Johnson Controls opens automotive interiors plant in Binh Duong

The Viet Nam-Singapore industrial zone in southern Binh Duong province. The US-based Johnson Controls group has recently inaugurated a plant producing automotive interiors in the Viet Nam-Singapore industrial zone in southern Binh Duong province. The US$8 million Jonhson Controls Viet Nam has a capacity of churning out 833,000 products per year and generates jobs for 530 workers. Its products are not only geared to foreign customers in Japan and Malaysia but also potential ones in Viet Nam. The corporation's board of managers highlighted Viet Nam's propitious investment environment, intensive labour force and promising market of over 80 million people as the main factors prodding them to increase investment in Viet Nam. A global leader in automotive devices and power solutions, Johnson Controls also plans to expand their business to other fields in Viet Nam, including production of power equipment like batteries and power solutions for the automobile sector in the future, said the managers. Jonhson Controls has an annual turnover amounting to more than US$32 billion.

Source: Vietnam Agency

Stock market will develop but not make rapid leaps: expert

Mr Nghia started the interview with the press by saying that the stock market will see further increases. The P/E (price on equity) index is now 38, quite high if compared to the normal level (12-17 times higher). However, the stock market will still see further increases since Vietnam is an emerging market, while the international capital flow is moving towards Asia. A watchdog specializing in supervising the financial market will be set up in the near future, which will not directly interfere in the market, but will only support the market development. Vietnam’s stock market has not been so hot that it needs to be restrained. Do you mean that Vietnam will have a watchdog to supervise financial activities? The Government plans to set up a committee in charge of supervising the financial market operation (securities, banking and insurance). The committee will take remote supervision over the management agencies like the Ministry of Finance and the State Bank of Vietnam (SBV). SBV is also considering setting up a supervision and inspection agency, which will be the result of the reunification of the departments with the same functions. Is it true that the establishment of the financial supervision committee aims to receive the new capital flows and assist the development of the stock market? The international capital is now flowing into Asia. In Asia, China and Vietnam prove to be the two most attractive destinations. Vietnam’s stock market will develop quickly for two reasons. First, Vietnam plans to equitze 70 groups and big generations. If one third of the 70 units list on the bourse, it would be enough to make the total supplies in the market increase sharply. I think this will happen from July towards the years end. The profuse supplies will make the market less hot. Second, there will be several hundreds of foreign investors coming to Vietnam. Many famous financial consultancy groups and banks will be present on the market. Their clients are big investors, who will ask them to do research about Vietnam. There will be a big capital flow into Vietnam’s securities. The stock market will develop strongly, and it will need to be supervised in order to avoid sudden changes, that can cause shocks. You seem to be very optimistic. But why does SBV plan to control the commercial banks that make investment in securities if you believe that the stock market will develop? The Government has been aware of the need to keep the stock market in stable operation. Any troubles in the stock market will directly influence the monetary market. It is the SBV’s task to guarantee the capital raised from the public. Commercial banks have been advised to think carefully before making decisions on funding securities trading deals. For example, when the P/E is three times higher than the normal level, banks should give the loans valued at 1/3 of the securities’ market values. If banks keeps cautious with the loans mortgaged by securities, it would be safer for investors, the stock market and banks as well. Do you mean that SBV will not ask banks to tighten the funding of securities trading deals? No, not to tighten the loaning to securities traders, but to protect them, give advice in order to avoid risks. Foreign investors always are methodical when making investments, even if they just make short term investment. Meanwhile, domestic investors buy or sell securities just by feelings or follow the moves of someone else. It is very risky. Will the Government consider raising the maximum foreign ownership ratio in local banks from the current 30% limit? From April 2007, foreign bankers will have the right to set up 100% foreign owned bank entities in Vietnam. However, I think that many foreign banks will be set up in the first years after Vietnam joins the WTO as they still expect that the 30% foreign ownership ratio will be raised. You may see that the current laws allow local banks to get M&A (merge and acquisition), but aim to prevent foreign banks from swallowing domestic banks.

Source: Thời báo Kinh tế Sài Gòn

Bank revenues drive up dividends

Following announcements of double and even triple annual earnings growth over the last few weeks, bank stocks are again in vogue as investors prepare to reap high dividends payments. Asia Commercial Bank (ACB) topped the money list, reporting VND568 billion (US$35.5 million) in 2006 pre-tax profits. ACB mobilised nearly VND39.5 trillion (US$2.5 billion) through selling shares and deposit services, and provided VND17.1 trillion (US$1.1 billion) in loans, a 77 and 79 percent year-on-year increase respectively. The bank is expected to issue a 38 percent dividend payment, 8 percent of which will be issued in cash while the remaining 30 percent will be through share options. With pre-tax profits at VND447 billion (US$27.93 million), Sai Gon Thuong Tin Commercial Bank (Sacombank) plans a 20-22 percent dividend issuance. Sacombank intends to use much of last year's earnings as legal and working capital. Meanwhile, shareholders of the Export and Import Commercial Bank (Eximbank) expect to receive a 55 percent dividend payment on the back of VND340 billion (US$21.3 million) in pre-tax profits. In addition to strong profits, banks also reported strong asset accumulation. ACB reported VND42.5 trillion (US$2.65 million) in assets, more than double from where it was at the start of 2006. Sacombank and Eximbank saw similar results with VND24 trillion (US$1.5 million) and VND17 trillion (US$1.06 million) in assets, up 58 percent and 49 percent respectively over the previous year. Industry insiders attributed the impressive results to the country's economic growth, and the development of financial products and services, like term deposit accounts and preferential credit policies.

Source: Vietnam Agency

Fitch affirms ratings of Sacombank

Fitch Ratings has affirmed Vietnam-based Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank)’s Individual and Support ratings of 'D' and '5', respectively.
The ratings reflect Sacombank's adequate balance sheet strength and good profitability.

The bank has grown rapidly over recent years, registering a 237% growth in its balance sheet over the three years to end-2005.

Its loan book is split 40:60 between consumers and private businesses, reflecting its niche focus in the retail business segments which has been considerably neglected by Vietnam's larger state-owned banks.

Despite its rapid growth, Sacombank has maintained good asset quality, with a very low reported NPL ratio of 0.6%, down from 0.9% a year prior thanks to loans growth and very few new NPLs.

Additionally, almost all loans are tangibly secured on a low/conservative loan-to-value basis, although this provides only limited comfort in a country where foreclosure is a time-consuming and uncertain process due to a relatively inefficient legal system.

Meanwhile, profitability has been good with the bank achieving a RoAA of 1.8%, thanks to strong margins from its retail deposit-taking/lending focus, good fee income and limited credit costs.

Sacombank's capital strength is also sufficiently adequate, with an end-2005 equity/asset ratio of 13.0%, up from 9.3% at end-2004 due to capital injections and to a lesser extent retained earnings.

Such substantial capitalization, however, is unlikely to remain over the longer term if the bank continues to grow so fast. In this regard, the bank advises that it plans to retain all of 2006's earnings and further boost its equity base by 5% to 10% through a public share issuance over 2007.

Sacombank was formed in 1991 through the consolidation of four credit institutions in Ho Chi Minh City.

The bank has three foreign strategic shareholders, ANZ, the IFC and Dragon Financial Holdings (a Vietnam-based, UK-owned asset management company). It was listed mid-2006 with management holding a 34% share and the public 29%.

Source: The Asian Banker

World Bank wants careful equitisation of power plants

Although the equitisation of power plants has helped develop the national grid and meet soaring demand, the process would likely encounter roadblocks, the World Bank warned recently.

Shares of equitised power companies listed on the bourse in HCM City and Ha Noi, including Vinh Son-Song Hinh, Thac Ba, Na Loi and Nam Mu, have generated interest from foreign and domestic investors.

However, according to the World Bank’s report on Viet Nam’s electricity industry in 2006, the eq

uitisation process of power plants should be carefully considered. This is especially true in remote areas where companies are less profitable because they are forced to offer power at below-market rates, the bank said.

At present, the State holds a majority stake in several large electricity firms in a bid to stabilise supply nation-wide. Yet industry plans to shrink the State’s stake to less than 51 per cent. World Bank experts warned authorities in rural and remote areas should examine that policy closely.

For instance, the equitised Khanh Hoa power company has had difficulty developing an electricity network in remote areas and luring investors. The State should subsidise enterprises in these areas, said industry experts.

The nation’s developing power industry faces other challenges, according to the report. In other countries, firms usually target strategic and powerful shareholders to finance upgrades and implement state-of-art management methods.

Vietnamese electricity companies saw a shortage of strategic shareholders, however, the report stated. Most shareholders are small investors, looking for immediate profits rather than long-term returns.

Source: Vietnam News

Promulgated by the Governor of the State Bank of the Socialist

DECISION OF THE GOVERNOR OF THE STATE BANK Of VIETNAM ON THE PROMULGATION OF THE REGULATION ON SHORT TERM CREDITS FOR ECONOMIC ORGANIZATIONS No. 198/QD-NH.1

(Promulgated by the Governor of the State Bank of the Socialist Republic of Vietnam on September 16, 1994)

SUBJECT: BANKING AND FINANCE

ISSUING-DEPT: GOVERNOR OF THE STATE BANK OF VIETNAM

ISSUE-DATE: 09/16/1994

IMPLEMENT-DATE: 09/16/1994

LENGTH: 428 words

TEXT:

The Governor of the State Bank of Vietnam

Pursuant to the Ordinance on State Bank of Vietnam issued in connection
with Order No.37/HDNN8, the ordinance on Banks, Credit Cooperatives
and financial Corporations issued in connection with the Order No.38/HDNN8
dated May 24th, 1990 of the President of the State Council of the Socialist Republic of Vietnam.

Pursuant to the Decree No. 15/CP dated March 2nd, 1993 of the Government stipulating the task, powers and responsibilities for the State management of the Ministries and Ministerial-ranking bodies.

On the proposal of the Director of the Credit Department for conomic studies.

DECIDED

Article 1 :

To promulgate in connection with this Decision The Regulation on
Short - term credits for economic organizations.

Article 2 :

The Regulation on short - term credits issued in connection with
this Decision are generally applied to State Commercial Banks, Investment
and Development Banks. Commercial Stock Banks, Joint - venture Banks.
Branches of foreign Banks in Vietnam, Credit Cooperatives, financial
Corporations operating in accordance with the ordinance on banks,
credit cooperatives and financial corporations.

Article 3 :

This Decision shall come into effect from the signing date and replace:
the Regulation on short term credit for economic organizations issued
in connection with Decision No.04/QD-NH dated January 8th, 1991 and
other documents relating to this Regulation.

Article 4 :

The Chief of Governor's Office, the General Inspector of the State
Bank, Heads of the sections belonging to the Central State Bank, the
Directors of the provincial and city State Banks, the General Directors
(Directors) of State Commercial Banks, Investm ent and Development
Banks, Commercial Stocks Banks, financial Corporations, joint venture
Banks, the branches of foreign banks in Vietnam and managers of credit
cooperatives shall be responsible for the implementation of this decision.

for The State Bank of Vietnam Governor CAO SY KIEM (Signed)

Vietnam Basics

Time: GMT +7.
Electricity: 220 volts, 50Hz. Plugs are either the two flat-pin or the two round-pin type. Three rectangular blade plugs can be found in some of the newer hotels.
Language: The official language is Vietnamese. Some Chinese, English and French are spoken. Tour guides can also speak Russian and Japanese. Numerous ethnic languages are also spoken in parts.
Health: An outbreak of bird flu in 2004 claimed numerous human lives; recent outbreaks have also resulted in human fatalities. Avian flu in poultry has now spread to numerous provinces and cities across Vietnam. All care should be taken to avoid contact with live poultry and visitors are advised to exercise caution when eating poultry dishes, particularly raw or undercooked poultry products. Other health risks in the country include Hepatitis A and E, typhoid, Japanese encephalitis, dengue fever, bilharzia, diarrhoea, meningitis, rubella and HIV/AIDS. Malaria prophylaxis is recommended for travel outside the main cities and towns, the Red River delta and north of Nha Trang. There has been an increase in the amount of deaths relating to dengue fever in recent months, and visitors should take care to protect themselves from mosquito bites during the day, especially just after dawn and just before dusk, particularly in the southern Mekong Delta region. Travellers should seek medical advice about vaccinations at least three weeks before leaving for Vietnam and ensure they have adequate insect protection. Typhoid can be a problem in the Mekong Delta. Those arriving from an infected area require a yellow fever vaccination certificate. Water is potable, but visitors usually prefer to drink bottled water. Decent health care is available in Hanoi and Ho Chi Minh City (Saigon) with English-speaking doctors, and there is a surgical clinic in Da Nang, but more complicated treatment may require medical evacuation. Pharmacies throughout the country are adequate, but check expiry dates of medicines carefully. Health insurance is essential.
Tipping: Most restaurants and hotels now add a 5 to 10% service charge to their bills, but a further 5% for good service is greatly appreciated in more upmarket places. In top hotels porters expect a small tip. Hired drivers and guides are usually tipped, and it is customary to round up the bill for taxi drivers in the cities. Tipping is not generally expected, but some small change for most services is appreciated.
Safety: Travel in Vietnam is generally safe and violent crime is uncommon. Pick-pocketing is rife, and in Ho Chi Minh City (Saigon) drive-by purse snatching is a common trick. When transferring from airports only use pre-arranged hotel pickups or licensed taxis to avoid theft from opportunists. It is best to leave valuables in a secure hotel safe and avoid obvious displays of wealth. During the monsoon season (usually between June and October) the country is prone to serious flooding and typhoons (until December), particularly the Mekong Delta and Central Region, and has resulted in isolation of areas and damage to infrastructure.
Customs: Shorts should be avoided away from the beaches if possible. Shoes must be removed on entering religious sites and a donation is expected when visiting a temple or pagoda. Photography is restricted at ports, harbours and airports, and it is polite to ask permission before taking photographs of people, especially of ethnic minorities. Never leave chopsticks sticking upright in a bowl of rice as it has strong death connotations.
Business: Business practices in Vietnam are conducted in a similar fashion to those of China, Japan and Korea rather than their Southeast Asian counterparts. Pride and tact are important to bear in mind, as practices tend to be formalised more so than in Western countries. Often it is best to be introduced rather than approach the person with whom business is intended for fear of suspicion. Negotiations and settlements may take longer as the Vietnamese like to examine contracts thoroughly. Formal dress is common but in summer months the dress tends to be more casual. It is important to be on time for business appointments as the Vietnamese consider lateness rude. The person is always addressed as Mr., Mrs., and Ms., followed by their personal name (not family name), unless otherwise referred. It is worth finding out in advance. Shaking hands with both hands is the most respectful greeting although bowing is still popular among the older population, and meetings always begin with the exchange of business cards, which should be given and received with both hands; each person expects to receive one, so be sure to bring a vast supply. Business hours are typically 8am to 5pm Monday to Friday with an hour taken at lunch, and 8am to 11.30am on Saturdays.
Communications: The international country code is +84. The outgoing code is 00, followed by the relevant country code (e.g. 001 for the United States or Canada). City/area codes are in use, e.g. Hanoi is (0)4 and Ho Chi Minh City is (0)8. GSM 900 mobile networks cover the major urban areas. Internet cafes are available in Hanoi, Ho Chi Minh City and Internet access is often available at post offices in rural areas.
Duty Free: Travellers to Vietnam over 18 years do not have to pay duty on the following items: 400 cigarettes, 100 cigars or 500g tobacco; 1.5 litres alcohol with alcohol content higher than 22% and 2 litres below 22%; up to 5kg tea and 3kg coffee; perfume and items for personal consumption within reasonable amounts; other goods to the value of 5 million Vietnamese dong.

Vietnam Securities Companies

As of February 2004, thirteen companies have been licensed by both the State Securities Commission and Ho Chi Minh City Stock Trading Center. Of these, nine have capital of VND43bn (US$2.73m) or more and have been licensed to conduct a full range of securities business including brokerage, advisory, fund management, proprietary trading and underwriting. Saigon Securities Incorporation, Hai Phong Securities Joint Stock Company and EAB Securities Company have chartered capital ranging from VND20-22bn (US$1.27m-US$1.4m) while Mekong Securities Joint Stock Company are capitalized at VND6bn (US$0.38m). Neither company is licensed to conduct proprietary trading or underwriting.

Six of Vietnam’s securities companies were licensed ahead of Ho Chi Minh City Stock Trading Center’s opening in July 2000.

All 4 state-owned commercial banks and Vietnam’s largest State-owned Insurance Company established their wholly owned subsidiaries, consisting of Bank for Investment & Development of Vietnam, Industry and Commerce Bank of Vietnam, Bank for Agriculture and Rural Development, Bank for Foreign Trade of Vietnam and Bao Viet Insurance Company. The securities arm of the Bank for Investment and Development of Vietnam and the Bank for Agriculture and Rural Development are the largest ones with chartered capital of VND100bn (US$6.3m) each.

Asia Commercial Bank Securities Company and Thang Long Securities Company are wholly–owned subsidiaries of joint stock banks - Asia Commercial Bank (which is the largest and considered to be amongst the most progressive of Vietnam’s 33 joint stock banks) and Military Bank (which is majority controlled by the army).

First Securities Company is a joint stock company whose major shareholders include Becamex - an enterprise co-owned by the People’s Committee of Binh Duong Province and several business partners. (Binh Duong Province, some 40km from Ho Chi Minh City, is home to Vietnam’s largest concentration of industrial and manufacturing enterprises).

Saigon Securities Incorporation is a privately owned joint stock company founded by Vietnam’s Pan Pacific and Saigon Business Consultancy and is considered the most ‘internationally minded’ of the licensed securities companies. At the end of 2003, SSI’s reported share of order-matching turnover on the Ho Chi Minh City Stock Trading Center was just over 23%; a couple of percentage points ahead of Bao Viet.

During 2003, there were 4 more companies entered the market, including Ho Chi Minh Securities Company (‘HSC’) which is largely controlled by Ho Chi Minh Investment Fund for Urban Development (HIFU), Eastern Asia Bank Securities Company Eastern Asia Bank - a joint stock bank where HCMC Communist Party Economic Committee has major shares and influence and two other companies in the north, Hanoi-based Mekong Securities Company and Hai Phong Securities Company whose headquarter bases in Hai Phong - the second largest city in the north.

Vietnam has thirteen registered securities firms but only four of them - SSI, BVSC, ACBS and BSC - dominate brokerage business, accounting for 71% of all trade.

Vietnam Stock Exchange

The Stock Trading Center of Vietnam (‘STC’), located in Ho Chi Minh City, was officially inaugurated on July 20, 2000, and trading commenced on July 28, 2000. Initially, two equity issues were listed, Refrigeration Electrical Engineering Joint Stock Corporation (‘REE’) and Saigon Cable and Telecommunication Material Joint Stock Company (‘SACOM’). As of this date, an additional 20 issues are also listed with a current market capitalization of US$239m.

The Stock Trading Center of Vietnam is also the official mechanism through which new government bonds are issued, and it functions as the secondary market for a number of existing bond issues. As of this date there are 120 listed bonds with a total market capitalization of US$866m. All securities traded on the Stock Trading Center of Vietnam are denominated in Vietnamese Dong. Par valued is standardized at VND10,000 for equities and VND100,000 for bonds. Trading is conducted daily with two matchings in a morning session, from 9A.M. to 11A.M.

The State Securities Commission (‘SSC’), a body established formally in 1996, is responsible for capital markets development, licensing of participants, and the issue and enforcement of regulations. A wide range of regulations, with significant input from multilateral bodies such as the International Finance Corporation, have been promulgated, including those dealing with such issues as insider trading, take-over trigger points and margin lending. In order to be listed, a company must have been profitable for at least 2 years, have a minimum capitalization of VND5b (approximately US$318,000), and have at least 50 shareholders who are not employees of the company, holding at least 20% of stake. Foreign invested joint venture companies are technically qualified to list, but in order to do so, they must be reorganized into joint stock company status. Companies intending to list must also submit to audit by an approved, independent auditing company.

At the beginning, an overall foreign ownership limit of 20% for equities and 40% for bonds were implemented. In July 2003, in a bid to improve liquidity, the government raised the foreign ownership limit for equities to 30% and totally removed foreign ownership limit of a particular issuer’s bonds. Foreign participants on the Stock Trading Center of Vietnam must register through a custodian licensed to hold securities on behalf of foreigners. Once registered, a securities transaction code is issued to the foreign investor that will permit securities trading.

The mechanism of trading on the Stock Trading Center of Vietnam is via an automated order-matching system. The capacity of the system is 300,000 orders per day. Currently, trading limits of 5% (for bonds and equities) either side of the previous close apply. No price restrictions have been set for newly listed securities but price caps were applied in the case of the very first day of the market’s operations.

Settlement is centralized through the Stock Trading Center of Vietnam using the Bank of Investment and Development of Vietnam (BIDV), a state-owned commercial bank. Several other domestic banks and securities companies have been authorized to accept custody of securities, with HSBC’s and Deutsche bank’s Ho Chi Minh City branches currently the only banks providing custody services for foreign investors. Custody is based on a central depository, central registry book entry system.

Presently, there are thirteen licensed securities companies. Of these, nine have been licensed to conduct a full range of securities services including underwriting, brokerage, custody, research, portfolio management and trading. The minimum capital required to operate effectively as an investment bank is VND43b (c. US$2.7m).

The current market capitalization is now US$239m for equities and US$866m for government bonds.

With the World Bank estimating domestic savings of some US$5b outside the official economy, considerable liquidity could flow into the securities markets in time. The SSC in conjunction with the Asian Development bank have formulated a development plan for Vietnam’s Capital markets which if successfully implemented would result in 100 listed companies on the Ho Chi Minh Exchange and a similar number on the Hanoi exchange by the end of 2005 with an associated total market capitalization of between 2 and 3 percent of GDP.

see details: Vietnam Stock Exchange

Vietnamese Stocks - Equities in Vietnam

Vietnam Stock Exchange - The Stock Exchange for Vietnamese Stock Market

The Stock Trading Center of Vietnam (‘STC’), located in Ho Chi Minh City, was officially inaugurated on July 20, 2000, and trading commenced on July 28, 2000. Initially, two equity issues were listed, Refrigeration Electrical Engineering Joint Stock Corporation (‘REE’) and Saigon Cable and Telecommunication Material Joint Stock Company (‘SACOM’). It is the smallest stock exchange in Southeast Asia. The Vietnam stock exchange is both operated and regulated by the State Securities Commission.

More information about Vietnam Stock Exchange

Vietnamese Securities Companies

As of February 2004, thirteen companies have been licensed by both the State Securities Commission and Ho Chi Minh City Stock Trading Center. Of these, nine have capital of VND43bn (US$2.73m) or more and have been licensed to conduct a full range of securities business including brokerage, advisory, fund management, proprietary trading and underwriting. Saigon Securities Incorporation, Hai Phong Securities Joint Stock Company and EAB Securities Company have chartered capital ranging from VND20-22bn (US$1.27m-US$1.4m) while Mekong Securities Joint Stock Company are capitalized at VND6bn (US$0.38m). Neither company is licensed to conduct proprietary trading or underwriting.

More information about Vietnamese Stock Brokers

Foreign Participation

Foreign ownership of shares in companies listed on the Ho Chi Minh City Stock Trading Center is limited to 49% of the company’s issued share capital. For bonds, foreign investors can hold 100% ownership of a particular issuer’s bonds.

Foreign investors who wish to purchase shares through the Ho Chi Minh City Stock Trading Center are required to register through a custodian licensed to hold securities on behalf of foreigners – of which there are currently three; The Hongkong and Shanghai Banking Corporation, Deutsche Bank AG and Standard Chartered Bank. Beside these three, securities companies can play role of custodian unit to hold stocks for foreigners as well. Once registered, a Securities Transaction Code is issued to the foreign investor who may then open a Trading Account with one or more of the twelve licensed Securities Companies.

How to Buy Vietnam Stocks

For private investors, it is necessary to fly to Ho Chi Minh City (Saigon) to open a securities account and a bank account. Foreigners are able to transfer funds out of Vietnam after fulfill tax obligations. There is no time constrain.

You may wish to contact Vietnamese stock brokerage firms on this list for more information.

Thanks for Minh Quan for the updates of the rules of Vietnam stock exchange.

see details Vietnamese Stocks - Equities in Vietnam