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State-owned Vietnam National Shipping Lines has borrowed nearly US$32 million from banks to buy a large cargo vessel.

According to contracts signed Thursday in Hanoi, Vinalines will borrow $16.375 million from Vietnam Private Bank (VPBank) and $15.5 million from Ocean Commercial Joint Stock Bank (OceanBank) to buy the 56,057 DWT bulk carrier Sunny Glory. 

The boat, built in Panama in 2006, is expected to expand markets for Vinalines, especially where there is demand for the transport of ore, iron and other raw materials..

The loans will be returned in eight years.

PetroVietnam, the state-owned oil and gas group, broke ground Sunday on a 5,200-megawatt power system.

The state-owned energy consortium broke ground on the smallest of the three-plant Song Hau, on July 18. The 1,200-megawatt Song Hau 1 Thermal Plant with a cost an estimated US$1.5 billion.

It’s 2,000 megawatt sister plants (Song Hau 2 & 3) will be developed with the help of international partners.

The three-plant center will occupy 367 hectares; it is projected to go online by 2016. 

PetroVietnam has already developed a 1,500 megawatt electrical plant in Ca Mau Province and plans to throw up thermal plants in Thai Binh, Quang Binh and Soc Trang provinces. It also has proposed a 1,110 megawatt hydro plant in Laos.  The Song Hau project represents the consortium’s largest investment in electro-power to date.

Deputy Prime Minister Hoang Trung Hai has approved in principle a proposal to defer application of a rule that requires container truck drivers to upgrade their licenses until next year.

The proposal was made by the Ministry of Transport and the Ministry of Public Security following transport companies’ complaints that they were suffering losses with more than half their drivers not qualifying for the FC class licenses that the rule demands.

Under the new regulation issued by the transport ministry, all container truck drivers currently holding class C, D, and E licenses had to upgrade to class FC by July 1 this year.

The regulation was first scheduled for July 1, 2009, but delayed for one year. Despite the deferrment, many drivers have not upgraded their licenses for various reasons.

While a significant number feared that the courses would be time-consuming and affect their work, others waited for agencies to delay the regulation further or amend it, the transportation ministry said.

PetroVietnam Construction JSC, a subsidiary of state-owned Vietnam Oil and Gas Group, has announced it will build the country’s tallest tower in Hanoi with an investment of more than US$1 billion.

The 102-story PVN Tower has surpassed the 70-story Hanoi Landmark Tower to become the highest building licensed in the country so far, the Vietnam Economic Times reported on Friday.

PetroVietnam Construction has convened a group of experts to implement the project. The tower will be built on a 25 hectare area in Hanoi’s Tu Liem District. The construction date has not been released.

It takes 12 procedures and 94 days to start a foreign business in Vietnam, slower than the average in the East Asia and Pacific region and the world, said a new report by the World Bank Group.

A foreign business needed an average of 68 and 42 days to establish in regional and global countries respectively, said the Investing Across Borders 2010 report, which offers objective data on laws and regulations affecting foreign direct investment that can be compared across 87 countries.

In addition, the bank said foreign businesses in Vietnam must apply for approval in the form of an investment certificate from the Ministry of Planning and Investment, which takes an average of 57 days to obtain in lieu of the business registration certificate required of domestic businesses.

The bank said procedures were more complex because a foreign business must translate the documents of its parent company into Vietnamese and then get a licensing authority or a notary public to certify them as a “true copy” in the country of origin.

They must legalize said documents with the embassy or consulate of the country of origin in Vietnam and with the Vietnamese Department of Foreign Affairs, said the report.

It also provides indicators examining sector-specific restrictions on foreign equity ownership, access to industrial land, and commercial arbitration regimes in the countries.

It said foreign businesses were offered with limits in strategic services sectors like fixed-line and wireless or mobile telecommunications, electricity transmission and distribution, and select transportation sectors.

In accordance with Vietnam’s commitment to the World Trade Organization, foreign businesses were limited to provide capital amounting to 49 and 51 percent of the total investment in telecommunications infrastructure and services, according to the report.

It said the electricity transmission and distribution and media sectors operate under direct government control and are closed to foreign businesses while they can only provide a maximum share of 49 percent of capital in domestic and international air transportation industries.

The bank said foreign businesses were able to access industrial land and lease it for 50 to 70 years from developers of industrial zones or the state with land clearance processes taking from a few months to several years.

Time taken to lease private land was about 120 days in Vietnam compared to 66 or 61 days average in the region and around the globe, said the bank, adding that it did not take as long to lease public land in Vietnam (133 days) compared with the region (151 days) and the world (140 days).

It said courts do not enforce arbitration awards as guidelines issued by the government for Ordinance on Commercial Arbitration have contradictory provisions, making the arbitration regime less effective in Vietnam.

Foreign awards were enforced in court and the process would take between 13 to 17 weeks, said the bank in the report.

It said the report does not measure all aspects of the business environment that matter to investors. For example, it does not measure security, macroeconomic stability, market size and potential, corruption, skill level, or the quality of infrastructure.

However, the indicators provide a starting point for governments wanting to improve their global investment competitiveness, said the bank.

Total advertising revenues in Vietnam are expected to top US$3 billion in 2020, triple the amount of last year, as the industry continues to post impressive growth, an industry official said.

Ad revenues have expanded by 30-35 percent annually on average in recent years, said Do Kim Dung, vice chairman of the Vietnam Advertising Association.

Despite the economic downturn last year, the industry still recorded a growth rate of more than 15 percent.

Dung said local companies will continuously increase their advertising budgets as tougher competition requires them to promote their products and services more.

Spending on outdoor and point of sale advertising is also growing because large companies now want to have a direct impact upon potential customers, he said.

With positive market prospects, the industry is likely to achieve the $3 billion revenue target, Dung said, noting that last year’s figure of $1 billion was low considering a local market made up of 86 million people.

Ad revenues in Thailand, Singapore and Indonesia are two or three times higher than Vietnam’s, he added.

Vietnam"s telecommunications authorities has banned local mobile phone networks from cutting their rates by more than 15 percent, preventing them from selling below cost to compete against each other.

Vinaphone and MobiFone, both managed by state-owned Vietnam Posts and Telecommunications, and military-run Viettel early this month asked for government’s consent to cut rates by up to 20 percent. The proposals have been rejected. 

The Ministry of Information and Telecommunications said it is working on a formula to calculate cost prices of phone services and until the task is finished, network operators are not allowed to lower their rates by more than 15 percent, Pham Hong Hai, director at the ministry’s Telecommunication Department, told Thanh Nien. Cost prices are currently calculated and reported to the authorities by the companies themselves.

Viettel, Vinaphone and MobiFone are the three largest wireless carriers in Vietnam. They had requested permission to cut rates at the beginning of this year, but the Ministry of Information and Telecommunications rejected them, saying price cuts could hurt smaller companies in the market.

Vu Tien Duong, a senior official at Vietnam Posts and Telecommunications, said his company doesn’t want to lower rates as they are already too close to cost prices. But if other networks cut their prices, the company has to follow suit to keep its market share, he said, noting there was “competition pressure” from Viettel.

Elizabeth Fong, CEO of Vietnamobile, said the authorities should take measures to encourage mobile phone networks to compete on service quality, not on prices.

Vietnam has 152 million phone subscribers and 80 percent of them mobile phone, official statistics show.

The government has responded to complaints from trucking companies by suspending fines on truck drivers who fail to upgrade their licenses in line with a new regulation.

The move aims to ease difficulties at container ports that have been at a standstill since a new rule came into effect requiring all truck drivers to renew or upgrade their licenses.

Too few drivers met the requirements to upgrade, meaning that the country effectively lost 70 percent its drivers, slowing the shipment of goods across the nation to a snail’s pace.

The new government decision has suspended the fines for violating the rule until June next year.

A statement on the government website said drivers needed to be given more time to renew and upgrade their licenses.

The development came after local trucking companies asked the government to roll back its decision requiring commercial drivers holding class C, D and E licenses to upgrade to class FC, saying the measure has stopped movements at ports because most drivers do not qualify to apply for the licenses.

FC licenses require a minimum of 50,000 kilometers of logged driving without incident.

The decision, which remains in place, slowed traffic out of container ports through the first two weeks of July.

“It is good news for transportation firms to receive such a quick response from the government,” said Thai Van Chung, secretary general of the Ho Chi Minh City Goods Transportation Association.

Chung told Thanh Nien Weekly that drivers without FC licenses had been fined up to VND2-3 million (US$105-157) since the decision took effect in July 1.

He said suspending the fines would put things back to normal.

He added that many drivers had refused to drive without the new licenses they were not qualified to have.

The association said just 30 percent of drivers had successfully obtained the licenses so far while about 20,000 drivers still needed to upgrade their licenses. About 37 centers nationwide offer the training courses needed for FC licenses.

International coffee prices have risen nearly US$600 per ton over the last three months, but Vietnam’s largest coffee producer says it has yet to reap the benefits.

Nguyen Cong Hoang, deputy general director of Vinacafe, said his firm didn’t have the capital to buy coffee beans from farmers.

He said that while the firm should have been profiting big from the five-year price hike ($1,123-$1,700 per ton) on its commodity, Vinacafe factories were often short on materials.

Hoang said coffee processors depend on loans for more than 95 percent of their production costs, but that funding from banks had become increasingly difficult to access amid tightened lending policies.

However, Tran Thi Hong Hanh, deputy head of the State Bank of Vietnam’s Credit Department, said there was no shortage of capital at commercial banks and that the central bank had asked credit organizations to support export businesses.

The only explanation she could give for the alleged lack of funding was that commercial loans might possibly be tied up in “procedures” and that the central bank had issued no regulations to tighten lending.

Nguyen Van Cong, deputy chairman of Vietnam Cashew Association, also said that cashew firms had been unable to access much-needed loans.

He said association members needed VND7 trillion to support local production and the import of raw materials needed at processing plants.

The industry plans to process 50,000 tons of cashew nuts from local farmers and 300,000 tons imported from Africa and Indonesia in the second half of this year.

“It is contradictory that prices are going up due to a bad season around the globe while local processors are in a huge shortage of capital,” said Cong.

Cong said 80 percent of cashew businesses were small and medium sized firms that commercial banks were shying away from lending to.

He said the inability to borrow was adversely affecting the industry, its exports and its 150,000 workers.

The industry needs help from the government or its goal of $1 billion in export revenues for the year might not be reached, he added.

Tran Duc Tung, chief officer of Vietnam Pepper Association, also said his sector was suffering, despite higher prices.

Vietnam has exported $220 million in pepper so far this year, a 48 percent year-on-year jump. The industry plans to earn $440 million on the international market in 2010 compared to $338 million last year.

However, association members are worried they won’t be able to fulfill contracts with their customers by the end of this year as they don’t have enough money to collect pepper for their factories, Tung said.

He said some exporters had to accept low-priced orders with quicker payment guarantees just to stay above water, even while prices this year are forecast to skyrocket due to lower production in the world’s six largest pepper exporters, including Vietnam and India in the number one and two positions respectively.

India plans to slap antidumping tariffs on recordable DVD imported from Vietnam, citing predatory pricing.

India’s Directorate General of Anti-dumping said Vietnamese exporters are selling recordable discs 60.09 percent below Indian market value. Those looking to export the discs to India will now face a tariff of up to US$50.51 for every 1,000 units.

The official complaint to the Indian Directorate General was filed by Optical Disc Manufactures Welfare Association

Ritek Vietnam, a major manufacturer, will now pay $29.75 per 1,000 units under the new anti-dumping tax. So far, Ritek has been the only Vietnamese exporter to respond to the new rules.

The ruling also named DVD-R exporters from Thailand and Malaysia. The Indian watchdog group has imposed a lower antidumping tariff than Vietnam as their selling prices were found to be 22.51 and 34.05 percent respectively below market value, respectively. 

Vietnamese firms exported 57.56 million discs to India, accounting for 12.11 percent of the country’s DVD imports in 2008-2009, according to the directorate.

This is the third Indian ruling against Vietnamese products since Vietnam joined the World Trade Organization in 2007.

Last year they imposed antidumping duty of US$46.94 for every 1,000 units on recordable compact discs (CD-R) and tariffs ranging from $0.452 to $1.582 on compact fluorescent lamps bulbs from Vietnam.

Now is a good time for Vietnamese companies to start exporting to and investing in Myanmar as the closed economy has a huge demand for consumer goods, experts say.

When Myanmar’s economy is officially open, it will be difficult to enter the market because of tough competition, the Vietnam Economic Times on Thursday cited experts as saying.

Vietnam"s ambassador to Myanmar, Chu Cong Phung, said that with local production able to meet just 10 percent of demand, Myanmar has to depend heavily on imported goods. Vietnamese products have many opportunities to enter this market, he said.

According to the customs department, trade between Vietnam and Myanmar reached US$93 million last year, down 14.1 percent compared to 2008. Vietnam was the 14th largest exporter to Myanmar and main shipments were steel, drugs, medical equipment, production materials and cosmetics.

Bilateral trade recovered this year, reaching $70 million in the first five months, double that of the same period last year.

As importers in Myanmar are also exporters, they will not have problem making and receiving payments, Phung said. But since the economy is still closed, prices in Myanmar are lower than in the global market, he noted.

Vietnam has invested $173 million in 20 projects in Myanmar, much higher than the $30 million recorded prior to Prime Minister Nguyen Tan Dung’s visit to Myanmar this April.

Experts said despite the potential, Vietnamese investors should pay attention to certain difficulties in Myanmar including a highly bureaucratic economic system based on subsidies and the lack of a banking system to support payments.

Hoang Huy Ha, of the Bank for Investment and Development said his bank will open a branch in Myanmar soon with a capital of $200 million to facilitate trading between the two countries.

 Vietnam National Shipping Lines, the state-owned ship operator, said talks on asset transfers from Vietnam Shipbuilding Industry Group are ongoing as the government restructures the money-losing shipyard.

Vinalines Chairman and Chief Executive Officer Duong Chi Dung is leading a steering committee that is working on the issue, Tran Manh Ha, head of the shipping line’s legal department, said Thursday by phone. The company will report progress to the government every 10 days, he said.

Ha denied a Lloyd’s List report that the shipping line will buy 40 vessels from state-controlled Vinashin. The company will receive some assets following a government decision, he said, without elaborating.

The government this week suspended Vinashin’s chairman as it begins restructuring the shipyard following financial difficulties. Vinashin doesn’t have sufficient funds for some projects after customers and lenders were hit by the global recession that started in 2008, the Ministry of Transportation said July 1.

Calls to Vinashin Chief Executive Officer Tran Quang Vu’s mobile phone were unanswered on Thursday. Officials from Vinashin and Vinalines have discussed the transfer of seven transport and seaport units, according to a statement on Vinashin’s website.

Vinashin will sell 21 general cargo or bulk carriers, seven tankers, 10 box ships and two barge carriers to Vinalines, Lloyd’s List said Wednesday, citing an unidentified official at the shipbuilder.

Thu Duc Housing Development Joint Stock Corporation has decided to expand its business to Uzbekistan following a plan to invest in a real estate venture in the US last year.

The Ho Chi Minh City-based developer, backed by Citigroup Inc. and Deutsche Bank AG, plans to invest VND32.5 billion to build properties in the Central Asian country, the Vietnam Economic Times reported Wednesday.

General director Le Chi Hieu said the venture into Uzbekistan was a long-term one as land prices in the country are still low and the housing market has great potential for development.

The company will submit its plan to the government for approval soon, he said, without providing more details.

Thu Duc Housing received a license in February last year to set up a venture with US partners to invest in property development projects in the US for 20 years. The venture has a capital of around US$6 million.

The company has targeted total revenues of VND709.2 billion this year, a 15 percent increase over last year’s VND616.8 billion.

Commercial banks have lowered interest rates on deposits as requested by the government, but they fear the move may lose them customers.

Several bankers were quoted in a report published by news website VnExpress Wednesday as saying they are worried about attracting deposits following the interest rate cuts.

“Once deposit rates are lowered to around 11 percent a year and all perks are withdrawn, clients will be reluctant and consider carefully about whether to deposit their money at banks,” a general director of a bank in Ho Chi Minh City said.

Another banker who requested anonymity said it was necessary to cut deposit rates so that banks can lower lending rates and thus offer more loans. But he said

deposits were shrinking and rate cuts could even make them less attractive to clients. “There will certainly be a strain on money inflows at banks,” he said.

The State Bank of Vietnam said earlier this month that commercial banks in the country should gradually lower their interest rates on dong deposits to 10.5 percent a year next month and 10 percent by September.

Nguyen Hoang Minh, deputy head of the central bank’s HCMC branch, said most banks in the southern region have begun to lower their rates as requested.

Major lenders including Vietcombank and Asia Commercial Bank have brought their rates lower than the 10.5 percent level. Other banks now set their rates on dong deposits at around 11 percent a year.

Pham Quang Dung, deputy general director of Vietcombank, the country’s biggest listed lender, said that, in general, there was no serious concern about deposit rates being lowered to around 11 percent. With inflation at single digit levels, rates of between 10 and 11 percent still ensure a positive real interest rate for depositors, he said.

Since the new lower rates came into effect just several days ago, it was too early to gauge their impacts on the market, he said. “If all banks agree to lower their rates, there will be no flows of money from one bank to another.”

But he noted that as the gap between dong and dollar deposit rates has been narrowed, there can be a shift towards dollar deposits.

According to a weekly review published by the central bank Wednesday, partly-private lenders offered dollar deposit rates of as high as 5 percent a year last week.