| It’s necessary to filter foreign portfolio investment: officials (21/03) | |
Investors once breathed a sigh of relief when the Government announced it would not apply measures to control foreign portfolio investment flow in the stock market. However, the market has become stirred up again by the news that the Government will enact the regulation of monitoring securities companies, investment funds and fund management companies through many restrictions. The draft regulation has been facing strong opposition from the Vietnam Association of Financial Investors (VAFI), which said that 80% of investment funds would withdraw from Vietnam if the draft regulation was enacted. Phung Khac Ke, Deputy Governor of the State Bank of Vietnam (SBV), said that every country applies certain technical barriers to monitor the market and make it develop on the right track or the way the Government wants. Every country wants to seek prestigious and capable investors, which can ensure the sustainable growth of the market. “These are technical barriers, not policy barriers,” Mr Ke stressed. When asked if the majority of the investment funds would withdraw from the market, Mr Ke said that the regulation, if enacted, would not be retroactive, which means that the operational funds that cannot meet the new regulations would still be allowed to operate in Vietnam. “Only the investment funds to be set up after the regulation is enacted would have to meet the requirements. I think that the State Securities Commission (SSC) also thinks this way,” Mr Ke said. He added that the principle of non-retroactive effect would be suitable in this case, as investors have come to Vietnam in the early days of the stock market. Truong Van Phuoc, Director of the State Bank of Vietnam’s Transaction Centre, said that the question that policy makers always raise when compiling regulations is which goals the policies aim to. “If Vietnam wants to attract stable capital flow which can serve long-term development, it must have a suitable mechanism to filter capital. We have to, as Vietnamese people always say, pick our company,” Mr Phuoc said. However, Mr Phuoc said that state management authorities should consider carefully the measures to be applied, adding that administrative orders sometimes do not bring the desired effects. “The market should be controlled by economic measures rather than administrative orders,” he said. |
Sunday, September 2, 2007
It’s necessary to filter foreign portfolio investment: officials (21/03)
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Foreign investors not keen on Vietnam’s agriculture
Foreign investors not keen on Vietnam’s agriculture
 |
Vietnam has attracted US$63.7 billion of registered capital from foreign investors and $30 billion has been disbursed; only $3.78 billion (5.6% of the total) and $1.9 billion are the respective figures for agriculture.
The lack of a long-term FDI drawing strategy, poor rural infrastructure, low labour skills, high risks are still big barriers preventing foreign investors from accessing Vietnam’s agricultural sector.
Unattractive agriculture
The country currently has 758 foreign-invested projects in agriculture, which bring the annual turnover of around $312 million, including over $100 million from exports.
However, experts have said that investments in this sector have to face many latent risks from weather, market, low profit, and dependence on the growing periods of plants and animals.
As a result, foreign investors focus their money on projects that allow them to quickly recover their investment, such as producing animal feed and processing agricultural products instead of developing bio-technology in agriculture, creating new plant varieties by cross-breeding. Specifically, foreign investment in plantations, agricultural and animal feed processing projects accounts for 76% of the total foreign investment in agriculture.
Additionally, agricultural projects are often carried out in rural areas, where the supportive resources for investors are poor, resulting in the dissolution of up to 30% of projects.
Some investors need to use vast areas of land for their projects but provinces have allocated their land to farmers already. Agglomerating land to have a large production area is a decisive factor to attract foreign investment in agriculture but this is really a very difficult task for local governments because of the lack of a clear policy on compensation, tariff, and investment incentives.
A strategy for agriculture
The agricultural sector still lacks a strategy to lure foreign investment so one of the most important points of the “Strategy to attract and raise the effectiveness of foreign investment in agriculture”, which is being compiled by some state agencies, is defining the role of foreign investment in the needs of development investment of this sector, key projects that need foreign investment.
Accordingly, solutions to attract foreign investment in agriculture will include three major groups: raising the effectiveness and quality of planning tasks and development plans of each agricultural branch; making complete mechanisms and policies on encouraging foreign investment in agriculture; promoting foreign investment in agriculture.
Official development assistance (ODA) capital will be used to develop rural infrastructure, implement vocational training programmes for farmers, scientific research, and technology transfer in agriculture.
Foreign investors will be encouraged to invest in ago-forestry processing, afforestation-wood processing, animal husbandry and animal feed production.
This month the Ministry of Agriculture and Rural Development will issue the strategy and plan for the use of foreign investment to 2010. The government will approve and issue new policies to lure foreign investment into agriculture and forestry sectors. All of the moves aim to raise US$1.5 billion of foreign capital for the agricultural sector from now to 2010.
Source: VietnamNet
Banks look overseas
Under the approval of the State Bank of Vietnam (SBV), Sacombank has become the first commercial bank of Vietnam to have a representative office abroad. This move proves that Vietnamese banks now are not only focusing on competition in the home market but aspiring to go abroad.
Looking for foreign markets
A mission of Sacombank has gone to China to perform formalities to open the bank’s representative office in Nanning city, Guangxi province.
Chinese authorities have agreed in principle and the office will be put into operation later this year. At the same time, Sacombank has applied to open branches in Laos and Cambodia. The bank’s rep. office in China will survey the economic, finance and banking, monetary, and credit situation in China to seek business opportunities for Sacombank.
By opening this rep. office in Guangxi, Sacombank has become the first commercial bank of Vietnam having an overseas rep. office.
Opening rep. offices or branches is not a new thing for the Bank for Foreign Trade of Vietnam (Vietcombank). Several years ago, this bank had a plan to open a branch in the US but owing to many reasons, Vietcombank couldn’t enter this finance-banking centre.
In 1970, Vietcombank had a financial company in Hong Kong, the Vietnam Finance Company. At that time, the role of this company was great when international payment in Vietnam faced many difficulties. But now, as means of payment are diverse, Vietcombank needs to have a branch with many more functions.
With its potentials, Vietcombank could open branches in neighbouring countries but the bank has a bigger dream in wanting to set up a branch in the US.
“The first move abroad shows that we not only know how to take defensive measures but also attack,” said Dang Van Thanh, Chairman of Sacombank Board of Directors.
The prestige of banks
A banking expert raised concerns about a regulation which could hinder the operations of banks. Once he went to the My Xuyen Commercial Joint Stock Bank in the southern province of An Giang to exchange US$1,000 into Vietnam dong. The bank’s staff said that as a rural bank, My Xuyen didn’t have a licence to exchange foreign currencies and they told him to go to a gold shop next door.
“Why can a gold shop exchange foreign currencies but a bank with capital of VND500 billion (US$31.250 million) is not licenced to do so?” he asked. This shows that banks are being restricted by irregular rules.
Recently, three banks, the HCM City Housing Development Bank, Phuong Nam Bank and Saigon Bank, have been licenced to trade gold on foreign accounts, raising the number of banks permitted to do so to ten. The Southeast Asia Bank is permitted to perform payment factoring service.
The above expert said that these were high-class services that could increase the prestige of banks. “With those tools, banks can get nearer to people and enterprises,” he said.
Source: Sài Gòn Tiếp thị
Agribank joins parade of banks selling insurance
Agribank joins parade of banks selling insurance
The Bank for Agriculture and Rural Development of Viet Nam (Agribank) yesterday launched Agriculture Bank Insurance Joint Stock Corp (ABIC), which will operate non-life insurance services.
The corporation has VND160 billion (US$10 million) in chartered capital, of which Agribank holds a ruling stake of 47.81 per cent, Viet Nam Reinsurance Joint Stock Co holds 10 per cent and Agribank Leasing I&II companies hold 11.12 per cent.
At the launch ceremony, Agribank signed a contract to provide IT solutions to ABIC. At the same time, ABIC also signed two other contracts to supply insurance services to TMT Motor Joint Stock Co and Long Hai Technologies Applying and Transferring Joint Stock Co. Financial terms of the three contracts have not been released.
"With a very large operational network, the company will provide special insurance services to support remote rural areas. Our network coverage will be considered as our main advantage over competitors," said Chief Executive Officer of ABIC Nguyen Huu Luong.
The corporation would also try to achieve targets ratified by the Prime Minister so that by 2010, revenues from insurance services in rural areas will reach VND9 trillion ($562.5 million), equivalent to 4.2 per cent of GDP, he added.
"We are keen to encourage competition in this sector. It is likely to heat up rapidly among domestic insurance enterprises in such areas as quality, operational network capacity and human resources," said Director of the Insurance Department under the Ministry of Finance Trinh Thanh Hoan.
In the first half of this year, revenues from the non-life insurance services fetched nearly VND4 trillion ($250 million), an increase of 38 per cent compared with the same period last year. And the total revenue in this sector increased to over VND8.3 trillion ($518 million).
According to Phung Dac Loc, chairman of the Viet Nam Insurance Association, the nation’s entry into the World Trade Organisation was expected to open more opportunities for enterprises but the competitive pressures on the market would also significantly increase.
Insurance enterprises are also getting ready to compete with other diversified financial institutions such as banks, securities firms and real estate investments.
Agribank is the third state-owned bank to join this sector and ABIC is the corporation with biggest charter capital among existing domestic insurance enterprises.
Early this year, Vietcombank announced a new partnership designed to help the bank break into the insurance market, signing a VND140 billion ($8.75 million) deal with Cardiff, the insurance provider for BNP Paribas Assurance, and the Southeast Asian Bank (SeABank), to create VCB Cardiff Life Insurance ltd.
Following this event, Bank for Investment and Development of Viet Nam (BIDV) bought interests in Australia QBE Insurance Co and in the Viet Nam-Australia Insurance Joint Venture. The bank founded the Bank Insurance Co with capital of VND80 billion ($5 million).
HSBC has also opened a representative office for HSBC Life International ltd in Ha Noi. The office will serve as spearhead for the bank to penetrate the domestic life insurance market.
Source: Vietnam News
What standards to be applied for coffee exports?
| What standards to be applied for coffee exports? | ||
| | ||
Coffee exporters cannot sign export contracts at this moment, as they do not know what standards will be applied for the exports, while the new coffee crop 2007-2008 is only one month away. Most refused coffee sourced from Vietnam The International Coffee Organisation (ICO), of which Vietnam is a member, has recently announced that the volume of refused coffee of Vietnam in the 2006-2007 crop kept increasing, according to the statistics of LIFFE. Among the refused 708,300 coffee bags (60 kg for each), Vietnamese products accounted for 88%, or 37,000 tonnes, an increase of 19% over the previous crop. Van Thanh Huy, Chairman of Vicofa (the Vietnam Coffee and Cocoa Association), said that most local coffee exporters still applied TCVN 4193:1993 standard, set in 1993, out of date compared to international standards. Currently, most exporters apply R2 standard for robusta. Every year, Vietnam exports 800-900,000 tonnes of coffee with 1% of impurities, and 8-9,000 tonnes are refused. Though having good aromatic flavour, Vietnam-made coffee is always ranked as 3rd or 4th class products due to impurities and broken beans. Many coffee exporters in Dak Lak said that they were capable of making coffee which could meet R1 standard, which is $30-40/tonne more expensive than R2 standard products. However, the application of R2 standard is the habit of enterprises. One coffee dealer related that he wanted to sell R1 coffee, but the buyers all wanted to buy R2 products, and he had to add ‘some more things’ to turn R1 into R2 coffee. Which one: previous or new standard to be applied? The 2007-2008 crop will begin in October, or just one more month. Normally, enterprises make deals and sign export contracts with foreign partners several months before the crop begins. However, coffee cannot do that this year, because they don’t know if the TCVN 4193:2005 will be applied this year. In May 2007, the Ministry of Trade, now the Ministry of Industry and Trade, sent a dispatch to coffee exporters, saying that the new standard TCVN 4193:2005 would be applied this year in order to upgrade the export quality. After that, the Ministries of Trade and Agriculture and Rural Development both sent dispatches to the Ministry of Science and Technology (MST) requesting that the ministry promulgate the regulations on examining coffee exports in accordance with TCVN 4193:2005, commencing from October 1, 2007. However, MST has not made any move. TCVN 4193:2005 has been recognised by ICO which wants Vietnam to apply it soon. However, problems still exist. Mr Huy from Vicofa, on one hand, thought that the new standard should be applied, on the other hand, said that the tardiness in enacting legal documents would put difficulties on exporters. In order to apply the new standard, enterprises need more time to upgrade the processing line and purchase more equipment. Nguyen Thanh Bien, Deputy Minister of Industry and Trade, has warned that once the new standard was applied, several tens of thousands of tons of lower quality coffee would be weeded out. Do Ha Nam, Director of Intimex, the biggest coffee exporter in Vietnam, said that farmers would need more time to change their habits of harvesting and drying; therefore, the new standard should not be applied right this year. “This would put hard pressure on tens of thousands of farmers who grow coffee nationwide,” Mr Nam said, adding that it was necessary to draw up a roadmap for the application of the new standard, while it could not be implemented immediately. Vietnam exported 893,000 tonnes of coffee in the first seven months of the year, earning $1.32bil of the targeted $1.46bil worth of coffee export turnover for the whole year of 2007. | ||
Source: Thời báo Kinh tế Sài Gòn |
