[Update] Vietnam on Bloomberg, Reuters, WSJ

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Vietnam’s Vinacomin to Issue VND3Trl Bonds

The country's largest mining firm, Vietnam National Coal and Mineral Industries Group (Vinacomin), plans to issue 3,000 domestic bonds this year at 1 billion dong (US$48,000) each. The bond term will be for 5-7 years.

Chairman of the group's member council Tran Xuan Hoa said the capital mobilised from the bond issuance would be used to boost investment, business and production operations.


The group pledged it would manage and use the capital in accordance with its set purposes. The 2012 bonds would be a safe and effective investment, it said.


As part of a joint venture, acting as an issuance agent, Deputy General Director of the Viet Nam Bank for Industry and Trade (Vietin Bank) Le Duc Tho confirmed that Vinacomin's 2012 domestic bond issuance would follow the country's regulations as well as correspond with international standards. The bonds would enjoy floating interest to be paid annually, he said.


Deputy General Director of Vinacomin Nguyen Van Bien said his group would use the capital for projects in the 2011-15 period, which had been already approved by the Prime Minister. These projects were very important in contributing to ensuring the economy's need for coal and natural minerals and national energy security as well as economic development.


A report made after auditing showed the group's revenue reached 87.6 trillion dong ($4.3 trillion) in 2011, making a profit of 8.6 trillion dong ($413 million). Nearly 137,000 workers had an average monthly salary of 8 million dong ($380.95) each.


The group expects to earn 96 trillion dong ($4.6 trillion) this year.


At present, Vinacomin has been exploiting 23 open-cast coal mines and 46 coal pits. An alumina production factory, the first of its kind in Viet Nam, will come into operation by the fourth quarter of this year. Another will be operational at the same time next year.


The group has five electricity plants with a combined capacity of 1,110MW and is building four others with a combined capacity of 720MW.

Source VNA

 

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Vietnam to Publish State Company Results After Scandals

By Bloomberg News - May 31, 2012 9:28 AM GMT+0700

Vietnam’s state-owned companies are set to begin publishing audited earnings for the first time as the government improves oversight and tries to reassure investors following losses and corruption scandals.

All state-owned companies will have to publicly post results online at least once a year under rules expected to be signed by Prime Minister Nguyen Tan Dung within the next few weeks, Dang Quyet Tien, deputy head of the finance ministry’s corporate-finance department, said in a May 29 interview in Hanoi. In some cases, financial statements will be required quarterly, he said.


Pedestrians and traffic pass down a street decorated with national flags in Hanoi, Vietnam. “It’s a fundamental change,” said Dang Quyet Tien, deputy head of the finance ministry’s corporate-finance department. In some cases, financial statements will be required quarterly, he said. . State-owned companies will be required to publish information including sales, profit, losses, debt, return on assets, return on equity, cash flow and salary ranges, he said. Photographer: Justin Mott/Bloomberg

“It’s a fundamental change,” Tien said. State-owned companies will be required to publish information including sales, profit, losses, debt, return on assets, return on equity, cash flow and salary ranges, he said. Unlisted state companies only compile earnings once a year and there is no requirement to release the data publicly.

The regulations, which will probably come into effect in the second half, will also detail ministries’ responsibility over companies as well as potential penalties, Tien said. Vietnam is stepping up scrutiny as police seek an ex-head of the nation’s biggest shipping line accused of mismanagement and after eight shipyard executives were jailed for losses in March.

“It would be great if the government could begin to impose discipline on these firms, through transparency and forcing them to announce to the world exactly how they make their money,” said Jonathan Pincus, a Ho Chi Minh City-based economist at the Harvard Kennedy School’s Vietnam program. “The public tolerance for very risky speculation in the state sector is zero at this point.”
Downgrades

Concerns about a lack of financial transparency contributed to Standard & Poor’s downgrading Vietnam to BB-, three levels below investment grade, in December 2010. Moody’s Investors Service cut its rating on the country to B1, four below investment grade, the same month.

The police said this month they are looking for Duong Chi Dung after the ex-chairman of Vietnam National Shipping Lines fled his home in Hanoi on May 17. Dung, who has been suspended from his current post as head of the Vietnam Mari-time Administration, is accused of “intentionally violating state regulations on economic management, causing serious consequences,” according to a posting on the government website last week, citing Col. Tran Duy Thanh, head of the economic- crime investigation bureau.


Dung and two other former executives at the ship and port operator, known as Vinalines, were involved in falsifying contracts that raised the cost of a floating dock to $24.3 million from $14 million in 2007, according to a May 22 posting on the government website.

“The Vinalines case has created pressure on the government to move faster with rules to scrutinize companies,” said Nguyen Duc Kien, deputy head of the National Assembly’s economic committee. “It had discussed this before, but hadn’t done much.”

Former executives at Vietnam Shipbuilding Industry Group were imprisoned for as long as 20 years in March after a probe into the company’s near collapse in 2010 under $4 billion of debt. Vietnam Electricity Chairman Dao Van Hung was also fired in February after the power company lost 11.5 trillion dong over two years, according to postings on the government website.

“We are concerned when we hear stories, reports about problems in the state enterprise sector,” Victoria Kwakwa, the World Bank’s Vietnam country director, said May 28. “You need to ensure accountability. You need to have clear targets for performance that SOEs are held accountable for. You need modern, clear management and governance.”

To contact Bloomberg News staff for this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

 

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PRESS DIGEST - Vietnam newspapers - May 31

HANOI | Wed May 30, 2012 10:16pm EDT

May 31 (Reuters) - These are some of the leading stories in the official Vietnamese press on Thursday. Reuters has not verified these stories and does not vouch for their accuracy.

ECONOMIC AND GENERAL NEWS:

VIETNAM NEWS

- Vietnam and China concluded the first round of negotiations on cooperation in less sensitive fields at sea, reaching high consensus on the principle of mutual respect, equality and mutual benefit.

HANOI MOI

- Vinasat 2, Vietnam's second telecoms satellite, is now in its correct orbit after its launch earlier this month and manufacturer Lockheed Martin Corp will hand over operations to Vietnam Telecoms International Co in July, state telecoms group VNPT said.

THOI BAO KINH TE VIETNAM

- Vietnam's May output of oil products dropped 44 percent from April to 309,000 tonnes as Dung Quat oil refinery shut operations for a general check, the Industry and Trade Ministry said.

- Vietnam will not impose import taxes on a number of Cambodian agricultural products, including rice, coffee and cashew through 2013.

 

[phuong1290]

Đã GC và FF rùi ak b?

 

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Eximbank lends $100 mln to Vietnam Air for Airbus planes

HANOI | Thu May 31, 2012 4:05am EDT

May 31 (Reuters) - Vietnam's Eximbank has signed a credit agreement to lend $100 million to national carrier Vietnam Airlines to help it purchase four Airbus Industries passenger jets this year, the central bank said on Thursday.

The 10-year loan will help Vietnam Airlines take delivery of four Airbus A321s in 2012, part of its order for 26 Airbus planes for the 2011-2014 period, the State Bank of Vietnam said in a statement.

(Reporting by Ho Binh Minh; Editing by Ed Lane)

 

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Vietnamese Bonds Advance on Speculation More Rate Cuts Coming

By Bloomberg News - May 31, 2012 5:32 PM GMT+0700

Vietnam’s two-year bonds advanced, pushing the yield down by the most in more than two weeks, on speculation slowing growth will prompt more interest-rate cuts. The dong was steady.

Deputy Prime Minister Nguyen Xuan Phuc said on May 21 that the economy is showing signs of a slowdown. The country reduced borrowing costs for a third month in May. Gross domestic product increased 4 percent in the first quarter, the least since 2009, official data show.

“We expect another 200-300 basis points of rate cuts over the next six to nine months as growth risks take precedence over inflation concerns,” Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. wrote in a research note yesterday.

The yield on the two-year bonds fell 21 basis points, or 0.21 percentage point, to 8.94 percent today, the most since May 15, according to a daily fixing rate from banks compiled by Bloomberg. The yield on the five-year notes dropped two basis points to 9.61 percent. The yields on the two tenors decreased 1.81 percentage points and 1.04 percentage points this month.

The State Treasury sold 55 percent of the 2 trillion dong ($96 million) of two-year debt offered at an auction this week but only 27 percent of the 3 trillion dong of five-year securities, according to a statement on the stock exchange’s website.

“Banks may be preferring government bonds with shorter terms,” said Ha Thi Quynh Trang, a Hanoi-based fixed-income trader at Bank for Investment & Development of Vietnam. “The economy may not be stable in the next few years.”

The dong was little changed today and this month at 20,868 per dollar as of 4:20 p.m. in Hanoi, according to data compiled by Bloomberg. The State Bank of Vietnam set the currency’s reference rate at 20,828, unchanged since Dec. 26, according to its website. The dong is allowed to trade as much as 1 percent on either side of the rate.

To contact Bloomberg News staff for this story: Diep Ngoc Pham in Hanoi at dpham5@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

 

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Investors believe in VN’s long-term growth

(31/05/2012)

At the Vietnam Business Forum (VBF) on May 29, investors expressed their continued belief in Vietnam’s long-term growth, as macro-economy has improved due to the Government’s timely effective measures.

The VBF is a dialogue channel between the Vietnamese Government, business community in Vietnam and international donors.

According to Mr. Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry (VCCI), many enterprises are facing difficulties in production and business. The Government on May 10 issued a resolution on some measures to remove the obstacles against them.

At the forum, foreign investors said they want stronger transparency in investment and business in Vietnam, shorter time for licensing investment projects, especially in such big cities as Hanoi and Ho Chi Minh City.

To lure more foreign direct investment, especially in hi-tech sector, Vietnam should effectively implement laws and regulations on intellectual properties.

Country Director of the World Bank in Vietnam, Ms. Victoria Kwakwa, said the rapid economic growth has become a springboard for poverty reduction and life quality of Vietnamese people, so slower growth can affect the society. Recent growth-accelerating measures taken by the Government should be more inclined to long-term, she said.

At the forum, the State Bank of Vietnam and the Finance Ministry were asked to allow foreign investors to raise the stake they can hold in banks in Vietnam, currently capped at 20%. Strategic partners should hold stakes of up to 30%.

Speaking at the event, Deputy Prime Minister Vu Van Ninh said Vietnam’s economy is still facing numerous difficulties, thus, the Government would be keen on curbing inflation, stabilizing macro-economy, maintaining reasonable growth along with renovating growth model and restructuring the economy.

He said the Government would issue policies to improve the country’s business environment toward sustainable development.

PV (source: chinhphu.vn)

 

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Finance companies may be merged with banks

31-May-2012 Intellasia | Vneconomy | 1:41 PM

The State Bank of Vietnam (SBV) is drafting a circular guiding the reorganisation of credit institutions, creating a legal basis to promote the restructuring process.

When finalised and issued, this will be an important document following the central bank’s Circular No 04/2010/TT-NHNN stipulating the merger, consolidation and acquisition of credit institutions.

The scope of the draft circular will be conditions, dossiers, order and procedures for approving the reorganisation of credit institutions in Vietnam. The reorganisation of credit institutions as provided in the draft circular covers only the merger, consolidation and changes of legal form of credit institutions.

Accordingly, forms for merger and consolidation of credit institutions are determined in five cases including banks, finance company being merged into a bank, finance company being merged into another finance company, financial leasing company to be merged into another financial leasing, people’s credit fund to be merged into another people’s credit fund; microfinance institution to be merged into another microfinance institution.

In addition, the draft circular also specified many cases and gave more detailed guidance on the implementation of the legal forms for the transfer of credit institutions.

As originally drafted, this provision will ensure the legacy of provisions in Circular No. 04/2010/TT-NHNN stipulating the merger, consolidation and acquisition of credit institutions and comply with the contents in the Law on Credit Institutions and Business Law, at the same time avoid legal troubles that may arise from the merger and consolidation amongst credit institutions.

 

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Vietnam Scandal to Boost State Firm Disclosure: Southeast Asia

By Bloomberg News - May 31, 2012 3:22 PM GMT+0700

Vietnam’s state-owned companies, accounting for a third of the economy, are set to begin publishing audited earnings as the government boosts oversight and reassures investors after losses and corruption scandals.

The companies will all have to publicly post results online at least once a year under rules expected to be signed by Prime Minister Nguyen Tan Dung within the next few weeks, Dang Quyet Tien, deputy head of the finance ministry’s corporate-finance department, said in an interview in Hanoi. In some cases, financial statements will be required quarterly, he said.

“It’s a fundamental change,” Tien said. State-owned companies will be required to publish information including sales, profit, losses, debt, return on assets, return on equity, cash flow and salary ranges, he said. Unlisted state companies only compile earnings once a year at present and there is no requirement to release the data publicly.

The regulations, which will probably come into effect in the second half, will also detail ministries’ responsibility over companies as well as potential penalties, Tien said. Vietnam is stepping up scrutiny as police seek an ex-head of the nation’s biggest shipping line accused of mismanagement and after eight shipyard executives were jailed for losses in March.

“We’ll need to improve our accounting and reporting process, but that’s good,” said Nguyen Van Bien, deputy general director of state-owned Vietnam National Coal-Mineral Industries Group, the country’s biggest miner. “More detailed results will help the government grade companies better, and investors will have more information before investing.”
KPMG, Ernst & Young

Under the new regulations, state companies will appoint independent auditors to examine their financial statements before they are posted online, Tien said. The companies will be encouraged to select from among the largest international auditors such as KPMG LLP, Ernst & Young LLP, Deloitte Touche Tohmatsu Ltd., PricewaterhouseCoopers LLP, he said.

“It would be great if the government could begin to impose discipline on these firms, through transparency and forcing them to announce to the world exactly how they make their money,” said Jonathan Pincus, a Ho Chi Minh City-based economist at the Harvard Kennedy School’s Vietnam program. “The public tolerance for very risky speculation in the state sector is zero at this point.”

Concerns about a lack of financial transparency contributed to Standard & Poor’s downgrading Vietnam to BB-, three levels below investment grade, in December 2010. Moody’s Investors Service cut its rating on the country to B1, four below investment grade, the same month.
Slowest Improvements

Vietnam has encouraged state-owned companies to list on the stock exchange and sell non-core businesses to tackle inefficiencies that have weighed on the economy. The nation’s industrial productivity grew an average of less than 1 percent annually over the past decade, the slowest rate in Southeast Asia, according to a Jan. 20 Harvard Kennedy School policy discussion paper, based on World Bank’s Development Indicators.

The state sector’s share of the economy has declined to 33 percent of GDP in 2011 from 40 percent in 1994, while the foreign share has increased to 19 percent in 2011 from 6 percent in 1994, said Art Woo, a Hong Kong-based director of sovereign ratings at Fitch Ratings.

The police said this month they are searching for Duong Chi Dung after the ex-chairman of Vietnam National Shipping Lines fled his home in Hanoi on May 17. Dung, who has been suspended from his current post as head of the Vietnam Mari-time Administration, is accused of “intentionally violating state regulations on economic management, causing serious consequences,” according to a posting on the government website last week, citing Col. Tran Duy Thanh, head of the economic- crime investigation bureau.
Falsifying Contracts

Dung and two other former executives at the ship and port operator, known as Vinalines, were allegedly involved in falsifying contracts that raised the cost of a floating dock to $24.3 million from $14 million in 2007, according to a May 22 posting on the government website.

“The Vinalines case has created pressure on the government to move faster with rules to scrutinize companies,” said Nguyen Duc Kien, deputy head of the National Assembly’s economic committee. “It had discussed this before, but hadn’t done much.”

Former executives at Vietnam Shipbuilding Industry Group were imprisoned for as long as 20 years in March after a probe into the company’s near collapse in 2010 under $4 billion of debt. Vietnam Electricity Chairman Dao Van Hung was also fired in February after the power company lost 11.5 trillion dong over two years, according to postings on the government website.

“We are concerned when we hear stories, reports about problems in the state enterprise sector,” Victoria Kwakwa, the World Bank’s Vietnam country director, said May 28. “You need to ensure accountability. You need to have clear targets for performance that SOEs are held accountable for. You need modern, clear management and governance.”

To contact Bloomberg News staff for this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

 

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Billionaire City Belies Capitalism’s Victories

By William Pesek Jun 1, 2012 2:00 AM GMT+0700

Suddenly, it’s not much fun being Hong Kong.

Riding the dragon’s tail was thrilling while it lasted. The 10 years after China joined the World Trade Organization in 2001 saw one of history’s greatest booms, one that bestowed enormous riches on the city of 7 million people. The ranks of Hong Kong’s billionaires swelled along with hubris about its central place in the Asian century.

That was until the Chinese slowdown, which almost everyone said could never happen. Data on China’s trade, production and construction paint a grim picture, as do Europe’s debt crisis and slowing world growth.

Hong Kong’s wide-open economy might have a problem that few want to admit: It may be a case study in the flaws of one brand of capitalism.

The city is more than a proxy for concerns about China. It’s a laboratory for the brand of finance-driven capitalism that not so long ago was heralded as the model for others to follow. Small, laissez-faire Hong Kong was the world’s special- enterprise zone. Now the world awaits a judgment on the Anglo- Saxon economic model.
Economic Canary

As test cases go, Hong Kong hardly looks like a breakthrough. The free-market crowd adores the city for its low taxes, unrestricted entry of foreign capital and rule of law. It is routinely ranked the freest economy anywhere. Never mind that its leader is picked by China; its currency is pegged; it is home to the only state-backed Disney theme park; and a handful of oligarchs rule the place. To the true believers, this is market-freedom central.

Yet what have Hong Kongers gotten out of their emancipated economy? The highest income-inequality gap in Asia. A widening divide between rich and poor is tolerable if it is tempered with hope that it is bridgeable. But Hong Kong’s government is failing on this front. Politically connected tycoons have enriched themselves from monopolies in power generation, real estate, transportation and telecommunications. The 99 percent are falling further behind.

Hong Kong’s plan to ride out the global financial storm was twofold: First, encourage visits from 28 million mainland tourists a year to splurge at luxury shops; second, to spur immigration by hyper-wealthy bankers seduced by beggar-thy- neighbor tax policies. It isn’t clear that the opportunities created by this strategy are empowering locals to share in Hong Kong’s growth in the long run.

Promoting itself as the center of offshore yuan transactions doesn’t look like a long-term growth strategy, either. Once China brings those markets onshore, Hong Kong may be left out of the loop.

The school system churns out well-trained young people, but Hong Kong’s job-creation machine is coming up short. True, unemployment is just 3.3 percent. But what does the average Hong Konger who can’t get a job at HSBC Holdings Plc or billionaire Li Ka-shing’s Cheung Kong Group do for work? Pouring concrete, driving a bus or selling Gucci sunglasses or Prada shoes to their wealthy mainland cousins is fine, but do these jobs fulfill Hong Kong’s promise as an economic Mecca?

Local leaders seem clueless about all this. Donald Tsang, Hong Kong’s chief executive, dismissed the wealth gap as a byproduct of capitalism. Economics 101 tells Tsang that he can no more ignore the fallout from growing inequality than residents can overlook their city’s worsening air quality.
Clueless Leaders

And then there’s Henry Tang, who thankfully lost his bid to replace Tsang come July. Tang’s “Basement-gate” scandal left Hong Kong residents aghast as they were squeezed by surging rents and living costs. His lavish and illegally constructed underground playpen enraged the masses. Not the most perceptive head in the crowd, Tang says there’s ample proof that Hong Kong’s model works: Just look at the steady influx of chief executives and bankers.

Tang’s basement, replete with wine cellar and movie theater, became a rallying cry. So might the widening ethics investigation focusing on Tsang’s overseas trips on the yachts and jets of business owners. It is feeding outrage over the collusion between politics and the corporate world, not unlike the one sweeping the mainland.

The Bo Xilai scandal is shining a bright and unsparing spotlight on official corruption in China and how it stymies much-needed economic and political reforms. The epic wads of cash being amassed by the so-called princelings, the descendants of the Mao Zedong leadership generation, are making huge waves in the Chinese blogosphere. The timing poses a challenge to the legitimacy of China’s elites as the nation’s economic outlook turns negative.

Hong Kong has its own troubles with billionaires. The arrest of the Kwok brothers in March offered the possibility that Hong Kong was finally clamping down on the rich and unaccountable. In time, we will know if the bribery case against Raymond and Thomas Kwok, co-chairmen of Sun Hung Kai Properties Ltd., is a pivotal moment.

Yet if the world’s showcase economy can’t get things right, what hope is there for China? Or Vietnam and Myanmar, for that matter? Not much when the bellwether of this version of capitalism seems to be pointing in the wrong direction.

(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)
About William Pesek

William Pesek is based in Tokyo and writes on economics, markets and politics throughout the Asia-Pacific region. His journalism awards include the 2010 Society of American Business Editors and Writers prize for commentary.


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To contact the writer of this article: William Pesek in Hong Kong at wpesek@bloomberg.net

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net