-month, the office said.

Domestic steel companies are facing difficulties due to slowing demand, with the government using higher import tariffs to allow producers to clear stockpiles, the Vietnam Steel Association said last week.

Property projects are short on working capital, economist Scott Robertson of the HCMC-based Dragon Capital wrote in a note last week.

Slowing inflation has allowed the central bank to cut its benchmark interest rate by 5.5 percent since October to 8.5 percent now.

“The government’s cooling measures were perhaps too successful,” Joseph Lau, a Hong Kong -based economist at Credit Suisse Group AG, wrote in a note dated December 17. “Domestic demand is reportedly waning.”

But consumer prices are expected to increase in January, when demand surges during the Lunar New Year festival (Tet) late next month, economist Le Dang Doanh told Thanh Nien Daily Thursday.

The consumer price index (CPI) is estimated to have risen 22.97 percent this year, down from the government’s initial forecast of 24 percent.

“Decelerating inflation is a good sign, but the economy still shows worrying signs, as the trade deficit is high and government revenues are down due to decreasing prices of some major export items like rice, rubber and crude oil,” he said.

The government may keep the inflation rate down to a single-digit level in 2009, but it has to assign top priority to combating an economic slowdown, Doanh said.

“With commodity prices falling, headline inflation is expected to drop to single digits by end-2009, although core inflation (excluding raw food and energy) could fall more gradually,” Ben Bingham, Senior Resident Representative of the International Monetary Fund, said in a statement December 18.

Reported by Thanh Nien staff (With inputs from Bloomberg)

Models to vie for biennial award tonight

The topic of who will take the modeling crown has heated up considerably as the Vietnam Model Award 2008 (VMA) contest draws near.

The second leg of the final round, to be held tonight in Ho Chi Minh City, will have 28 female and male models contending for the title.

The audience will have a say in choosing the winner by sending their votes on SMS.

The biennial pageant aims at honoring professional models’ contributions to the fashion industry over the last two years.

With the participation of many outstanding models, the final round promises many challenges and has attracted intense speculation from public and experts.

A leading face in Vietnamese fashion, Hoang Yen, 20, is believed to be a leading contender because she has won many prestigious awards including the crown at the Vietnam Supermodel 2008 competition and the first runner-up at the Miss Universe Vietnam 2008 several months ago.

Another outstanding candidate is Ngoc Quyen, who is considered a strong challenger to Yen in the  beauty contest. She has been highly acclaimed by fashion magazines.

She mostly performs at big shows across the country like Fashion Week, held by Dep (Beauty) magazine. Quyen also took part in the Asian Model contest last year.

Vu Thu Phuong, 23, is another model in the leading pack. She came into the limelight recently with a role in the star-studded film “Shanghai,” in which she acted with Hollywood film stars like John Cusack, Gong-Li and Chow Yun Fat.

However, she could be handicapped by the scandal of breaking up with pop singer Tuan Hung and the breast-revealing accident on the catwalk.

In the male section, with a lot of experience and many important prizes, Binh Minh is considered a senior supermodel in modeling circles.

Minh rarely shows up in fashion shows these days because he is busy with other work like acting in films, emceeing shows and doing photo shoots.

Besides Minh, there are many young models in the fray, including Duc Vinh, Quang Hoa, and Xuan Thu.

With the advantage of his 1.87-meter height, Duc Vinh won a consolation prize at the Mr. World 2006 contest held in China.

Quang Hoa won the Manhunt 2007 in Vietnam while Xuan Thu won the first prize at the Vietnam Supermodel 2008 alongside Hoang Yen.

Mister International 2008 Tien Doan has not entered the contest due to his “Mister” mission in Singapore.

Besides the highest prizes awarded based on votes by the audience, the organization board will give away six others including best body, best performing style, most photogenic and most talented model.

Each category of prizes will have a male and female winner.

The final round and the awards ceremony will take place tonight at Lan Anh Stadium in Ho Chi Minh City and be broadcast live on Vietnam Television’s VTV3 Channel at 8 p.m.

Ngoc Quyen

Binh Minh

Hoang Yen

Xuan Thu

Vu Thu Phuong

Quang Hoa

Reported by Bao Tran