Thread: Latest news on the Dong!

FPT gains a wealth of foreign experience
13:52' 04/11/2006 (GMT+7)

Texas Pacific Group (TPG) and Intel Capital last week pumped $36.5 million to acquire 10 per cent of Corporation for Financing and Promoting Technology (FPT). Timothy D. Dattels, managing director of TPG Newbridge, explained the move.

Why does TPG invest in FPT?
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“I prefer to be in a leading company as an investor and FPT surely has that advantage.”– Timothy D. Dattels

Vietnam’s economy is growing at the world’s second highest rate after China. The IT sector, in particular, is booming. Ten years ago, when I came to Hanoi, it was hard to get an [internet] connection, today there are 13 million internet users. This company [FPT] is right at the heart of what is happening in the country and has excellent management and strong employee ownership. So we are excited about being a partner.

Do you see FPT’s leading position in Vietnam’s IT sector as a key factor behind your investment decision?

I think in an emerging market, the national champions do well, because they tend to attract the best and the brightest [in the] country and their involvement is very significant to this country’s growth. I prefer to be in a leading company as an investor and FPT surely has that advantage.

What do you expect FPT’s growth rate will be after receiving the two new strategic partners?

A number of people have asked me how quickly I think it is going to grow. FPT has grown at 70 per cent per annum in several years and I don’t think it will continue to grow at this pace. But I think it will have a very strong growth rate in the future, which is higher than the industry because it will be dominant due to its big market share. And the IT market grows at 25 per cent a year right now in Vietnam.

We have an idea on how it will grow. But I don’t want to make projections because it is not going to define what our term is and what the market does.

What will you do as an FPT’s strategic partner?

We can help make FPT become more attractive to overseas investors if FPT decides on a foreign [bourse] listing. Whether is does or does not is really up to the foreign investors to decide.

Could you say more specifically?

Firstly, my partner Vivek Paul will be a special advisor to Truong Gia Binh [FPT’s CEO] and management. Secondly, along with Intel, a lot of other connections we expect to put in the company’s portfolio.

And thirdly, we have a lot of experience with companies all over the world. We have different ideas on world standards of governance and reporting. Tactically and strategically we can help FPT grow its business but we are not running the company.

In which market would you prefer to recommend FPT to list shares?

It is really up to FPT. I like such Asian markets as Hong Kong and Singapore personally.

Does this deal signal the upcoming increase in US investments into Vietnam’s IT sector?

I think there is huge interest in Vietnam with foreign direct investment in Vietnam on a similar level to India. That is very big statement when you look at those economies. Our investment of $36.5 million is relatively small compared to the size of the economy.

What is important is this investment is in a Vietnamese-run, managed and owned organisation.

To be perfectly honest, the signing of this deal was coincidental with Vietnam’s final preparatory stage to join WTO. WTO accession is a reason for the anticipated opening of IT business and the anticipated dramatic growth.

Another reason which attracted me, frankly, was when I sat down with Binh and [his] team, I thought I was in Silicon Valley. I can understand people who own their business. So as an investor, if I put in a dollar, our interests are alive that is something I can understand.

Do you plan to look at other companies?

We are so busy working on this. [We] haven’t spent much time [on it], but we like financial services, banking, insurance and product distribution.

It is really dependent upon the circumstances, but there are a lot of opportunities right now in Vietnam. The government has a very ambitious equitisation programme that we are following closely.

(Source: VIR)

WTO: local banks and the local ‘war’
15:58' 05/11/2006 (GMT+7)
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VietNamNet Bridge – With the market-opening itinerary of seven years, competition in the banking market of Vietnam will be very fierce as many foreign banks want to join the market.

According to the head of Vietnam’s WTO negotiation mission, Luong Van Tu, when Vietnam integrates into the global trade playground, of 12 service fields, finance and banking is one that particularly must raise its management capability.

Foreign banks are coming

According to statistics of the State Bank of Vietnam (SBV), foreign banks have come to Vietnam in the following forms: branch (34), joint venture (4), and representative offices (40 from 10 countries mainly based in Hanoi or HCM City). Most of the foreign banks operating in Vietnam are in the top 1,000 banks of the world.

Fast growth, earning profits and deep penetration into the local market is the best way to describe the situation of foreign banks in Vietnam.

Recently, the Hong Kong and Shanghai Banking Corporation (HSBC), the largest foreign bank in Vietnam, bought 10% of chartered capital of the Technology and Commercial Bank of Vietnam (Techcombank) to become Techcombank’s strategic investor. Previously, ANZ bought stocks of the Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), Standard Chartered purchased shares of the Asia Commercial Bank (ACB), and OCBC Singapore bought shares of VPBank.

This trend is continuing as some other foreign banks have also expressed their plans to buy shares of Vietnamese commercial joint stock banks, namely Citibank with East Asia Bank.

Notably, foreign financial firms have also expressed their interest in establishing wholly foreign-owned financial companies in Vietnam. The “marriage” between local banks and foreign banks, according to experts, is a clever maneuver by foreign banks to get their foothold on the fertile land that domestic banks are holding.

By late 2005, the market share of foreign banks in terms of outstanding debt was more than 9%, up nearly 1% compared to 2004. The total outstanding debt balance of all foreign banks in Vietnam grew by nearly 30%, totaling VND49,000 billion. Overdue debt ratio fell from over 0.1% to 0.06%. Their deposit capital also increased by more than 20%, with corporate clients accounting for more than 70%.

Should local banks worry?

Dr. Le Xuan Nghia, Head of the SBV’s Development Strategy Department, said that the biggest challenge for Vietnamese commercial banks when Vietnam joins the WTO will be the increasing competition pressure in the local market.

The weakness of local commercial banks is their modest financial scale (averaging from $20 to 250 million); high percentage of bad debt under international accounting standards; low minimum capital safety index; poor capability in increasing capital and settling bad debts. In addition, their services are still simple.

As a member of the WTO, Vietnam will not be allowed to restrict the number of banking service providers, the total of transaction value of banking services, the number of banking services as well as the number of workers at banks.

“There will surely be a flow of high-grade and professional human resources from local to foreign banks because the need for human resources grows by at least 50% per year,” said Le Dac Son, General Director of VPBank.

The best way to keep employees, according to Mr Son, is for local banks to prepare preventive human resources.

The opening of the local financial market will heighten the market risks in terms of price, interest rate, and exchange rate. Domestic banks will have to face risks of crisis, the impacts from financial and economic shocks in the region and the world, the lost of advantages associated with client and distribution.

A challenge that local commercial banks must solve themselves is part of their strategic customers, which are under the protection of the State, can make higher risks on the operations of those banks in case they operate poorly.

What commitments must Vietnam fulfill?

As of 2006, the country has to gradually lift restrictions on stock ownership of financial institutions under the Vietnam-US bilateral trade agreement. By 2008, Vietnam will have to abolish all restrictions on capital contribution, services, transaction value at foreign banks under the ASEAN Framework Agreement on Services (AFAS).

Under WTO rules, banks will be allowed to receive deposits in Vietnamese dong without limitation by 2009 and 100% of foreign banks will be permitted to operate in Vietnam by 2010.

(Source: Tien Phong)

Hanoi opens door to luxury retailers
16:23' 04/11/2006 (GMT+7)

Hanoi’s luxury end retail market is getting more active with new space available for distributors of international brands.
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Luxury retailers are entering the Hanoi market in droves

CB Richard Ellis retail service director Richard Leech said the area around the Sofitel Metropole Hotel was the most sought-after in the previous quarter. Salvatore Ferragamo and Bally Shoes have taken stores at the Ngo Quyen street entrance into the hotel, complementing the Louis Vuitton shops, which has tripled space.

The Opera Business Centre on Ly Thai To street can boast a first for Vietnam with the opening of the first Burberry stores outside of an airport while Dunhill, Estee Lauder, Shiseido and My Way Café have also moved into the property that is due for completion soon opposite to the Hanoi Opera House.

CB Richard Ellis reveals that the high point of retail rentals for prime locations appears steady at around $90 per square metre per month, including service charges, excluding value added tax.

Pacific Place on Ly Thuong Kiet street is the next hotspot for retailers. The complex is due for completion next March consisting of 16,500sqm of grade A office space, 179 luxury apartments and 6,400sqm of prime retail, a food court and five underground parking levels.

Chesterton Petty Vietnam, the exclusive marketing agent for the complex, confirms the leasing of the retail component is proceeding at a rapid rate with the large majority of the space available having been secured by quality retailers.

Monthly rental levels for the Pacific Place’s ground floor is between $40 to $60 per square metre and Mark Farquhar, associate director of Chesterton Petty, said the retail space was oversubscribed.

Chesterton Petty has also been appointed as marketing agent for Ruby Plaza in Le Ngoc Han street. The 16-storey building will have six levels available for prime retailers in addition to a 680 square metre luxury day spa offering a full range of treatments and a rooftop bar restaurant with fantastic views across the city.

Farquhar said: “We see a unique opportunity for high-end retailers to locate themselves in what will be one of the most sophisticated retail environments in Vietnam.”

Developed by TTD Gems, Ruby Plaza has gross floor area of 11,000 square metre. Owner Do Minh Phu said the project would offer boutique, high-quality products for the discerning shoppers.

(Source: Dau tu)

VN delegation leaves for WTO admission meeting
11:17' 05/11/2006 (GMT+7)
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VietNamNet Bridge -
Vietnamese Deputy Prime Minister and Foreign Minister Pham Gia Khiem will lead a delegation to Geneva, Switzerland for a meeting on November 7 expected to welcome Viet Nam as the World Trade Organization’s 150th member.

The delegation, which includes Trade Minister Truong Dinh Tuyen and Deputy Trade Minister Luong Van Tu, Vietnamese chief WTO negotiator, will leave Hanoi today, November 5.

On November 7, the WTO General Council is due to approve documents setting out the terms of the country’s accession after 12 years of tough negotiations.

Trade Minister Truong Dinh Tuyen and WTO Director General Pascal Lamy will sign a protocol for Vietnam’s accession.

(Source: SGGP)

VNECONOMY updated: 06/11/2006


Vietnam will have to open its service market upon its accession to the WTO and signing up to Free Trade Agreements (FTA).


Apart from the opening of the goods market, Vietnam will have to open its service market upon its accession to the WTO and signing up to Free Trade Agreements (FTA).

So far, Vietnam has opened its local market within the frameworks of ASEAN and the U.S.-Vietnam Bilateral Trade Agreement (BTA).

In the coming time, Vietnam will have to further open the financial services market once it becomes an official member of the WTO and signs up to other FTAs.

Such financial services sectors as accounting, auditing, tax advice and consulting services, insurance services and securities investment advisory services are currently put under the country’s commitments to open the market within the frameworks of the ASEAN and the BTA.

However, at present, fields of services under the administration of the Ministry of Finance are opened the most under commitments in BTA.

Accordingly, the opening of local service market with the participation of foreign partners is made under the following forms:
(1) allowing overseas enterprises to provide services to individuals/organizations in Vietnam;
(2) allowing Vietnam-based individuals/organizations to use overseas services; (3) allowing foreign enterprises to establish their Vietnam-based trade agents, including representative offices, branches, joint-ventures and 100% foreign-owned enterprises, to provide services;
(4) allowing foreign individuals to independently provide services in the local market.

According to the Ministry of Finance, in the next five years, the opening of Vietnam’s service market will mostly focus on the implementation of the country’s commitments upon its accession to the WTO and announce its commitments at bilateral and multilateral negotiations to join the WTO.

The field of accounting, auditing and tax consulting services are fully opened for the first aforesaid three forms. Regarding the fourth form, Vietnam did not commit to open.

Regarding the field of insurance services, WTO commitments will allow overseas insurance companies to provide its services to foreign-invested enterprises and foreigners who are working in Vietnam. Furthermore, Vietnamese individuals and enterprises are allowed to use overseas insurance services when going abroad.

Restrictions on the establishment of a Vietnam-based legal entity of foreign insurance companies will be removed as soon as Vietnam officially join the WTO. Particularly, the market for mandatory insurance will only opened for 100% foreign-owned enterprises in early 2008.

Regarding securities investment services, Vietnamese individuals or organizations will be allowed to use overseas services. Also, establishment of representative offices and joint-ventures of up-to-49% foreign direct investment will be allowed as soon as Vietnam becomes an official member of the WTO.

5 years later, establishment of 100% foreign-owned enterprises which provide such services as management of assets and investment funds, deposits, offset payment, provision and transfer of financial information, etc.

However, Vietnam-based branches of foreign traders will not be allowed to provide such services as well as services in the form 1 & 4 aforesaid.

To facilitate the implementation of WTO commitments, documents on the implementation of the Securities Law should have detailed guidelines relating to the WTO commitments on the establishment of 100% foreign-owned securities companies and branches within 5 years since the country joins the WTO.

Since customs regulations aim at creating favorable conditions for trade development, WTO commitments in this field focus on custom valuation according to the provisions of the Customs Valuation Agreement (CVA), basing on transaction values instead of regulations on minimum import prices or a price list.

Moreover, Vietnam commits to fully implement WTO regulations relating to custom fees to ensure transparence.

Any one help me out, I am in CANADA, Toronto where can i buy?

Vietnam to be responsible member of WTO: official
10:30' 06/11/2006 (GMT+7)

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VietNamNet Bridge - "Vietnam will be a serious and responsible member of the World Trade Organisation (WTO)", said Truong Trieu Duong, Head of the Multilateral Trade Cooperation Department of the Foreign Ministry, referring to the Vietnamese delegation's visit to Geneva for a special session to admit Vietnam to the WTO, to be held in Geneva, Switzerland, on Nov. 7.

According to the Vietnamese Foreign Ministry, the delegation, led by Deputy Prime Minister and Foreign Minister Pham Gia Khiem, will leave Ha Noi on Nov. 5. It will include Trade Minister Truong Dinh Tuyen, who took part in the whole process of Vietnam's WTO negotiations, Chief of the Vietnamese delegation to the WTO negotiations Luong Van Tu, his entourage, and representatives from relevant agencies and the press.

At the admission ceremony, Deputy PM Khiem and WTO member representatives will witness the signing of a protocol by Minister Truong Dinh Tuyen and WTO Director-General Pascal Lamy. Deputy PM Khiem will also have bilateral meetings with representatives of several WTO member countries.

Vietnam officially applied for WTO membership in January 1995 and has gone through 15 required multilateral and bilateral negotiations with 28 partners. On Nov. 7, Vietnam will be officially recognised by the international community as a member with a similar trade mechanism as other countries.

This will bring great opportunities for Vietnam to enter the world market and attract foreign investment, but also put Vietnamese businesses in a more competitive environment with a lot of challenges, requiring them to make changes for development, said Duong.

At the last multilateral negotiation session on Oct. 26, international partners acceded that the admission of Vietnam at that time helped lessen the tension in the WTO as the Doha negotiation round was at a standstill.

(Source: VNA)

US President to pay longest visit to Vietnam
16:38' 06/11/2006 (GMT+7)
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Photo: AFP

VietNamNet Bridge - According to the Vietnamese Foreign Ministry, US President George W.Bush will visit Vietnam from November 17-20. This will be the longest visit by President Bush to a country so far.

His visit to Vietnam this November will be the second official visit by a US President to Vietnam, after the first by former President Bill Clinton in 2001.

President Bush will have a talk with Vietnamese counterpart Nguyen Minh Triet and meet with Party Secretary General Nong Duc Manh and Prime Minister Nguyen Tan Dung.

During the visit, the two sides will sign some bilateral cooperation documents. Mr Bush will also announce the aid for Vietnam to combat HIV/AIDS, which is rumoured will be the largest amount ever.

President Bush will visit HCM City and a hospital for HIV/AIDS patients. The president and the first lady, Laura Bush, will go to the Cua Bac church in Hanoi as well.

A high-ranking official of the Vietnamese Foreign Ministry confirmed that the US Secretary of State Condoleezza Rice would accompany Mr Bush. The US delegation coming to Vietnam for the 14th APEC meeting will comprise 1,000 members.

Escorting the US President will be high-ranking officials, bodyguards, representatives of 200 companies, and 300 correspondents. Among US businessmen will be the chief executive officers of leading groups like Citigroup, AIG, Visa, Fedex, General Motors, Microsoft, Time Warner, AT&T, Boeing, Ford Motors, General Electric, Motorola, Intel, IBM and Oracle.

(Source: TN)

Vietnam's WTO membership will cut both ways, bringing opportunities and challenges

By Ben Stocking
ASSOCIATED PRESS

9:58 a.m. November 6, 2006

HO CHI MINH CITY, Vietnam – Banking on new business after Vietnam joins the World Trade Organization, electrical appliance maker REE Corp. added a new office tower to Ho Chi Minh City's burgeoning skyline. But it's also bracing for an onslaught of competition from global giants like Toshiba and Samsung.

For REE Corp. and for Vietnam, WTO membership will cut both ways.

“Joining the WTO will create a lot of opportunities,” said Nguyen Thi Mai Thanh, the company's general director. “But it will also present strategic challenges.”

WTO members are expected to approve Vietnam's entry on Tuesday, bringing to an end 10 years of negotiations with the communist country, which has recently begun accelerating the pace of market reforms. The deal will take effect 30 days after Vietnam's National Assembly approves it, which it is expected to do swiftly.

Tuesday's vote is well timed, coming just days before Hanoi will be in the spotlight hosting the Asia-Pacific Economic Cooperation summit, which will draw leaders from 21 countries and thousands of business executives from around the world.

WTO membership will give Vietnam increased access to foreign markets and the opportunity to take trade grievances to a neutral arbiter, strengthening its hand against nations that accuse Vietnam of illegally dumping goods on their markets. In return, the country will be required to drop its high tariffs on foreign imports and eliminate subsidies for state-owned companies.

Foreign companies will enjoy far greater access to Vietnam's economy, which has averaged 7.5 percent growth over the last decade, one of fastest rates anywhere in the world.

However, American businesses may not be able to take advantage of the WTO agreement immediately because the U.S. Congress has yet to grant Vietnam “permanent normal trade relations” status. President Bush hopes a PNTR bill will be passed before he visits Hanoi for the APEC summit Nov. 18-19, but that looks unlikely.

Among other obstacles, Sen. Mel Martinez, a Florida Republican, has been blocking consideration of the bill due to concerns about a Florida pro-democracy activist who is being held in a Vietnamese jail, suspected of plotting against the Vietnamese government.

The PNTR bill is expected to be approved eventually. But without it, U.S. companies will not be able to enjoy the benefits of the WTO agreement – unless Vietnam decides unilaterally to treat them like other member countries.

Still, since the United States and Vietnam implemented a bilateral trade agreement five years ago, trade between the former foes has grown from $1.2 billion in 2000 to $7.8 billion last year.

Many Vietnamese businesses, especially garment makers, are excited about new export opportunities that WTO membership will bring. Others, like REE Corp., are eager to supply goods and services to foreign companies that come to Vietnam.

But some businesses here – particularly in banking, insurance and financial services – also worry about the new competition WTO membership will bring. State-owned domestic companies, still steeped in the old central-planning mentality, will inevitably be forced to change or perish.

“Foreign competition is bitter medicine for Vietnamese enterprises, but it will help them become stronger,” said Le Dang Doanh, an economist at the Ministry of Planning and Investment.

As of April 1, foreign banks will be able to operate their own, fully owned branches for the first time, said Alain Cany, head of the European Chamber of Commerce and director of HSBC Bank's Vietnam operations.

“We are in a country of 84 million, most of them very young people who like saving and like buying,” Cany said. “They will take loans from us and use our credit cards. It's going to be a great market.”

At the Eastern Asia Commercial Bank, one of Vietnam's more successful banks, director Tran Phuong Binh is rapidly installing new ATM machines and opening new branches, some in rural areas that will be difficult for foreign banks to serve.

In addition to introducing a new ATM card, Binh also is developing a “take out” service for customers, who can call and have money delivered to their house.

“We sometimes have to cross rivers to serve our rural customers,” Binh said. “I don't think foreign banks will be able to serve this market.”

Foreign investment in Vietnam has surged ahead of Tuesday's vote, rising 41 percent in the last year. Foreign firms have been encouraged by Vietnam's market reforms, which began tentatively in the late 1980s, moved in fits and starts during the 1990s and greatly accelerated over the last three years.

The government has approved new enterprise and investment laws that grant equal treatment to foreign and domestic firms, and it will soon approve a securities law that will increase the transparency of Vietnam's small but booming stock market.

“Entering the WTO sends a very important signal that everything they have done so far is not just temporary,” said Cristoph Wyesner, head of the European Commission's political, economic and trade section in Hanoi.

Vietnam's garment exports to the U.S. have skyrocketed, and the industry is hoping to reap even greater profits after joining the WTO, which will require the United States to lift quotas on Vietnam's garment exports. But expectations have been tempered by ongoing negotiations on the trade normalization bill.

In response to concerns raised by two senators from the textile-producing states of North Carolina and South Carolina, the U.S. Commerce Dept. has struck an arrangement under which it will keep a close watch on Vietnam's garment exports and initiate antidumping measures if the clothing is judged to be sold at lower-than-market costs.

Vietnamese garment manufacturers plan to tread carefully, limiting export growth to about 20 percent a year, said Nguyen Huu Binh, deputy general director of Vinatex, Vietnam's largest garment company, which produces clothes for Wal-mart Stores Inc., Nike Inc., and other U.S. retailers.

“We don't want them to bring antidumping cases against us,” Binh said. “That would be even worse than quotas.”

Rice exports soar, reap US$1.2b in 10 months

VNECONOMY updated: 06/11/2006

Rice exports over the past ten months have generated nearly US$1.2 billion in revenue, according to the Ministry of Trade.

Viet Nam is among the world’s largest rice exporters, shipping more than four million tonnes abroad since the start of the year.

The Ministry of Agriculture and Rural Development estimates that Viet Nam in 2006 will produce 36 million tonnes of rice, a 400,000 tonne increase from 2005.

Truong Thanh Phong, Chairman of the Viet Nam Food Association (Vietfood), says the country will be able to meet its export target of five million tonnes and sustain national food security due to a bumper harvest and inventory built-up during 2005.

Phong adds that global rice prices this year have hit decade highs, which has not only improved corporate revenues but also farm incomes. In the domestic market, the price of rice in the Cuu Long (Mekong) delta region has increased by VND 500-600 per kg compared to the same period a year ago.

As a result, there has been a noticeable impact on rural communities. Ba Huong, a farmer in Tay Ninh Province’s Ninh Dien commune, says he is very happy with his new tile roof house.

"This is all thanks to high rice prices in the world market," declares Huong.

The situation, though, has created some excess volatility in the domestic market. Shop owners in Tay Ninh Province’s Long Hoa market have commented that prices change daily by VND 30-50 per kg.

Deputy Minister of Trade Phan The Rue attributes rising global prices to reduced supply from Thailand, Pakistan and India.

Rue says Viet Nam has recently been awarded three major export contracts to Japan, the Philippines and Indonesia, which should guarantee strong corporate revenues throughout the remainder of the year.

The Vietfood has also worked closely with the Ministry of Trade to provide rice exporters with the latest information on pricing and supply. This puts local companies at an advantage during contract negotiations, Phong says.

Source: Vietnam News