Free tickets on offer
Mekong Aviation JSC (Air Mekong) will offer a promotional programme for flights between Ha Noi and HCM City, the carrier announced on Monday.
Passengers who buy two tickets, will be given one free. The offer lasts from January 13-23.
Despite difficult economic times, Air Mekong posted a 75 per cent occupancy rate last year. During the period, it performed 10,750 flights, carrying 710,000 people on 14 domestic routes.
Ha Noi hosts beverage fair
A fair showcasing international and domestic beverage brands will be held in Ha Noi, starting tomorrow.
Co-organised by the Viet Nam Beer, Alcohol and Beverage Association and the Viet Nam Exhibition and Fair Centre, the event will run for 10 days and supply quality drinks for the Tet holiday.
Vinaconex targets $40m revenue
Vinaconex Corporation hopes to make VND19 trillion (US$905 million) in turnover this year with VND852.3 billion ($40.6 million) in earnings before tax, up 1 per cent on last year.
Last year, the corporation continued to implement many big projects, including real estate.
From 2012-16, Vinaconex will continue restructuring.
PetroVietnam Insurance wins award
PVI Holdings has been listed as the Vietnamese Insurance Company of the Year in Viet Nam by World Finance, a British finance magazine.
It is the second time in succession that the company has won the prize.
In 2011, PVI Holdings’ revenue reached VND5,200 billion (US$247.6 million), 6 per cent above target. Profit was VND450 billion ($21.4 million), up 34 per cent over the previous year.
Help for entrepreneurs
Viet Youth Entrepreneurs is providing an opportunity for students to work as interns in entrepreneurial environments, including start-up companies and venture capital funds.
Students can also participate in a series of workshops, seminars and talk series simulating the process of building a venture.
The activities are aimed at building leadership capability, soft skills and an entrepreneurial mindset.
Backing the scheme are Stanford Technology Ventures Programme, HCM City National University, IDG, VinaCapital and others.
Fertiliser prices increase
PetroVietnam fertiliser and Chemicals company (PVFCCo) will increase fertiliser prices by 40 per cent this year.
A director of the company, Cao Hoai Duong, said the rise stemmed from a 40 per cent increase in input gas.
This year, the company plans to produce 800,000 tonnes of nitrogenous fertiliser and distribute 560,000 tonnes of urea made by Ca Mau Fertiliser Plant.
Stocking up for Tet
Central Quang Binh Province’s Industry and Trade Department will commodities worth VND850 billion (US$40.48 million) for the Tet holiday.
The goods will include 800 tonnes of rice, 600 tonnes of meat, 1,000 tonnes of seafood and 6,000 tonnes of vegetables.
The province has also made sure that petrol supplies meet demand and that companies supply kerosene, iodine salt and other essential goods at set prices.
Metro accepts ‘plastic’
Metro Cash and Carry Viet Nam will allow the use of credit card payments in its national system.
Vietinbank will also provide credit card services and ATMs at all Metro centres.
Gold decree takes shape
The government has required the State Bank of Vietnam to ensure its draft decree on gold trading with the State’s monopoly on gold bullion production as well as the export and import of gold material for production, according to a resolution issued at the government’s monthly meeting in December.
The resolution dictates that the decree recognize and protect the legal gold ownership of organizations and individuals and limit the use of gold as a form of payment.
The government has assigned the State Bank to coordinate with the Ministry of Justice, the Government Office, and relevant agencies to get ideas from government officials to perfect the decree.
The decree aims to restrict trade in gold bullion in order to stabilize the gold market, check hoarding and speculation, and minimize the influence of the gold market on monetary policy.
Tourism contributes significantly to national economy: world report
The tourism sector in Vietnam fetched VND205 trillion in 2011, accounting for 9.2 percent of the country’s GDP, while providing jobs for 402,000 local people, according to a report from the World Trade & Tourism Council.
The sector is predicted to earn more than VND390 trillion in 2021, making up 9.3 percent of the national GDP, and employ as many as 509,000 workers.
Foreign investment in tourism stood at VND90 trillion in 2011 and is forecast to reach VND163 trillion in 2021.
The World Trade & Tourism Council ranked the Vietnamese tourism sector 57th out of 181 nations in terms of general development, 83rd in its contributions to the national GDP, and 17th for its long-term growth prospects.
Banks again breach deposit rate cap
After staying cool for the last few months, the race to attract deposits among banks has become heated again, with many banks admitting to having broken the deposit interest rate ceiling.
At the review meeting on last year’s operations of commercial banks based in Ho Chi Minh City held yesterday, Truong Thi Thuy Nga, director of the HCMC branch of Vietcombank, admitted that the deposit interest rate amounted to 16 – 17 percent.
However, the cap set by the State Bank of Vietnam is only 14 percent a year.
Nga said she had to meet the major depositors , who are financial directors or major accounts of the businesses, in person, to persuade them not to withdraw their deposits and turn to other banks, which offer higher rates.
However, there are cases when she could do nothing but watch her bank’s mobilized capital flow to others, Nga said.
Also speaking at the meeting, a representative of the municipal Department of Industry and Trade said there is no other country that has lending interest rates as high as Vietnam.
Banks have to mobilize capital with an interest rate of 18 percent a year, so they have to charge borrowers with rates of up to 20 percent a year, discouraging the latter to access bank loans, he said.
“Thus, the central bank should stay firm on penalizing banks that breach the interest rate cap,” he urged.
For his part, Deputy Governor of the State Bank of Vietnam Tran Minh Tuan admitted that the banks had stopped violating the deposit interest rate regulation for a while, when the central bank intensified crackdowns on certain violators.
“Things have gone back to normal now,” Tuan said, adding that if the violations cannot be curbed soon, lending interest rates will never be cut.
He asked the banks to provide testimony so the central bank can impose strict sanctions on the violators.
He said many banks are also offering loans at low interest rates, but these loans account for just a small proportion of the banks’ total outstanding loans.
“For instance, a bank said it will allocate VND7 trillion for loans at interest rate of 17 percent a year, but this only accounts for 13 percent of total outstanding loans,” Tuan said.
“The remaining 87 percent belongs to loans with interest rate of 19.5 percent a year.”
The central bank said that 90 percent of the deposits of the public are short-term savings, mostly for just one month. Meanwhile, outstanding loans for medium- and long-term loans of banks currently account for as much as 47 percent of the total figure.
Thus, many banks have to break the interest rate ceiling to solve the liquidity problem, it said.
The central bank also admitted that its inspectorate tasks have not been conducted appropriately and effectively, a fact that ultimately resulted in the failure to detect the violators.
The regulations are not completely developed, leaving loopholes for banks to exploit, it said.
Industries urged to take inflation-control measures
Ministries and sectors need to draft measures to reach the target of single-digit inflation in 2012, says Deputy Minister of Industry and Trade Ho Thi Kim Thoa.
Thoa told the year-end meeting of the domestic market watch team here last week that industries and sectors this year should operate at full capacity to meet domestic demand for essential goods and improve distribution networks, with close co-operation on determining supply and demand for goods and reasonable changes in price.
It is imperative to ensure sufficient supplies of essential products and avoid price fevers, Thoa said. The Ministry of Industry and Trade will ensure sufficient supplies of electricity for production of essential goods, she added.
The Government also needs to devise further policies to support development of the domestic market, especially trade promotion programmes, she said. The ministry will continue to encourage export, limit the trade deficit and promote production of domestic goods.
Thoa urged the State Bank of Vietnam to stabilise foreign exchange rates and ensure foreign currency supplies for enterprises importing materials and equipment for domestic production, such as fuel, fertiliser, pig iron and pharmaceuticals.
According to the domestic market watch team, inflation spiked nationwide in the first seven months of last year due to soaring prices of rice and other food staples, as well as inflationary pressures worldwide.
Nguyen Tien Thoa, head of the Ministry of Finance’s Price Management Department, said Vietnam’s high inflation was also due to the low competitive capacity of the domestic economy, including low-quality growth, an ineffective investment structure and loose credit policies in previous years that caused economic growth to overheat.
Inflation rose at a rate of 18.58 percent in 2011, the General Statistics Office (GSO) reported last month. However, inflation began to slow in August due to such measures as tighter credit policies and State budget cuts.
Inflation fell from a one-month rate of 0.93 percent in August, to 0.82 percent in September, 0.36 percent in October, 0.39 percent in November and 0.52 percent in December. All of these figures were well below the rates during the first seven months of the year, which ranged between 1.09 percent and 3.32 percent per month, the GSO said.
For this year, the Government has targeted inflation below 10 percent, a growth rate of 6-6.5 percent, and a 13-percent increase in export turnover.
State Bank regulates overseas lending
The State Bank of Viet Nam issued Circular No 45/2011/TT-NHNN on December 30 regulating overseas lending and borrowing by credit institutions. Under the circular, intended to control outbound foreign currency flows, domestic credit institutions are only allowed to lend to an enterprise with capital contributed by a Vietnamese enterprise in the form of a direct overseas investment. The State Bank will approve registration and modifications of such loans within 30 days. Each loan must be made via a single bank account used for making and collecting on foreign loans. The credit institution must disburse and make all collections via this account. The circular takes effect on February 13.
New provisions on internal audit
The State Bank of Viet Nam issued Circular No 44/2011/TT-NHNN on December 29 replacing decisions No 36/2006/QD-NHNN and No 37/2006/QD-NHNN on internal audit of credit institutions, including branches of foreign banks. Under Circular No 44, credit institutions and branches of foreign banks must establish internal audit systems in compliance with banking laws, with an explicit and transparent allocation of powers and duties to personnel and departments and specifying risk limits for banking transactions.
Credit institutions and branches of foreign banks must also annually evaluate the audit system of each unit and department and submit reports on these evaluations to their management bodies, e.g., board of management, members council, or controllers committee, along with the State Bank branch.
Circular 44 also provides regulations on internal audit management and operation of interal audit departments, subject to the specific management and instruction of the credit institution’s controllers committee. For branches of foreign banks, internal audits may be conducted by the bank’s headquarters or regional office. Internal auditors must meet criteria and requirements set by Circular No 44.
Circular No 44 takes effect on February 12 and allows institutions six months to establish internal audit systems in compliance with the circular.
New asset, capital rules for insurers
The Government issued Decree No 123/2011/ND-CP on December 28 detailing the Law on Insurance Business and amending Decree No 45/2007/ND-CP of March 2007 on insurance, reinsurance, brokerage and agency operations. Pursuant to Decree No 123, foreign insurance brokerage enterprises providing out-bound, overseas insurance brokerage services must have total assets of at least US$2 billion, while the recquirement is $100 million for domestic brokerage enterprises.
Under the new regulations, reinsurers must have legal capital of at least VND400 billion ($19 million); life insurers must have legal capital of VND700 billion ($33.3 million); and insurers offering both life and non-life, at least VND1.1 trillion ($52.38 million). Enterprises offering health insurance must have legal capital of VND300 billion ($14.28 million).
Decree No 123, which takes effect on February 15, does not apply to social insurance, health insurance, deposit insurance and other non-commercial insurance operations conducted by the State.
Vinacomin rolls out updated business targets
The Viet Nam National Coal and Mineral Industries (Vinacomin) Group is to increase production for domestic use this year and invest in exploration to meet long-term development.
The targets the corporation said it had set for this year included selling 45.5 million tonnes of coal, an increase of 1 million against last year, of which domestic consumption would account for 31-32 million tonnes and exports would be 13.5-14.5 million tonnes.
That would reduce coal exports by 3.3 million tonnes to meet domestic demand, the corporation said.
Estimates indicated that domestic demand for coal would reach 32 million tonnes this year, up 4.2 million tonnes in comparison with last year.
Vinacomin general director Le Duy Chuan said coal exports would be reduced gradually in order to ensure national energy security. Total coal exports by 2015 were estimated to fall to around 8 million tonnes.
Vinacomin planned to increase the volume of run-of-mine coal (straight from the ground) to 48.9 million tonnes this year, a 2.4 per cent rise over last year.
It will invest around VND600 billion (US$28.8 million) beginning this year to boost the capacity of existing mines and open new mines in order to reach 65 million tonnes of coal products by 2015.
The corporation was expected to reap VND96.3 trillion ($4.6 billion) in total revenue this year, a modest increase over last year’s VND94 trillion ($4.5 billion)
In addition to the exploration plan for northeastern Quang Ninh Province’s coal fields and other important minerals such as copper serving sustainable development, the corporation saw new technologies as a key to enhancing productivity and promoting its growth.
With the aim of continuing to curb inflation and stabilise the economy, Deputy Prime Minister Hoang Trung Hai asked Vinacomin to increase investment from outside and allocate capital for exploration to evaluate coal reserves in Quang Ninh Province as well as the Song Hong (Red River) Delta.
Vinacomin would also have to co-ordinate with localities in the management of illegal coal trading and coal bandits.
Hai said Vinacomin must identify itself as a major importer of coal for power production and develop facilities at coal ports so the country could import around 10 million tonnes of coal by 2015 and 65 million tonnes by 2020.
“The corporation should take responsibility for training human resources,” Hai said.
Meanwhile, Vinacomin should also pay attention to technological innovation and investment, and promoting technology transfer.
Vinacomin last year produced 48.2 million tonnes of coal, contributing 6.7 billion kWh to the national electricity system and earned a revenue of nearly VND94 trillion ($4.5 trillion), up 15 per cent over the year’s target and 16 per cent over 2010.
Its profit reached 7.8 trillion ($371.4 million), adding 11 per cent compared to the annual plan.
The return on equity ratio last year was 30 per cent, ranking second to the National Oil and Gas Group (PetroVietnam). In addition, Vinacomin was able to secure jobs for its 138,000 employees, “which is a great effort in the context of a troubled economy”, Hai said.
“It was also a great effort for the corporation to invest in new mines,” Hai said.
Meanwhile, Vinacomin focused on 24 modernising the measuring control systems in methane fields and developed mine rescue teams.
Retail value climbs by 24.2% in 2011
The value of retail sales and services enjoyed a year-on-year increase of 24.2 per cent to VND2,004 trillion (US$95.5 billion) in 2011, announced the General Statistics Office (GSO).
However, if price increases were included in the figure, the growth was only 4.7 per cent compared with 2010, representing the lowest growth rate in the past four years, the office said.
In recent years, the total retail sales value surged by 6 per cent in 2007 and 2008, 11 per cent in 2009 and 14 per cent in 2010.
GSO economic experts said the low retail sales growth last year was due to the high consumer price index (CPI) of 18.58 per cent which forced the retail value of goods and services up by 24.2 per cent in terms of the actual amount paid but not in terms of volume and value.
Vu Manh Ha, a GSO expert on retail goods and service said a few groups of goods and services accounted for a large percentage of the total retail sales value and were priced higher than they were the previous year.
For instance, food prices increased by 29.34 per cent, with rice prices rising by 22.82 per cent, education costs rose by 23.18 per cent, and housing and building material prices surged by 19.7 per cent.
Input prices for production of goods and services also surged in comparison with 2010, Ha said.
The lower growth rate contributed to reducing CPI during the final months of the year, the trade deficit and curbing inflation. However, it also led to an oversupply of goods, boosted production costs and slowed business.
Families relocated for new urban area
HCM City Party Committee secretary Le Thanh Hai on Monday handed over keys to new apartments to 620 families whose houses were demolished to make way for the Thu Thiem New Urban Area in District 2.
Hai told them the city appreciated their contrib-utions to the city’s devel-opment, and was respon-sible for providing them with good living conditions.
Seven months ago, 512 other families were handed possession of apartments in the same resettlement area.
The 17.3-hectare area in An Phu Ward comprises a total of 1,844 apartments, which the builder, Nam Rach Chiec Company, started constructing in 2008.
The municipal Department of Construction said the quality of the apartments matched those in the Phu My Hung New Urban Area.
The District 2 People’s Committee has so far allotted 2,300 apartments and 850 land lots for resettled families.
Auto sales fall 12 per cent in December
Vietnam ‘s vehicle sales suffered a 1 per cent drop last year and a dramatic 12 per cent fall in December, the Vietnam Automobile Manufacturing Association (VAMA) said on Jan. 10, as the auto sector heads into a difficult year.
Slightly more than 110,000 vehicles were sold last year. The association, whose members’ sales accounted for the lion’s share on the market, said December sales were down 12 per cent year-on-year to 10,937 units.
VAMA attributed the fall to economic difficulties, high lending interest rates, and a State policy to tighten the purse string of all State agencies.
On the other hand, the shorter supply of auto components resulting from the Japanese tsunami and Thai flooding are also blamed for the fall in overall sales.
While commercial vehicles and SUV/MPV/Cross-over units saw a 15 per cent and 6 per cent decline at 46,000 units and 23,000 units respectively, passenger cars saw a 22.1 per cent jump at 40, 858 units.
Despite the stumble in sales last year, the “big three” are enjoying better sales than 2010.
Vietnamese car maker Truong Hai led the country’s sales last year among the 17 manufacturers in Vietnam , selling 31,801 cars, up 28.7 per cent from 2010, VAMA said.
Truong Hai assembles vehicles including the Republic of Korea ‘s Kia brand and buses.
Japanese Toyota ranked second, with 29,792 cars, up 26.9 per cent from 2010.
Meanwhile, US GM Deawoo sold 10,350 units, up 9.3 per cent year-on-year.
No prediction for 2012 sales has been made by the local industry.
However, according to a latest research report, “Vietnam Automobile Forecast 2014” despite the recent economic crisis, sales of passenger cars and MPVs in Vietnam are anticipated to post a CAGR (Compound Annual Growth Rate) of more than 5 per cent and 4 per cent, respectively during 2011-14.
The research was made by Global Information Inc, a Japan-based information and research service company.
The research concluded that Vietnam ‘s automobile industry has faced an increase in consolidation among domestic as well as international players, while the industry players are adopting various strategies such as forward or backward integration with other industry players to sustain their position and increase their market capacity.
Passenger cars will continue to dominate overall market sales by the end of the forecast period, owing to the relatively low-penetration rate of this segment in the country, it said.
According to the Ministry of Industry and Trade, the national automobike industry boasted 397 businesses, of which, 12.8 per cent specialised in assembly, 10 per cent in production of frameworks, bodies and carriages, 52.7 per cent in parts and accessories and 24.4 per cent in maintenance.
Viet Nam will open the car market completely in 2018 under free trade agreements, a deadline by which local manufactures need to improve their competitiveness.
Taxes on passenger cars of less than nine seats and components imported from Southeast Asian countries will be completely removed in 2018.
Since the Vietnamese auto industry came into being in 1991 with the licensing of the first two joint ventures, Mekong and VMC, it has benefited from many preferential policies.
However, analysts say local manufactures have not made full use of these policies to develop a strong industry and the industry still has to import most of the components it needs.
Dalat flowers struggling for export
Dalat flower export has barely recorded growth in the past ten years, with the current export volume accounting for a mere 5% of the city’s total output like ten years ago.
Pham Van An, director of Lam Dong Province’s Department of Agriculture and Rural Development, said the flower cultivation area of Lam Dong doubled from 1,731 hectares in 2003 to 3,500 hectares in 2010, leading to a surge in annual revenue.
In 2010, the province’s flower productivity reached 1.5 billion branches and the export turnover was worth US$16 million. Dalat City alone contributes 50% of the total cultivation area and 70% of the annual output of the province.
In recent years, flower growers in Dalat have enhanced the application of advanced technology in farming, packaging and preservation, improving yield and quality as well as reducing post-harvest losses. Dalat flowers are now grown in greenhouses with automatic irrigation systems.
At present, there are over 400 species of flowers and thousands of flower varieties in Dalat. However, the biggest concern of farmers and businesses is Dalat flowers are now heavily dependent on domestic market, especially HCMC and some central provinces.
Apart from the local market, a small amount of Dalat flowers, some 5% of the total output, is exported to Japan, Australia, the U.S. and European markets. The export proportion remains the same as 10 years ago, with absolute increase rate recorded in foreign invested flower companies only, said Chairman Tran Huy Duong of the Dalat Flower Association.
An of Lam Dong’s agriculture department ascribed the struggle of Dalat flowers to the low product quality that has yet to satisfy the strict requirements of the world’s market. In addition, since the city is now dependent on imported varieties, flower prices are pushed up, thus making it more difficult for Vietnam to compete with other countries with developed flower industry.
Pham Ngoc Trung, deputy director of the Agriculture Extension Center of Lam Dong, suggested developing a concentrated flower production zone, especially high-tech flower cultivation area, avoiding rampant development. Furthermore, he recommended setting up a commodity circulation channel connecting producers to cooperatives, sales agents, and wholesale markets.
Meanwhile, Duong of the flower association said Dalat flower brand building and registration should be done. Still, the most important is improving product quality so as for local flowers to compete in the global playground.
Construction sector faces underemployment
Vietnam’s construction industry is expected to continue facing underemployment danger this year as the property market gloom has forced many project owners to halt new developments.
Under the Ministry of Construction’s calculation, around 17 to 25 workers are needed to build a square meter of house, not including those for producing construction materials. Meanwhile, around 10 house managing and operation jobs are created when a condo block is put into use.
However, many construction enterprises are considering layoff schemes to reduce operation costs as their building projects have fallen behind schedule given economic difficulties.
“No businesses want to sack their employees but they have to choose between a huge staff structure and a simplified one to survive difficulties and avoid bankruptcy dangers,” said Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company.
Given adverse impacts of the economic downturn, Dat Lanh Co. has gathered consulting staffs from two offices into a single one. As a result, only necessary consultants will be retained at the new office while the rest will work at home or be sacked.
Pham Trung Ha, a representative of Hoa Phat Land Joint Stock Co., said the construction sector will have to face many challenges in the coming time, especially underemployment. The enterprise has also begun its layoff scheme and narrowed down operation areas.
As difficulties of the real estate market will continue to last this year, a large number of unskilled laborers working at building sites will face a high danger of unemployment.
Speaking at a conference of construction enterprises in Hanoi late last month, Minister of Construction Trinh Dinh Dung expressed his concerns over difficulties in the sector this year although he did not give a detailed figure for underemployment possibility. Dung said difficulties of the real estate market will continue to last at least till the end of the second quarter, causing many challenges for the labor market.
SBV drafts decree on intermediary payment service
A draft decree on non-cash payment mapped out by the central bank to replace the prevailing Decree 64/2001 on payment service providers is set to go before the Government early this year.
This is the first time related sides involved in intermediary payment activities has been officially mentioned in a legal document.
Duong Hong Phuong, deputy head of Payment Department at the central bank, said that intermediary payment is a new service which has vigorously developed in line with the strong development of information technology and telecom.
Without a complete legal frame for this activity, the central bank has had no choice but to have granted licenses on a trial basis to nine organizations specializing in e-purse services at home.
“Intermediary payment services associated with high technology need to be strictly supervised to minimize risks. This is the reason why new regulations will set up a legal corridor to support non-banking institutions in payment activities,” Phuong noted.
The central bank has initially classified intermediary payment services into three categories including electronic payment infrastructure provision, payment service support and other services.
Another important point of the draft Decree is the presence of regulations on supervising payment systems, such as principles, criteria and the scope of supervision of the national payment system, or the inter-bank electronic payment system. The 2010 Law on the State Bank of Vietnam provides for the central bank to manage, operate and supervise the national payment system.
Still, the national payment system has only accepted Vietnam dong, forcing the settlement of payments in foreign currencies to depend on commercial banks accordingly.
Liquidity the greatest challenge for banking system
The liquidity of the banking system will remain the biggest and most serious challenge for Vietnam’s macro-economy in 2012, said Vice Chairman Le Xuan Nghia of the National Commission for Financial Supervision.
Speaking at the seminar on Vietnam’s economic outlook in 2012-2013 held in Hanoi on Monday, Nghia said several banks had recently pushed up their deposit interest rates to 19-20%, or even 21%, regardless of the regulatory ceiling of 14%. Such phenomena revealed liquidity problems at several banks, he said.
In addition, the liquidity situation also becomes tense in the primary market, as the banks are boosting internal lending, said Nghia. Lenders are opening both loan and deposit accounts that are worth as much as VND500 trillion combined, as calculated by the commission.
“The monetary and banking market will continue to face difficulties in liquidity and bad debts in the first months of 2012. Liquidity is the greatest challenge for the banking system,” he said.
He advised the banking system should draw lessons from the South American countries which failed to curb inflation after two years of global economic crisis.
“As their confidence is severely eroded, customers hesitate to deposit money, switching to investment in gold and foreign currencies. Lenders are unwilling to give out loans after the nightmare of property market, while borrowers are discouraged by high interest rates,” he warned of the current situation in Vietnam.
The commission’s report showed there are more potential risks in the banking system’s liquidity, given the recent upheavals in the inter-bank market. For the first time in history, mortgages are required for inter-bank borrowing, while the bad debt ratio continues to surge
The system’s asset quality is worsened by high credit growth while risk management is still limited and shortcomings remain in operating monetary and interest rate policy, according to Nghia.
In particular, bad debts of the entire banking system have risen to the current level of VND85 trillion from VND71.6 trillion as of last year’s second quarter. The average growth of bad debts in the first half of 2011 is 7.3%, twice as much as the monthly average of 2010.
The ratio of bad debts on total outstanding loans has surged to 2.88% as of end-June 2011, and recently jumped to 3.39%.
However, the increase in provisions for credit risks does not match that in bad debts. The ratio of risk provisions over bad debts is on the downtrend, falling from 81.1% in late 2010 to 67.1% as of end-June 2011.
Also, the capital adequacy ratio (CAR) tends to drop strongly, with more banks failing to satisfy the regulated CAR. As of end-June last year, two out of 47 banks failed to meet the regulated CAR, but in the end of the third quarter, the figure rose to 17 out of 42 banks.
Online train ticket sales in wrecks
After carrying out an inspection of Vietnam Railways Corp’s (VRC) ticket services in Ho Chi Minh City, the ministry found that online sales services did not meet expectations.
“Since the online service was launched, it has helped people to save time and decrease disorder at train stations. On the other hand, brokers affected the quality and price of tickets. Many of these agents pre-book tickets and resell them at inflated prices,” said a report from the ministry, released on January 9.
According to the ministry, the situation has stemmed from the fact that the VRC granted complete autonomy to manage the service to Saigon Railway Passenger Transport Company (Saigon Railway), without proper oversight.
The online system also does not have the capacity to meet realistic demand, causing it to malfunction during times of high demand. The current bandwidth is only able to accommodate 1,000 hits.
After going through the firm’s database, the ministry determined that up to 30% of Saigon Railway’s online train tickets are currently brokered by middlemen, resulting in false scarcities, which prevent customers from directly using train services.
In order to improve the quality of service, the ministry requested that Saigon Railway tighten its oversight of ticket sales in order to prevent speculation and ensure stable prices for customers. They also recommended an overhaul of the online system for selling train tickets.
The company has been prompted by the ministry to come up with a scheme to streamline their methods of ticket sales by the second quarter of 2012.
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