Setting up new banks: green light on

Setting up new banks: green light on
16:41' 13/06/2007 (GMT+7)
VietNamNet Bridge – The regulation on setting up joint stock banks has been promulgated by the State Bank of Vietnam, paving the way for the establishment of more banks after a decade with no new banks.



With the aim of creating healthy competition in the market, while only allowing the most capable banks to be established, the central bank has set up strict requirements for candidate banks.

In order to get operation licences, banks must follow the strict requirements on chartered capital stipulated by the Prime Minister in different periods. From now until the end of 2008, the required chartered capital is VND1tril ($62.5mil) at minimum. After December 31, 2008, investors must have at least VND3tril to be eligible to set up banks.

Investors must make capital contributions to banks with their own money; they are strictly prohibited from making capital contributions with borrowed money.

Foreign investors are not allowed to make capital contributions to newly set up banks. They are only allowed to buy stocks of local banks which have been operating for two years at least. The foreign ownership in a local bank must not be higher than 30%.

A bank to be set up after the regulation comes into effect will have at least 100 shareholders, including three founding institutional shareholders who have the minimum assets of VND2tril and chartered capital of VND500bil.

In case the founding shareholder is a commercial bank, it must have the minimum total assets of VND10tril, chartered capital of VND1tril, and a bad debt ratio of below 2%. Shareholders are not allowed to transfer shares within three years of the day of licencing. Founding shareholders can only transfer shares among themselves within five years of the day of licencing.

Every institutional shareholder is allowed to hold 20% of the bank’s chartered capital at maximum. Individual shareholders are allowed to hold 10% of the bank’s chartered capital at maximum. Shareholders must get the Prime Minister’s approval to hold more than the above proportion of shares.

The regulation on setting up banks was promulgated on June 7 and will be valid 15 days after the regulation is published in the official gazette. Kieu Huu Dung, Director of the Banks and Non-banks Credit Institutions Department under the State Bank of Vietnam, said that right after the regulation came into effect the central bank would release a notice about receiving the applications for setting up new banks.

Twenty five applications for setting up joint stock banks have been sent to the central bank. All of them have the tentative capital sums of VND1tril and higher, and one of the banks has the impressive capital of VND3tril. However, Mr Dung said that the central bank would not consider any applications until the regulation came into effect.

State Bank Governor Le Duc Thuy stated at a meeting with the press in March that the central bank would not be soft in licencing new banks. Prior to that, experts warned that many investors would set up banks not for doing business themselves, but for reselling their operation licences.

IZs in Mekong River Delta left idle

IZs in Mekong River Delta left idle
16:39' 13/06/2007 (GMT+7)
VietNamNet Bridge – There are 120 existing industrial zones (IZs) in the Mekong River Delta area, but only four of them are fully occupied.


The Tra Noc IZ, one of the few effective IZs in the Mekong River Delta
The biggest problem of the IZs in the area is that they do not fit in with the master development plans of the area, while every IZ develops in its own way. This has resulted in waste in land funds and investment. Moreover, pollution in the IZs has become alarming.

The land in the Mekong River Delta has been mainly used for cultivation. Foreign experts have also said that the delta is the ideal area for agricultural development. However, the wonderful land area suitable for growing paddies and fruits has now been turned into industrial zones.

The programmers in the Red River Delta seem to think in a simple way. They believe that changing the land for agricultural cultivation into land for industrial production will help speed up the local economic restructuring process, and create jobs for labourers.

Local authorities have been put under pressure to obtain high GDP growth rates; therefore, they have tried to set up as many IZs as possible, though they did not make good preparations for the IZs. A series of IZs have been born, leaving farmers bare-handed as they do not have land any more to cultivate.

The IZ programmers never made thorough studies before designing the IZs. It seems they never sat together to discuss the strategy on the Mekong River Delta development in general so every locality has been setting up their own policies, which, as a result, has spoiled the common development plan.

In fact, IZs in the Mekong River Delta have low land use ratio. Most of them see the occupancy of 36-40%, and in some IZs, the ratio is 5% only.

Trade with Japan could reach $18bil

Trade with Japan could reach $18bil
16:54' 13/06/2007 (GMT+7)
VietNamNet Bridge – Bilateral trade value between Vietnam and Japan is expected to reach about US$18bil by 2010 if the Vietnam-Japan Economic Partnership Agreement (EPA) is approved, according to Vietnamese trade counselor in Japan, Nguyen Trung Dung.



Dung said the list of Vietnamese items eligible for Japan's taxation preferences would be lengthened.

"There will be many more Vietnamese products eligible for the Japanese market. They include agricultural products, art arid handicrafts and seafood," Dung said.

He also said that the signing of the EPA would not only result in the opening up of the two countries' markets, but also create opportunities for Vietnamese and Japanese businesses to expand their relationships in many fields such as investment, tourism, human resources development and cultural exchange.

"Thanks to the agreement, Vietnam will gain access to Japan's financial and technical assistance in science, technology, e-commerce, finance and banking."

He said the third round of negotiations to draft the EPA has just finished in Tokyo.

"At this round of talks, the two sides had detailed discussions relating to many areas such as investment, industry, agriculture and labour and have agreed many issues," he said.

"Both the Vietnamese and Japanese sides want to end negotiations and sign the bilateral partnership this year."

Dung said the Vietnamese and Japanese relationship was developing very well in many sectors, particularly trade, tourism and investment.

This was evident from the bilateral trade value of VND10bil ($625,000) in 2006.

The US$18bil bilateral trade value target was feasible, he said. "I have worked as a trade counselor in this country for many years. However this is the first time I saw so many Japanese businesses pay attention to the Vietnamese market like it is at present."

Recently, the Vietnamese Ministry of Trade joined with the trade office of the Vietnamese Embassy in Japan to organise two trade promotion workshops in Tokyo and Fukuoka, he said.

"The two events attracted the participation of hundreds of Japanese enterprises. Many major Japanese distributors said they were ready to import Vietnamese high-quality goods and sell them to local supermarkets and trade centres," Dung said.

In addition to traditional export items including seafood, wood furniture and textiles, many other Vietnamese products such as chemical engineering goods, processed agro-products, footwear, and plastics will also have great potential in the Japanese market after the EPA is signed.

Dung said domestic enterprises need to make thorough preparations to ensure that products are of good quality and design.

There are still many hurdles for Vietnamese goods to be exported to Japan, he said.

"To protect domestic production, Japan is applying many strict technical regulations to exporters from Vietnam and many other countries, particularly relating to food hygiene and safety."

In future, these technical barriers might be simplified after the agreement was signed, he added.