Workers at Saigon 2 Garment Company. Apparel makers anticipate a tough year ahead and want the government to give them a helping hand. The textile and garment industry is demanding government assistance to overcome the export hurdles posed by the recession.

At a meeting organized by the Vietnam National Textile and Garment Group (Vinatex) with Deputy Minister of Industry and Trade Bui Xuan Khu in Ho Chi Minh City Wednesday, apparel exporters suggested that the government should consider introducing a package of three measures. The first is for assisting workers in businesses facing export difficulties or considering layoffs, Le Quoc An, chairman of the group and of the Vietnam Textile and Apparel Association, said. He suggested spending 1 percent of the total garment export earnings. The second, worth VND5 trillion (US$294 million), is for subsidizing exporters’ bank credit. An said the rate offered by banks may have fallen to 12 percent recently but it is still too high at a time of recession. The third measure is for promoting the industry in the international market at a cost of VND50 billion ($2.94 million). Vietnam’s main apparel markets are the US, Japan and the EU. Khu assured them that the government would support the industry since it is a major foreign currency earner. Textiles, in fact, replaced crude oil as the top earner last year at $9.1 billion after the plunge in oil prices. The industry also created more jobs than the others, he said, adding his ministry would submit the package to the government for approval. Shrinking orders An said Vietnam’s apparel producers had less export orders than last year. Foreign businesses were affected the most though they have more orders than local producers, he said. Many of them cut jobs and closed factories because of the economic slump in key markets like the US, Japan, and the EU, he said. He forecast exports to fall 15 percent year-on-year in the first quarter. But he said it is difficult to set a target for the whole year since no one knows when the recession would end. Bui Van Tien, general director of Viet Tien Garment Corporation, said recessions occurred in every decade, adding firms should not worry too much about them. But they should restructure their business and train human resources, he said. The industry would recover soon if apparel producers focused on the home market in addition to their traditional export markets, he assured. Reported by Minh Quang

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The Ho Chi Minh Stock Exchange moved lower Tuesday over growing concern about negative corporate earnings this year.

VN-Index lost 5.05 points, or 1.62 percent, to close at a 10-day low of 307.13. Of its 175 members, 26 gained and 113 declined. Trading remained quiet, with only 7.7 million shares being traded. “The outlook on corporate earnings is very gloomy, given the current economic situation,” Huynh Anh Tuan, chief executive officer of the Ho Chi Minh City-based SJC Securities, said. “Companies have started to release 2008 earnings and many of them have made losses or missed their profit targets. For those who managed to make some profit, it was because of the gains they made in the first half of 2008. “In addition, people also lost a lot of their confidence in the market after HSBC said the Vietnamese market is no longer investable for overseas investors. “Besides, almost half of January has passed but we are still not yet clear how and when the government is going to implement its US$6 billion stimulus package to boost the economy. So, the market has no momentum.” Dau Tu Chung Khoan (Securities investment) newspaper quoted Kim Long Securities Company Deputy General Director Pham Vinh Thanh as saying, “Companies with a strong cash flow and those not involved in finance are a good choice this year.” He added that petroleum, transport, technology and financial stocks would be his top picks when the market shows signs of recovery, without explaining his choices. How they fared Vinpearl (VPL) lost VND2,500, or 4.17 percent, to close at VND57,500. VFG Investment Joint Stock Company became a major shareholder in the resort operator after buying 5,045,000 shares, or a 5.05 percent stake last month, according to a report on the exchange’s website. Saigon Securities Inc. (SSI), the country’s leading brokerage, slipped VND1,100, or 3.63 percent, to VND29,200. ANZ Bank failed to buy around 1.4 million shares amid a “gloomy market and its low liquidity,” the exchange said on its website. ANZ now holds 18.35 percent in the Hanoi- based brokerage. Thu Duc Trading and Import Export Joint Stock Company (TMC) remained unchanged at VND21,500. The firm said on the exchange’s website that retail investor La Tang Duc bought 242,060 shares, or 6.05 percent, to become a major shareholder. Saigon Fishing Net Joint-Stock Company (SFN), a silk thread and fishing net producer, gained VND400, or 4.2 percent, its most in two weeks, to finish at VND9,900. The HCMC-based company will start buying back 100,000 shares from January 20, according to a stock exchange announcement. “The buyback volume is not huge, but given the daily trading volume of the shares, which is about several thousand a day, this buyback plan could move the stock,” Hoang Thach Lan, chief analyst at HCMC-based SME Securities Company, said. Reported by Hoang Uy

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Swiss and German institutes will help Vietnam train international marketing and export management experts in an attempt to improve the image of local businesses in the global market.

Switzerland-based European Institute of Foreign Trade and German Reutlingen University’s Export Academy will collaborate with TFF (Training For the Future), a Vietnamese business training school, to offer courses from April. A TFF official told Thanh Nien Daily Tuesday the 18-month courses, partly funded by the Swiss government, would offer essential knowledge about marketing and export skills in an international setting. Those who complete the courses will obtain masters degrees in international marketing and export management. Reported by Minh Quang

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Saigon Petro, VT Gas and Petrolimex have reduced the retail price of 12-kilogram cylinders of cooking gas by VND40,000 (US$2.37), effective today.

This is the second time in a month gas prices have been lowered. The price of a 12-kilogram cylinder was cut by between VND5,000 and VND10,000 ($0.30-$0.60) a week ago. The companies said the retail prices had been reduced after global gas prices fell. The lowest price for a 12-kilogram gas cylinder at present is VND203,000 ($12). Reported by Trung Bao

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Employees count money at an Asia Commercial Bank branch in Ho Chi Minh City. The central bank said Vietnam’s commercial banks do not have any direct connections with troubled foreign banks. Vietnamese banks have withdrawn funds from overseas banks to reduce their exposure to the US financial crisis and shifted part of the funds to banks in Singapore and Hong Kong, the government said.

But the government statement did not mention how much money was involved. Prime Minister Nguyen Tan Dung, in a separate statement, also urged the central bank to pursue flexible policies on interest rates, the currency and foreign reserves to ensure liquidity in the banking industry. Governments, central banks and regulators globally are scrambling to protect their markets from the financial tsunami sparked by last month’s collapse of investment bank Lehman Brothers. The impact has been felt mostly in the US and Europe but a number of countries in Asia have sought to assure investors that their banking systems are sound. The State Bank of Vietnam’s Monetary Policy Department, in a statement published on the government’s website at the weekend, said the Vietnamese banking sector is operating normally and that commercial banks do not have any direct connections with troubled foreign banks. In addition, the businesses of two Vietnam-based banks fully owned by HSBC Holdings and Standard Chartered, foreign banks' branches and all joint venture banks in the country are stable, the statement said. Limiting crisis impacts In a statement published by on the central bank’s website Monday, the prime minister asked the central bank to request commercial banks to review their operations to limit the impact of the global financial crisis. He urged the central bank to pursue a tighter monetary policy but maintain flexibility in management of interest rates, exchange rates and foreign reserves to ensure liquidity of the banking system. Dung said local commercial banks may implement measures such as restructuring investment portfolios and withdrawing funds to ensure liquidity after examining their deposits and investments in foreign financial institutions. Banks should also help exporters expand business as a measure to reduce the country's trade deficit, which has ballooned this year owing to the rising cost of imports as inflation surged to double digit levels. The prime minister requested the central bank to establish regulations to merge troubled local banks, the statement said. The central bank must also ask commercial banks to reassess thoroughly loans in “high-risk” fields, including real estate and stock investments. Real estate-related loans by commercial banks account for 9.15 percent of the country's total outstanding loans, online newspaper VnExpress reported last week. The State Bank of Vietnam's reserves rose to $21.9 billion at the end of September from $20.7 billion three months earlier, Governor Nguyen Van Giau said on September 30. The central bank has 82 percent of these reserves deposited with central banks in the US, UK, France, Germany, the International Monetary Fund and other global financial institutions, Giau said. The rest is held in banks with credit ratings of AAA or AA. Interbank rates stable The Vietnam interbank overnight rate, or VNIBOR, was stable at 14 percent and domestic lending rates were also stable, the Monetary Policy Department said. But the average rate for three-month interbank loans edged up to 17.68 percent Monday from 17.5 percent a week ago on stronger demand. "Demand for short-term loans is strong while long-term loans are not preferred as borrowers expect lending rates to ease," a dealer in Hanoi said. The central bank has raised the interest rate it pays to banks for their compulsory reserves against dong deposits from October 1, increasing it to 5 percent from 3.6 percent, to reduce lending rates. Bonds gain Five-year bonds advanced on speculation the central bank will lower the base interest rate by the end of this year. The dong remained unchanged. The yield on the benchmark note fell 16 basis points to 15.83 percent, according to a daily price from 10 banks compiled by Bloomberg. One hundred basis points make a percent. “Investors are passing on the word that the central bank may cut interest rates by the end of the year as the banking system's liquidity has increased,” said Vu Anh Duc, a senior dealer at the fixed-income department of the Hanoi-based Vietnam Bank for Industry and Trade, known as VietinBank. “Banks have reduced borrowing costs and the central bank also wants to bring bond yields down.” Source: TN, Agencies

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