People in Vietnam can now submit their income tax declaration and conduct customs procedures on the Internet, the Finance Ministry said in a Friday agreement with the state telecommunication company.

The agreement between the ministry and Vietnam Posts and Telecommunication Group (VNPT) aims to digitize the ministry’s public administrative procedures. During the pilot period until December, the ministry will use the digital signature system of VNPT for tax and customs services and then apply the service to all of its public administration procedures when VNPT is licensed to provide the service. Reported by Truong Son

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Banks in Vietnam cut their dollar lending rates on the interbank market in the past week due to a growing surplus after firms switched to borrowing in Vietnamese dong under a government stimulus package, bankers said.

The State Bank of Vietnam said on Monday banks cut their dollar lending rates for nearly all terms in the week ending August 27. Rates on 12-month loans dropped to 1.7 percent from 2.8 percent the previous week. Many companies that needed dollars earlier this year have switched to borrowing in dong because of a government rate subsidy package, leaving banks with a surplus of the foreign currency, the official Securities Investment newspaper said. It said central bank measures to limit the use of the dollar in domestic markets had also helped reduce demand. On August 20 the central bank and the Industry and Trade Ministry agreed to tighten control over foreign exchange as dollar rates rose on the unofficial market and the country's exports were forecast to fall 6.4 percent this year to US$58.6 billion. On the unofficial market, the dollar rose to 18,390/18,430 dong on Monday from 18,370/18,390 last Friday. Commercial banks lent businesses about VND398 trillion ($22.3 billion), equivalent to 81 percent of the government’s loan-subsidy program, as of August 27, according to a statement on the government’s website. Last week the value of subsidized loans rose 0.43 percent from a week before, accelerating from 0.25 percent the previous week, central bank data shows. Governor Giau told a seminar last week the central bank would maintain its looser monetary stance, with the annual credit growth target lifted to 30 percent from the 25-27 percent set earlier by the government. Money supply would be targeted to expand 30 percent in 2009, accelerating from 20 percent growth last year, Giau said in a statement seen on Monday. “Inflation is on a rising trend in the last months of the year due to the impact of the easier fiscal and monetary policy,” he said, forecasting inflation this year at 6 percent to 8 percent. Consumer prices surged 22.9 percent in 2008. The central bank said state-run banks raised their dong deposit rates slightly, offering to pay 8.2-8.4 percent on six-month deposits against 8.0-8.4 percent a week ago, but that was below the 8.5-8.9 percent offered by partly private banks. Last week bankers said commercial banks extended their campaign to raise dong funds by increasing interest rates and in one case offering gold prizes. Source: Thanh Nien, Reuters

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A worker packages cooking oil bottles at a factory in Ho Chi Minh City Further fiscal stimulus is needed as the US$8 billion package this year has worked its way through the economy, showing good results, experts say.

If the economy is not completely out of the woods by the end of the current stimulus package, its continuation should be considered though the amount can be smaller, economist Vu Dinh Anh said Friday in a report on Vietnam Television’s website Cao Sy Kiem, a member of the National Advisory Council for Monetary Policy, said more stimulus measures would be necessary even after the economy has recovered. “Local businesses need to descend the ladder step by step and there should not be any abrupt end in stimulus spending,” Kiem said in an interview with Tien Phong newspaper Wednesday. Although the government’s program to subsidize 4 percent of the interest rate on loans taken by local businesses has shown real effects, it can only meet about one third of the credit demand, he said, noting the program is also set to close in the next four months. Vietnam’s economy accelerated in the second quarter as the stimulus helped drive credit growth and buoyed construction activity. The nation’s commercial banks have lent more than VND397.7 trillion ($22.3 billion) to businesses as part of the government’s loan-subsidy program as of August 27, a 0.43 percent increase from a week earlier, according to a central bank report Friday. “The government’s interest-rate subsidy program has helped the banking system and companies avoid bad debt and bankruptcies,” Tran Du Lich, a member of Vietnam’s National Assembly Committee for Economic Affairs, said at a conference in Ho Chi Minh City on August 19. Lich said the National Assembly will early next year discuss the size of another lending program for medium and long-term loans to help companies restructure businesses through the end of next year. The International Monetary Fund has said the global economy is recovering from a severe downturn, but it is too soon for governments to begin winding down stimulus efforts, according to AFP. “The outlook is improving but we do feel that it is very important to stress that it is no time for complacency,” AFP quoted IMF spokeswoman Caroline Atkinson as saying at a news conference Thursday. Kiem said interest rates on loans subsidized by the government are around 6 percent now but they would return to around 10 percent without the subsidies, which would cause many difficulties for local businesses. “What the government should do is to provide more credit,” he said, noting a credit growth target of around 30 percent is viable. The central bank plans to ease limits on credit growth this year as it aims to help the nation reach its economic expansion target of about 5 percent. The State Bank of Vietnam aims to cap expansion in lending at 30 percent, and will try to slow loan growth in the coming years, Governor Nguyen Van Giau said in a statement on the central bank’s website Friday. Credit from banks has grown 25 percent in the eight months through August from the end of last year, Giau said at a meeting in Da Lat on Friday. Vietnam’s economy may grow 5.2 percent this year, he said. Source: Thanh Nien, Bloomberg

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Multi-billion dollar foreign steel projects in Vietnam are likely to face delays because of the global economic slump, even though demand in the country is forecast to grow 20% this year and 10-15% next year.

Foreign investors, including Taiwan’s Formosa, India’s Tata Steel, South Korea’s Posco and Malaysia’s Lion Industries, have pledged to invest nearly US$30 billion in steel projects with total capacity of about 25-30 million tons by 2025. But Pham Chi Cuong, chairman of the Vietnam Steel Association, which groups the country’s major producers, said the global economic slump would hobble on those plans. “Most of the big foreign-invested steel mill projects are likely to be delayed because of their internal difficulties, such as finances,” he said in an interview on August 27. Cuong said the two partners in the country’s biggest steel project to date, a $10 billion joint venture between state-owned ship builder Vinashin and Malaysia’s Lion Group, had problems coming up with the money for the required investment. The only foreign company that had made any progress recently was Taiwan’s Formosa, with its $7.8 billion mill project in Vung Ang, in central Vietnam, Cuong said. India’s Tata Steel was still sorting out a “land allocation” issue for the plant’s site with authorities in Ha Tinh province for its $5 billion project, he said. No great leap forward Half of Vietnam’s annual consumption this year of about 11 million tons will be imported but domestic producers had already voiced concerns about oversupply once all proposed steel mills are up and running within the next five years. “There are many question marks around how realistic these foreign invested projects are, given all the problems they are facing, both internally and externally,” Cuong said. “There will not be a Great Leap Forward here for the steel industry,” he said. The industry had a painful start to the year, with a slump in prices and demand. Some companies slashed work shifts by as much as two-thirds and cleared inventories by selling at a loss to service bank debt, Cuong said. A chunk of money from the government’s stimulus package, which the Prime Minister’s office has valued at $8 billion, has gone into housing for the poor and infrastructure, buoying steel demand, which he said would rise more than 20 percent to 11 million tons in 2009. “The worst is behind us but we still cannot be too optimistic because of the uncertainty in the recovery and the fast rises in world commodity prices,” he said. Demand would increase 10-15 percent next year, he added. Prices have jumped nearly 40 percent so far this year and are set to rise around 5 percent between now and the end of the year thanks to robust demand, said Cuong, a former deputy director of top state-owned steel group Vietnam Steel Corp. Hence demand for scrap steel, the main source of feedstock for Vietnam’s mills, are expected to jump around 35 percent this year compared to 2008 to 2 million tons, Cuong said. At present the country does not import any iron ore as a few of its mills are designed to use iron ore but if the foreign-invested projects are completed they would have to import iron ores from mines in Laos, Australia and Brazil from 2012, Cuong said. Source: Reuters

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A branch office of ABBank in Ho Chi Minh City. Vietnam’s credit growth may spur inflationary pressures as the government encourages lending to boost the economy amid a slump in overseas demand, Morgan Stanley said.

Property prices in some projects have increased as much as 30 percent in Vietnam and new loan creation this year is equivalent to about 17 percent of gross domestic product, economists Deyi Tan, Chetan Ahya and Shweta Singh wrote in a note published Wednesday. Vietnam’s economy accelerated in the second quarter as stimulus spending that the government values at more than US$8 billion helped drive loan growth and buoy construction activity. The nation’s banks have lent more than VND389 trillion ($21.8 billion) to businesses as part of the government’s loan-subsidy program as of July 30, according to the central bank. “Credit disbursement has provided a cushion at a time when external demand indicators remained weak,” the economists wrote. “The current mode of policy-driven recovery could face limitations. With Vietnam having a functional banking system to push out liquidity via credit growth, strong credit acceleration could pose inflationary concerns.” Inflation slowed for an 11th straight month in July, with consumer prices rising 3.3 percent from a year earlier, compared with a 3.9 percent gain in June, according to General Statistics Office figures. Monetary policy Vietnam’s inflation will soon begin accelerating again, driven by commodity prices, a weakening currency and increased bank lending, HSBC Holdings Plc economist Prakriti Sofat said last month. Inflation will probably begin accelerating in September after dropping to about 2 percent in August, she said. The State Bank of Vietnam on July 20 said it will manage monetary policy in the second half to ensure credit grows as much as 27 percent for the year. Loans growth so far this year is about 20 percent, Morgan Stanley said. “If the lending target is to be adhered to, credit disbursement for the second half will have to slow to less than half the pace of the first half,” the economists said. “The delicate task of policy adjustment will likely have to take place to reduce the possibility of demand-pull inflationary pressures.” The central bank has kept the key interest rate at 7 percent since January, after reducing it six times from 14 percent in October, to slow inflation. Shipments from Vietnam dropped 13 percent to $32.35 billion in Januaryto-July from the same period a year earlier, according to data from the General Statistics Office. Exports from Vietnam, the world’s second-biggest shipper of coffee and rice, are poised to recover as commodity prices and production increase, fund manager Dragon Capital told investors this month. “Limitations to a policy-driven recovery due to potential inflation and trade deficit pressures suggest that the growth baton will have to be passed from policy-makers to make way for a market-based export-driven recovery,” the Morgan Stanley economists said. “We believe a market-based export-driven recovery is in the cards.” Source: Bloomberg

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PetroVietnam Drilling and Well Services Joint-Stock Co., which provides drilling services to joint ventures led by Soco International Plc in Vietnam, plans to sell another 25.7 million shares.

Soco International Plc is a UK oil explorer operating in Asia and Africa. The sale may raise about VND2.2 trillion (US$123 million), based on the Ho Chi Minh City-based company’s share price of VND85,000 Friday. The State Securities Commission gave permission to PetroVietnam Drilling to sell the shares to merge with its investment unit, PetroVietnam Drilling Investment Joint-Stock Co., according to a statement on the regulator’s website. PetroVietnam Drilling fell 4 percent on the Ho Chi Minh Stock Exchange Friday. On June 9, it had reached a eight-month high of VND92,000. The provider of oilfield services is the eighth-biggest company on the exchange. The statement didn’t say when the company will sell the new shares. Officials at PetroVietnam Drilling were not available for comment. Source: Bloomberg

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Vietnam’s largest banks will lower their interest rates on dollar deposits to 1.5 percent in June from around 2 percent now in a move to help avoid dollar hoarding in domestic markets, the central bank said.

All state-run banks plus Vietcombank, Vietnam’s largest partly private lender, have also agreed to set the ceiling for dollar lending rates at 3 percent, the State Bank of Vietnam said in a statement seen on Saturday. “The governor of the SBV is asking Vietnam Banks Association to seek consensus with other commercial banks to lower interest rates and (help) stabilize the forex market,” it said. The new rates come into effect tomorrow. The interbank 12-month dollar lending rates rose to 2.29 percent on Friday from 2.20 percent a week ago. This is still below the rate of 2.45 percent on April 29, according to Reuters data. The central bank said its inspectors will also step up large-scale checks from next month to deal with corporate dollar hoarding, which has pushed the exchange rate beyond regulated levels and led to a dollar shortage for the past several months. The Dow Jones newswire quoted Hanoi-based bankers as saying the SVB is implementing measures to make dollar holders sell greenbacks to banks, and encourage enterprises to borrow dollars instead of buying them. Earlier this month the government asked authorities, including the police, to help regulate foreign exchange transactions as part of efforts to reduce dollarization in the economy and control dollar rates on the black market. The central bank will accept the country’s recently issued dollar-denominated bonds as collateral in its dollar lending operations to help ease the tightness in dollar supply, bankers said on Friday. The central bank said it would accept foreign currency denominated “valuable papers” as collateral for the first time, without elaborating. Bankers said these papers would primarily include Vietnam’s US$230 million dollar bonds issued in March and they would be accepted in the central bank’s dollar lending operations. “This will accommodate the supply of short-term funds to banks which suffer from liquidity shortfall,” the bank said in a statement seen on Friday. Importers have been complaining they were unable to buy dollars at the official exchange rate due to dollar shortage at the banks. “The new rule would create a new mechanism for the central bank to intervene to solve the dollar shortage issue but given the amount of domestic dollar bonds, it will not be much,” a banker in Ho Chi Minh City said. The central bank said earlier this month that banks had plenty of dollars that they can lend but a shortage of dollars to sell as exporters preferred to keep their export earnings in the greenback on fear of a faster depreciation of the dong. Vietnam devalued its dong currency twice last year and the currency remains under pressure because of general economic uncertainty, an expected turnaround in the trade balance to a deficit and the fact that the dong has weakened less than many of its peers recently. The government estimated earlier this week that the trade deficit in May would widen to $1.5 billion from $1.18 billion in April. But State Bank Governor Nguyen Van Giau said last week he saw no need to adjust the dong’s exchange rate against the dollar on the grounds that the dollar was depreciating against other major currencies. The central bank allows interbank dollar/dong transactions to trade up to 5 percent on either side of the official reference rate. It set the rate at VND16,938 per dollar on Saturday. Source: Reuters, Thanh Nien

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High school students in Hanoi fill out registration forms for the college entrance exams. A National Assembly (NA) committee Saturday said a proposal to increase tuition fees had to be scaled down to minimize hardships for students, particularly those from disadvantaged backgrounds.

According to the proposal presented at the NA’s ongoing session Saturday by Deputy Prime Minister and Education Minister Nguyen Thien Nhan, monthly tuition fees would rise to VND255,000 (US$14.35) from the current VND180,000 ($10) for university students, and to VND170,000 ($9.40) from VND120,000 ($6.70) for those attending vocational schools. But the chairman of the NA’s Committee for Culture, Education, Youth and Children, Dao Trong Thi, said the monthly tuition for universities should be raised to a maximum of VND230,000 ($12.80), and that for vocational schools to VND155,000 ($8.60). Under the government’s proposal, university tuition fees will range from VND550,000-800,000 ($27.80-44.40) per month by 2014, depending on the discipline. Deputy Prime Minister Nhan said the education sector has not had enough capital to increase salary for teachers and to buy equipment to improve the quality of education given. Between 1999 and 2008, minimum salaries under the state regulation increased 1.86 times, state budget for education went up 5.8 times, and the consumer price index doubled. But tuition fees over the same period have remained unchanged, and this has affected the quality of education provided and caused irrationalities in the sector, Nhan said. Chairman Thi said the percentage of state budget spending on education, which has been 20 percent since 2007, should be increased annually, instead of remaining at the same rate, as per the government proposal. Tuition-income ratio The government has also proposed new tuition fees for public kindergartens, secondary and high schools under which the fees, together with other studying expenses, must not exceed 6 percent of the average family’s total income. As the new tuition fees are charged in accordance with families’ capacity to pay, it will not be a financial burden, Nhan said, adding that poor families would pay less than those with higher incomes. Under the new regime, the average urban school tuition fees would be VND35,000 ($1.94) per month, equaling the current average schooling fee in urban areas. Average tuition would be VND17,000 ($0.94) monthly in rural areas, lower than the current average of VND25,000 ($1.39), according to the proposal. Nhan said the government would subsidize part of the tuition fees and expenses for poor families. In Vietnam, the poverty line has been set at monthly income of VND200,000 ($11.10) per person in rural areas, and VND260,000 ($14.40) in urban areas. But Thi said the proposed 6-percent level is too high, and unsuitable with the actual income of households in a developing country like Vietnam, as most students come from poor rural households. The ratio stands at 1.9-7.95 percent in newly developed countries, and at 2-10 percent in developed countries. Therefore, the committee suggested that the tuition fee should not exceed 5 percent of the average income of a household, Thi said. Thi suggested the fee be increased gradually each year and the proposed fee to not be fully applied until 2014. Eliminate free tuition policy for would-be teachers Under the proposal, students trained to become teachers will be required to pay VND280,000 ($15.50) every month beginning in 2010, whereas they do not have to pay anything now. The rate will be raised each year until it reaches VND500,000 ($27.80) in 2014. Deputy Prime Minister Nhan said the current policy of exemption of school fees for students of pedagogy, but does not require them to work in the education sector after graduation, is irrational. Under the proposal, students will be facilitated in getting study loans from banks, and the state will pay off the interest and loans for them if they choose to work in the public education sector for a period at least double the time they study at universities or colleges. Thi said the proposal was a suitable solution, because the fee exemption policy has not been effective as there are many students who do not work in the public education sector after graduation, but they are not required to refund the training expenses, which is a drain on scarce budget resources. Reported by Ngan Anh

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The International Finance Corp. Thursday signed a commercial guarantee contract with An Binh Bank (ABBank) guaranteeing the lender’s payment commitments, the latter said in a statement.

The corporation, a member of the World Bank Group, will guarantee the Ho Chi Minh City-based bank’s commitments to the extent of US$10 million this year. The bank said the deal would be an advantage for its customers in approaching international exporters for purchases. Reported by Vinh Bao

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Vietnam’s leading retailer Saigon Co.op Thursday signed a deal with Tin Nghia Real Estate Company to take over its existing market in Bien Hoa Town and upgrade it into a supermarket.

The 3,000-square meter Co.opMart Tan Bien would be the retailer’s second outlet in Tan Bien Ward, an affluent business center in the city. Saigon Co.op said it is set to invest more than VND20 billion (US$1.1 million) to renovate Tan Bien market. Work would start next month, the retailer said, adding the supermarket would begin full operation in the third quarter. In July 2007, Saigon Co.op opened its first outlet in Dong Nai Province. Saigon Co.op’s revenues last year topped VND6.35 trillion ($372 million), a 48.9 percent year-on-year increase and it expects this to rise to VND9 trillion this year. It plans to have around 100 outlets by 2020. Reported by Vinh Bao

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An airplane replica seen at a ticket office of Vietnam Airlines in Ho Chi Minh City. Falling demand for travel amid the global economic downturn has forced many airlines flying to Vietnam to cut back on services and delay expansion plans.

From next month, Hong Kong Airlines will reduce the frequency of its Hanoi-Hong Kong service to five flights a week from the current seven. Sales manager Nguyen Tuan Hai said demand has fallen away sharply. Zlatko Zlatic, general manager of Lufthansa in Vietnam, said the German carrier would continue to fly three times a week this summer from Vietnam to Frankfurt, with a stopover in Bangkok. Demand is still adequate and the schedule would be restructured if passenger numbers decline, he said. Zlatic said the number of people flying from Europe and the US to Vietnam has dropped 10 percent since a year ago. The number of foreign travelers to the country fell 18.8 percent year-onyear in the first five months this year to 1.6 million, figures from the General Statistics Office show. Vo Huy Cuong, head of the Aviation Transport Department at the Civil Aviation Administration of Vietnam, said last month the number of flights registered to fly to and from Vietnam in the March-October period fell 4 percent from last year’s period. Many carriers, including Singapore Airlines, Thai Airways and Vietnam Airlines, have decided to reduce their flights, Cuong said. Vietnam Airlines has decided to cut down services on many sectors. The number of flights on the HCMC-Busan route, for instance, has been halved to two a week. The airline carried 2.3 million passengers in the first quarter, a 5 percent fall year on year, as the global recession hit leisure and business trips. “Our sales may decline and our costs are rising this year,” Pham Ngoc Minh, its chief executive officer, told Bloomberg last month. “We will try everything possible to make sure we don’t make a loss this year.” Indochina Airlines, which started operating late last year, now uses only one 282-seat airplane for its four flights between Hanoi and HCMC daily. Ha Dung, general director of Indochina Airlines, said cutting services and using just one plane are measures to deal with the economic slowdown. Even the no-frills model has not managed to weather the economic downturn very well. Budget carrier Jetstar Pacific has had to delay its plan to launch new services to Bangkok and Seam Reap. VietJet Air, a local carrier licensed in late 2007, has had to delay its first flight until the end of this year because of the downturn. Worldwide, air passenger traffic fell 3.1 percent in April, slowing from double-digit falls in the two preceding months, AFP reported Wednesday, citing the International Air Transport Association. Asia Pacific carriers saw the biggest fall in demand, with an 8.6 percent drop in passenger traffic in April. Giovanni Bisignani, director general of the airline association, said in a statement that as the decline in passenger demand still outstripped the capacity cuts made by airlines, yields have not improved. “The worst may be over. However, we have not yet seen any signs that recovery is imminent,” he said. Lufthansa’s Zlatic said the effects of the economic downturn would end soon in Vietnam and air travel demand would grow again. Hai of Hong Kong Airlines said though sales in the first few months were not so good, Vietnam, with its stable economic growth, remains a promising market. “During these hard times, we try to launch new services and manage our flight schedules well to overcome the difficulties. In the longer term, we are still scouting for new markets like HCMC and Da Nang.” Source: TN, Agencies

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A trade fair organized by Vietnamese manufacturers to showcase their products in Cambodia Several Vietnamese exports hold larger market shares in Cambodia than both Thai and Chinese products, said a local businessman familiar with the Cambodian economy.

Truong Cung Nghia, executive director of Truong Doan Company, said Cambodian customers preferred Vietnamese products to those from Thailand and China. Processed seafood products from Vietnam held an 80 percent market share in Cambodia while agricultural products made up 67 percent of that market, said Nghia, whose company specializes in Cambodian market research. Nghia added Vietnamese businesses supplied 68 percent of Cambodia’s steel demand. Nguyen Xuan Truong, head of Binh Dien Fertilizer Company’s Marketing Department, said Cambodians used similar daily agricultural products. Truong said his company’s brand was popular with Cambodian farmers in rural areas as the company advertized heavily in the countryside. Sales in Cambodia reeled in higher revenues for the company than its domestic sales did, said Truong. However, it was still risky to trade with partners in Cambodia as they paid in cash and rarely used banks, said Nghia. Truong said about 120 Vietnamese businesses and investors were operating in Cambodian markets, contributing to the US$1.7 billion bilateral trade with Vietnam last year. He said the figure would grow to $2 billion this year. Reported by Minh Quang

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From May 15, 2009, Viettel Telecom officially launches the pre-paid mobile package for foreign tourists when traveling in Vietnam. The package, named Tourist Sim, is offered with flexible usage time, attractive price and many other effective search services. Using Viettel’s Tourist Sim, customers are provided accurate, quick and free information on hotels, taxi numbers, exchange rate, weather forecast and sightseeing places by 5055 automatic server. Tourist Sim is also attractive for its price and usage duration. Regarding the price, the Tourist Sim is offered at US$5 or $10. Regarding call rate, International Direct Dial rate is at VND3,240/minute and Internation SMS is at VND2,160/message. Depending on the customer’s duration of stay and need for communication, he/she can re-charge his/her Sim at unchanged rate. Moreover, customers are provided GPRS for free. A free service center, 18008168, is also set up in both English and Chinese. This Sim will be widely distributed at airports, tourism places, hotels, resorts... Tourist Sim is a mobile pre-paid package specially designed for foreign tourists to Vietnam. It is a greeting from Viettel and Vietnam to international tourists. Viettel hopes to be the tourist’s friend as a communication bridge between tourist and their family, friends.

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The Ministry of Trade and Industry has begun a new crackdown on foreign currency use, the local VietnamNet online newspaper reported.

The move, launched by Minister Vu Huy Hoang on Friday, followed the prime minister’s instruction last week that ordered authorities, including the police, to help regulate transactions in US dollars. According to VietnamNet, Hoang asked the ministry’s Market Management Department to increase inspections and crack down on the advertising and selling of products in foreign currencies. In particular, Hoang instructed the department to strengthen cooperation with authorities in Hanoi and Ho Chi Minh City to enforce the clampdown in those commercial hubs. The department must also corporate with inspectors from the central bank in its inspections. Source: Thanh Nien

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Interest rates ‘have hit a floor,’ may rise, ratings agency says

The benchmark interest rate has probably reached “a floor” after a series of cuts, and borrowing costs may need to be increased as government subsidies spark accelerating loan growth, Fitch Ratings said.

The State Bank of Vietnam has lowered its key rate to 7 percent from 14 percent in October. Standard Chartered Plc predicted a month ago that policy makers would further reduce the rate to 5 percent by the end of June, in an attempt to bolster economic growth. “Given the government’s needs and that we’re starting to see dong liquidity tightening in the market, rates at the moment appear to have hit a floor,” said Peter Tebbutt, a Hong Kong-based senior director at Fitch, in an interview Thursday in Ho Chi Minh City. “If anything, they may go up a bit.” A government subsidy on loans, intended to help boost economic growth from the 3.1 percent first-quarter pace, has sparked a “new credit boom” in Vietnam, Citigroup Inc. said last month. Lending jumped about 11 percent from January to April, marking a sharp acceleration from a first-quarter increase of 3 percent, according to Fitch estimates. The subsidy program “appears from April’s numbers to be too successful,” said Tebbutt. “It seems to be driving loan growth too much.” The State Bank of Vietnam has apparently resisted government pressure for now to lower interest rates further, according to Sabine Bauer, a Hong-Kong based Fitch director. Defending their ground “The central bank in this regard has proved to be a strong voice,” Bauer said Thursday in HCMC. “In this debate, on the base rate, they have so far defended their ground.” In addition to delaying potential non-performing loans, the Vietnamese government subsidy program may also have resulted in some borrowing being used to invest in property or stocks; in the creation of some fake projects to take advantage of the scheme; or in banks using “circular loans” to profit from it, according to Citigroup. “The banks’ responsibility is to ensure that these are loans made to projects which are viable,” Bauer said. “But having said that, it’s very difficult for them to monitor where the money actually goes.” In a report released last week on Vietnam’s banking industry, Fitch said “moral suasion” has encouraged banks to keep lending rates low, with authorities attempting to ensure a “reasonable level” of loan growth. Still, with the spread between lending and deposit rates narrowing, the dong depreciating, and international demand for Vietnamese goods weakening, credit costs are set to rise, Fitch said in the report. “You have the interest-rate subsidy, you have quite strong loans growth,” Tebbutt said. “Then you could possibly start getting inflation coming back. And you’ve got a government that needs to borrow a lot of money this year, particularly for its fiscal stimulus program. So with everyone borrowing, rates will go up.” Source: Bloomberg

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Vietnam’s economic growth has probably begun accelerating, with the first quarter likely to be the low point in the country’s downturn, HSBC Holdings Plc said.

The economy expanded 3.1 percent in the first quarter from a year earlier, the slowest pace of expansion on record. A round of rate cuts by Vietnam’s central bank, a government stimulus program, a weaker currency and resilient personal consumption expenditure are buoying the growth outlook, Prakriti Sofat, a Singapore-based economist at HSBC, wrote in a note. The economy may grow 4.5 percent for the year, compared with 6.2 percent in 2008, she said. “The worst is behind us,” wrote Sofat. Vietnam is facing a “slowdown, not a recession,” she said. The State Bank of Vietnam has cut its benchmark interest rate to 7 percent from 14 percent in October. The central bank’s moves to date represent a “massive monetary policy easing,” Sofat wrote. The easing is now “working its way through the system,” she said in the note. A government subsidy on loans – part of a stimulus package that Prime Minister Nguyen Tan Dung last month valued at US$8 billion – functions as a de facto further easing of monetary policy, according to HSBC. The loan subsidy program is creating a new “credit boom” in Vietnam, Citigroup Inc. said last month. Exports holding up Exports may be receiving some boost from a 10 percent “nominal depreciation” of the Vietnamese dong against the US dollar over the last year, Sofat wrote. Garment shipments have held up “reasonably well,” in part due to a focus on lower-end products that benefit during a period when shoppers’ incomes are being squeezed, she said in the note. “We’re into summer orders already, and things are holding up,” said Jonathan Pincus, an economist with the Vietnam Program at the Harvard Kennedy School in Ho Chi Minh City, when asked about garment export performance this year. Retail sales of goods and services in the country grew 21.5 percent in the first four months, according to the General Statistics Office in Hanoi. The “astounding” recent growth in retail sales in Vietnam “shows that consumption remains very strong,” HCMC-based fund manager Dragon Capital said in a note dated April 29. “Strong growth and asset price gains (including commodity prices) over the last few years, even after taking into account the recent declines, mean that the average Vietnamese person is much better off,” Sofat wrote. Vietnamese Prime Minister Dung said last month that gross domestic product may increase as much as 5.5 percent for the full year, while the International Monetary Fund foresees 3.3 percent growth. Any positive figure is “an achievement when seen in the regional context,” Sofat wrote. Source: Bloomberg

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A streets-side barbershop on Hang Ruoi Street in Hanoi’s Old Quarter. Laws prevent badly needed upgrades to cramped and decrepit housing in the capital’s most popular neighborhood.

Squeezing through a crowded clothing shop, Nguyen Thi Hoa must continue through a courtyard strewn with old dressers, water tanks, and coal-fired stoves to enter her apartment in Hanoi’s Old Quarter neighborhood. Behind the clothing store on Hang Dao Street, Hoa’s apartment is situated alongside five other cramped and dilapidated units in a long dark corridor. Altogether, nearly 30 people are living in the confined space. Hoa’s family is among several in the Old Quarter suffering miserably in the apartments. They are not allowed to upgrade their units or build new ones, in part because of state regulations on preserving the original elements of the Old Quarter. And a staggering 95 percent of the residential units in the neighborhood are in need of upgrades. Located in the capital’s Hoan Kiem District, the Old Quarter is famous for its ancient architecture and is considered the heart of Hanoi’s cultural beauty. Old streets with unique architecture, elaborately tiled buildings, and intricate alleyways form the foundation of the popular area. For local residents, however, the charm of the badly eroded infrastructure leaves something to be desired. The municipal People’s Committee lists 274 houses in the district which are to be preserved for cultural heritage reasons, but the phrasing of the directive indicates that no restorative work can be carried out either. The residents are thus left in the lurch. “I know it is not safe. But, we have no other choice but to stay here,” Hoa said. Her family has lived in a deteriorated apartment with leaking pipes for more than 40 years now. Within the 25-square-meter one-bedroom unit, Hoa’s six-member family has been forced to turn their corridor into a space for cooking and clothes drying. At night, the family sleeps together in what little space is left in the one main room. “Daily life is very inconvenient,” said Hoa. “There are three generations sharing this cramped space.” According to government statistics, housing space per capita in the Old Quarter stands at a mere one square meter, much lower than the 10 square meters per capita in Vietnam’s urban areas. Up to 20 percent of residents in the Old Quarter have no private kitchens, and more than half of all households in the area have five to six people sharing just one room. Yet, the neighborhood has one major draw which dissuades many residents from moving – it is the city’s busiest downtown trading area. “All of my family lives above our shop, so we can’t leave here although the house is very cramped,” said Nguyen Van Ba from Hang Bac Street. His 10-member family lives in a dark 40-square-meter house and is forced to share a toilet with three other households nearby. Nguyen Thi Toan, however, chooses to stay in the Old Quarter for different reasons. She doesn’t own a shop but her small home on Hang Ga Street has great sentimental value, she said. Four generations of Toan’s family have lived here and so despite the discomfort of the cramped space, she and her relatives stay. “We are acquainted with the way of life here, and don’t want to move,” she said. “Moreover, it is downtown, near good schools, good hospitals and big markets. The services are very convenient.” Better preservation laws needed While the government has recognized the value of preserving the architecture of Hanoi’s Old Quarter, complex and ambiguously worded laws fail to address many important issues. For instance, regulations stipulate that for some structures, the “status quo” must be strictly preserved. The phrasing therefore prohibits even necessary restorative work from being carried out. Hanoi’s municipal authorities have asked agencies to simplify procedures so that people can upgrade their homes while retaining the features of the homes’ cultural heritage. Officials have also requested that organizations accelerate work on construction, drainage and pavement systems in the area. A member of the Hanoi Management Board of Relics and Landscape said, “It is necessary to assess the status of relics, build scientific documents for each old street, assess the deformation of houses and streets, and consider residential and infrastructural factors before building a detailed preservation program.” Unable to wait for improvements to his Old Quarter residence, Nguyen Van Trung decided to move out of the area altogether in 2006. He purchased a small house in a suburban district outside the city. “I live in the new house but I keep the old one on Hang Luoc Street for my cosmetic products business,” he said However, in a country where per capita income hovers around US$1,000 a year, not everyone can afford a new house like Trung. One of his old neighbors on Hang Luoc Street was recently forced to expand his cramped apartment onto the building’s fourth floor by adding steel bars to make a small room for his two daughters. “It’s [not ideal], but it helps him battle the shrinking living space and gives the family more freedom,” said Trung. Reported by Bao Van

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Vietnam has managed to avoid the sharp falls in exports experienced by other Asian nations, taking advantage of its focus on lower-end products such as garments. Vietnam posted a trade surplus for the first four months of the year, swinging from a deficit in the same period a year earlier, as import demand tumbled while garment exports increased.

The country recorded a surplus of US$801 million through April, compared with a shortfall of more than $11 billion in the same period a year earlier, the General Statistics Office said in Hanoi Friday. Exports declined 0.1 percent to $18.64 billion, while imports plunged 41 percent to $17.84 billion. Sluggish first-quarter economic growth, the slowest on record, cut into demand for raw materials from overseas. Vietnam has also managed to avoid the sharp falls in exports experienced by other Asian nations, taking advantage of its focus on lower-end products such as garments and on commodities such as rice. “People still need to have staples at the table, and they still need to have clothes for their kids,” Myron Brilliant, a vice president at the US Chamber of Commerce in Washington, told reporters Thursday in Ho Chi Minh City. “Vietnam is in areas where consumers are still buying products.” Garment shipments rose 2 percent to $2.59 billion, according to Friday’s report. Vietnam is among the world’s top 10 garment exporters, Deputy Prime Minister Nguyen Thien Nhan told an investment conference in HCMC Friday. FIRST MONTHLY DEFICIT IN 2009 With a sharp drop in exports of precious metals and gems in April, Vietnam would record the first trade deficit this year, the General Statistics Office estimated. Overall exports would come to around US$4.5 billion in April and imports would be $5.2 billion, the office said. The precious metal and gem stones category, consisting mainly of gold re-exports, earned only a paltry $15 million in April, the statistics department said. In March it earned $1.1 billion and in February $1.3 billion. Over the past two weeks, gold prices in Vietnam have been as much as $20 a tael more expensive than on the international market, gold traders said. A tael equals 37.5 grams. The domestic price of gold had been lower since the start of the year, prompting the record surge in gold re-exports. The central bank banned gold imports in May last year and had restricted exports, although it relaxed the rule to let a selected number of banks export the metal in February and March to take profits, bankers and gold traders said. Source: Reuters Self-sufficient “For a lot of the big retailers in the US, Vietnam is their second-largest platform, after China,” said Virginia Foote, president of financial advisory company Vietnam Partners LLC, in an interview Friday in HCMC. “Vietnam is hanging on to second, and that’s not a bad place to be.” Rice exports jumped 44 percent by value to $1.16 billion. Vietnam’s target is to maintain a “strong, self-sufficient export-oriented agriculture industry,” Nhan said Thursday. “Vietnam remains the world’s second-largest rice exporter,” the US Foreign Agricultural Service said in a report this month. “Large-volume contracts are often signed within the first two quarters of the year.” Oil exports slumped 45 percent by value to $1.98 billion, even while increasing 20 percent by volume. The average global price of crude oil tumbled 56 percent during the period. Footwear shipments slipped 11 percent to $1.24 billion, while seafood exports fell 7 percent to $1.06 billion. ‘Less vulnerable’ “Vietnam has been successful in having a fairly diverse export portfolio,” said Foote. “They’re less vulnerable. In this environment, that’s been very helpful.” Exports of precious stones and metals surged to a record $2.54 billion in the first four months from negligible levels a year ago. The sale of gold abroad has been driven by Vietnamese taking advantage of higher international prices for bullion, HSBC Holdings Plc said in a note. Almost all Vietnamese gold exports result from bullion obtained through past imports rather than from local output. “The gold export figures have been coming down quickly,” said Jonathan Pincus, an economist with the Vietnam Program at the Harvard Kennedy School in HCMC, in an interview Friday. “One would think that that’s it, that’s been played out.” Imports of machinery and mechanical products slumped 27 percent to $3.37 billion, while steel purchases from abroad tumbled 68 percent to $1.16 billion, according to Friday’s report. Foreign exchange “One of the reasons that imports are falling so rapidly is that people can’t get access to foreign exchange, as banks and exporters are holding it because of concerns about the exchange rate and fears that if they sell foreign exchange now they won’t be able to get it back later,” said Pincus. “And a lot of it is just a slowdown in investment,” he said. “It’s a signal that a lot of investment projects are being postponed or scaled down.” Vietnam is likely to post a trade deficit for the full year of as much as $6 billion, wrote Prakriti Sofat, a Singapore-based economist at HSBC, in a research note Friday. Imports will “show more life as base effects become less favorable and the policy stimulus feeds through the economy,” Sofat wrote. “It is important to bear in mind that Vietnam remains in the early stages of development, meaning that the country needs to import large quantities of capital goods, keeping it in a structural deficit.” Source: Bloomberg

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The dollar is expected to stay stable at around VND17,800 in the next month as banks have sufficient dollar holdings following a rare trade surplus in the first quarter, bankers said Monday.

The greenback has risen around 1.6 percent in the past week against the dong after the central bank widened the daily trading band to 5 percent either side of a midpoint, up from 3 percent, effectively allowing the dong to fall 2 percent. "The forex market performed positively after the central bank decision, with transactions more active and liquidity improving considerably," the central bank said in a weekly report seen Monday. The interest rate on overnight dollar loans fell 0.11 percent to an average 0.49 percent in the past week, indicating ample dollar funds at banks, the report said. At 11 a.m. local time, the dollar was bid at about VND17,770, up 1.6 percent from VND17,489 a week ago, Reuters data showed. On the unofficial market, the dollar was traded at about VND17,850 after briefly touching VND18,000 to the dollar last Tuesday when the new band took effect. "The market is quite comfortable with the new trading band, which has helped boost trading and improved banks' dollar liquidity," a dealer at a foreign bank in Hanoi said. A banker in Hanoi added: "The first-quarter macro figures, especially the trade surplus, have been supportive of the dong and so we see the dong stabilizing at around VND17,800 to the dollar over the next month, before April trade figures come out." Hanoi estimated last week it had a trade surplus of US$1.65 billion in the first quarter of 2009, mainly thanks to a surge in the re-export of gold worth $2.3 billion. Last week, State Bank Governor Nguyen Van Giau said the bank would allow only a moderate dollar rise this year and warned residents against hoarding the currency. Giau said Vietnam had more than $20 billion in foreign exchange reserves, down from about $22 billion in February, but he said the banking system, which was holding about $10 billion in dollar deposits, could meet demand. Economists, however, have said Hanoi would have to let the dong fall further as weak exports and declining foreign investment weighed on the economy. Hanoi let the tightly controlled currency depreciate by about 8 percent against the dollar last year in the face of tough economic conditions. The currency is down 1.7 percent this year, headed for a second quarterly loss. The State Treasury raised $230.11 million in auctions of one-, two- and three-year dollar-denominated bonds this month, about $70 million short of its target. Banks had less appetite for the longer-term paper. Bankers said dollar deposits at most institutions are short-term, hence the higher demand for shorter-term bonds. Five-year bonds gain Vietnam’s five-year bonds rose for a fourth day on speculation slowing economic growth increased demand for the relative safety of government debt. The economy expanded 3.1 percent in the first quarter from a year earlier, the General Statistics Office said March 27, less than half the 7.5 percent pace recorded in the same period in 2008. The government forecasts gross domestic product will rise 6.5 percent this year, while Credit Suisse Group AG predicted March 18 it may be as low as 2 percent. “The GDP outlook is expected to support bond prices in the long-term,” said Tran Kieu Hung, a Hanoi-based fixed-income trader at Bank for Investment & Development of Vietnam. The yield on the five-year note dropped 0.025 percent to 9.15 percent as of 3:20 p.m. in Hanoi, according to a daily fixing price from 10 banks compiled by Bloomberg. The securities are poised for a quarterly gain, pushing the yield down 0.085 percent. Source: Reuters, Bloomberg

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"Chúng ta chơi trò sụp đổ kinh tế nhé. Tớ sẽ là AIG" - "Này thì AIG!!!"

Tại văn phòng tư vấn việc làm: "Tôi đang tìm một vị trí lãnh đạo cao cấp, nơi vẫn có thể được nhận tiền thưởng dù kinh doanh thất bát. Bà biết đấy, đại loại như vị trí của mấy ông ở AIG ấy mà".

Cái giếng không đáy AIG.

"Tên cướp" AIG nói với nước Mỹ: "Bây giờ thì đưa tiền thưởng cho ta".

Tên tập đoàn AIG được phiên âm theo nghĩa khác - Absolutely Incredible Greed - tức là Tuyệt đối vô cùng tham lam.

Bữa tiệc trên đống tiền của các đại gia AIG với hàng nghìn người dân đang chết đuối xung quanh. AIG: "Huhm. Tôi ghét phải nhìn thấy cảnh tượng như thế này. Nên dùng vang đỏ hay vang trắng thì thích hợp với dịp này nhỉ".

Cướp biển 1 (Quốc hội) nói với cướp biển 2 (AIG): "Ông có thể làm ơn trả lại tiền thưởng cho tên kia (người đóng thuế) được không? Rồi đằng nào ông cũng có thể lấy lại trong dịp khác mà".

AIG: "Haha, lũ ngu ngốc. Ta đã đầu tư hết tiền vào Bernard Madoff rồi".

AIG: "Đây là chiến lợi phẩm (tiền cứu trợ của chính phủ) của tôi. Tôi muốn làm gì thì làm".

Tổng thống Obama không còn có thể kiểm soát con lợn tham lam AIG.

Con chó dữ tợn AIG đã gặm nát cánh tay của người đóng thuế.

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