31 Aug 2012 Intellasia Finance Vietnam - Hong Kong Business ...

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FINANCE Vietnam finance & business 31 August 2012 More 20,000 SJC gold taels supplied to market Aug 31: Vietnam Central Bank Sets Dollar Unchanged At 20,828 dong; Bank Rates Edge Up Vietnam, Russia strengthen finance cooperation Social insurance conundrum day. A tael equals 1.2 troy ounces. On the website www.kitco.com, the yellow metal on the world market was $1,662 an ounce at 6:00 p.m. on Wednesday, dropping by $4 compared to the closing price on the New York market on the previous night. http://english.thesaigontimes.vn/Home/business/financial-markets/25334/ 31/AUG/2012 INTELLASIA | SGGP In the last five days, Saigon Jewellery Company Limited (SJC) has processed about 20,000 gold taels to provide to the market, the local newswire Saigon Giai Phong, reported, citing Nguyen Hoang Minh, deputy director of the State Bank of Vietnam (SBV)'s HCM City branch, as saying. Earlier, SBV allowed SJC to process nearly 48,061 SJC deformed gold taels (about 1.8 tonnes of gold) and other kinds of gold being converted into SJC gold to stabilise the gold price. Related to this problem, the news provider, Vietstock, quoted Minh as saying that the amount of over 48,000 gold taels will be processed within this week. 31/AUG/2012 INTELLASIA | STOXPLUS The State Bank of Vietnam, the country's central bank, Monday set the exchange rate for the US dollar at VND20,828, unchanged for 8 months, and banks' rates marginally edge up. Banks are allowed to trade dollar at +/-1 percent from central bank quote and the ceiling price for dollar is currently at VND21,036. The rate offered by major commercial banks are at VND20,820-VND20,840 for bid and VND20,880 for ask. Dollar prices at the gold shops were also steady in the past days after heating a bit last week. Analysts say if dong denominated interest rate eases and production activities rise in the remaining of the year, dollar prices may edge up but will not surpass VND21,500. Local gold market has been supervised more closely, giving limited opportunities for speculators and volatility in this market will ease, helping stabilise forex market, traders said. http://stoxplus.com/News/89671/1/186/august-31-vietnam-central-bank-sets-dollarunchanged-at-vnd20-828-bank-rates-edge-up.stox 31/AUG/2012 INTELLASIA | VOV Vietnam and Russia have agreed to cooperate in areas of mutual concern related to economic stabilisation and management, financing, state budget collection and spending, social welfare and human resource training. A memorandum of understanding (MoU) in this connection was signed by the Vietnamese and Russian Ministries of Finance in Moscow on August 29, on the sidelines of the Asia-Pacific Economic Cooperation (Apec). Accordingly, the two sides will exchange working delegations and co-ordinate in organising seminars, conferences and short-term training courses in Vietnam and Russia. The MoU will be valid in three years from January 1, 2013 to December 31, 2015 and can be renewed as agreed by the two sides. http://english.vovnews.vn/Home/Vietnam-Russia-strengthen-finance-cooperation/ 20128/141592.vov 31/AUG/2012 INTELLASIA | VIR Ensuring social insurance fund payment stability remains a pressing question. The International Labour Organisation (ILO) forecast Vietnam's retirement pension fund would start incurring deficits from 2020 and be running out by 2029. These figures came on the back of ILO's sweeping study about Vietnam's retirement pension fund under proposal from Vietnamese government. Intellasia 31 August 2012 10 / 46
FINANCE Vietnam finance & business 31 August 2012 FDI firms enjoy a trade surplus of $7b in Jan-Aug The study had pointed out a number of problems in Vietnam's current social security system. Accordingly, only 20 per cent of the workforce contributes to the social insurance fund whereas the rate of contributors/recipients is falling dramatically. This is shown from the fact that in 1996 there was one retirement pension recipient per 217 contributors to the fund, it slid to around 10 contributors per one recipient in 2011. Meanwhile, the current average retirement age remains low (53.43 years generally for men and women), resulted in shorter time for payment against extended period of getting insurance benefits as the average life span of retirement pension recipients has extended to 73. In addition, pension hikes have significantly driven up fund costs. "After three six upward revisions from 2007 until present the pension hiked 134 per cent whereas social insurance fund rose an average less than 10 per cent per year," said ILO Vietnam's associate expert Carlos Galian. Hence, the fund's actual expenditure made up 94.65 per cent of total collected amount in 2011 against only 64.4 per cent in 2007. To boost incomes sources, under current regulations the fund's balance can be used to lend state commercial banks with usually low interest rates, to buy public bonds and government bonds. It could not be used for direct investment to ensure safety. This has resulted in low profit rates of 9-11 per cent only. From that practice, Ministry of Finance's Administrative Finance Department's deputy head Do Thi Thuy Hang suggested to hike idle capital efficiency through combining short-term and long-term loan provision or reforming lending rate setting methods. Hang proposed forming a specialised investment body to ensure the fund sustainable growth. ILO's Insurance and Finance Section expert Hiroshi Yamabana suggested gradually scaling up the retirement age. Accordingly, ILO suggested increase retirement age for men to 61 and to women to 56 from 2016, one year more than current levels. Then every two years the retirement age for men and women will increase one more year until reaching 65 years. However, this move alone is not enough, according to the ILO. Yamabana also suggested introducing regulations to restrict early retirements such as slashing 5-6 per cent retirement pension to each year of early retirement. "As the Law on Social Insurance slated to be put on National Assembly agenda in later this year session and might be approved in early 2013, we expect a raft of measures to help balance fund collections and expenditure soon be in place," said Yamabana. http://www.vir.com.vn/news/business/social-insurance-conundrum.html 31/AUG/2012 INTELLASIA | BAO DAU TU While the export turnover of FDI firms posted gigantic growth, local companies saw a fall of nearly 2 percent year-on-year in term of export turnover, according to the local newspaper Bao Dau Tu (Vietnam Investment Review). Vietnam's export import situation in the first months of 2012 saw strong changes. After eight months, the country's trade deficit was just about $62 million, much lower than the figure of $5.8 billion in the same period last year. Notably, in the country's export turnover in the first months of this year, FDI (foreign direct investment) companies made a significant contribution. According to the report from the Overseas Investment Department (Ministry of Planning and Investment- MoPI), FDI firms enjoyed a trade surplus of $7 billion in Jan-August (including crude oil). If excluding crude oil, FDI firms also posted a trade surplus of $1.53 billion in Jan- August It is expected that this positive change will last till the end of this year with some staple export items, which are the strength of FDI companies, such as electronic products, components and telephones. The import structure also had positive changes. As forecasted by MoPI, in Jan-Aug, while the import spending of essential products was estimated at $70 billion, rising 6.7 percent on year, the import value of controlled items was estimated at $3.2 billion, Intellasia 31 August 2012 11 / 46
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31 Aug 2012 Intellasia Finance Vietnam - Hong Kong Business ...

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