Low inflation keystone for growth

HA NOI (VNS) Single-digit (muc mot con so)inflation should be maintained for three coming years to achieve the economic growth target, experts said at a Tuesday conference held by the Academy of Policy and Development. Nguyen Thac Hoat from the academy said in the economic downturn, the inflation rate in the 2013-15 period should be controlled at about 7-7.5 per cent. This is to allow gross domestic product (GDP) to grow at an average of 6.5-7 per cent per year as targeted by the National Assembly. A report at the conference said that economic growth and inflation in Viet Nam were somehow inversely related. Statistics showed that in 2004-06, inflation was within 7-9.5 per cent and GDP growth at 8-8.5 per cent. However, in 2010-11, when inflation rocketed to double-digits, GDP grew at only 66.8 per cent. Experts said that the country's economic growth relied too much on an increase in investment during 2007-11. Together with the inefficient use of capital, it put pressure on inflation to rise. Hoat calculated that when inflation exceeded the optimal threshold(vuot qua muc toi uu), an increase by 1 per cent of inflation could lower economic growth by 0.0138 per cent. Economist Luu Bich Ho forecast economic growth at 5-6 per cent per year. He said that the optimal inflation rate was between 7-8 per cent, but could be lowered to 5-6 per cent when the economy experienced higher growth. According to academy director Dao Van Hung, declining credit growth (tang truong tin dung giam)from 2011, despite a slight increase in the the past two months (by 1.4 per cent by the end of April) put impacts on the economic growth. Inflation control required co-ordination and consistency of financial and monetary policies(nhat quanchinh sach tai chinh tien), Hung said. Tighter policies(chinh sach that chat) could help prevent inflation in the short term, he stressed, but added that the risk of inflation return remained high. Nguyen Thi Kim Thanh, director of the Banking Strategy Institute, said the management of investment capital should be enhanced to ensure efficiency. V

Experts believe Viet Nam is heading in the right direction (di dung huong)in controlling seafood quality.Photo baoquangninh HA NOI (VNS) The US Department of Commerce (DoC) has decided to increase antidumping duties (chong ban pha gia)on tra fish imported from Viet Nam by an additional US$0.52 to $1.29 per kilo, said the Viet Nam Association of Seafood Exporters and Producers (VASEP). Association secretary Truong Dinh Hoe said the tax hike was made after the US checked errors in the calculation of the previous tax(thue truoc ba), saying that the increase was consistent with (phu hop voi)the calculated data. In March, the US imposed a high tax rate of $0.77 per kilo on Vietnamese tra fish. It chose Indonesia as the sole benchmark country to calculate the anti-dumping rate, VASEP said. On a brighter note, Japan, one of the leading importers of Vietnamese seafood, has lifted a regulation that imported Vietnamese shrimps must be tested for trifluralin, a type of antibiotic(mot loai thuoc khang sinh), it said. The regulation has been applied to all kinds of shrimps imported from Viet Nam since October 2010. The ban led to a close watch on the industry from shrimp breeding to final processing by Viet Nam's Ministry of Agriculture and Rural Development. However, experts believe Viet Nam is heading in the right direction in controlling seafood quality. To push up the export turnover of seafood to the Japanese market, deputy director of the Department of Fisheries Nguyen Huy Dien said localities needed to further focus on preventing shrimp diseases. In addition, Dien said it was also necessary to pass on shrimp raising methods that ensured low Ethoxyquin content, an anti-oxidant substance popularly used in preserving aquatic feed. In the first four months of this year, Japan imported shrimp worth more than US$168 million from Viet Nam, an increase of 2.4 per cent compared with the same period last year. VNS

Tourists do a sightseeing around Phu Quoc Island by boat. VNA/VNS Photo Huy Hung

HA NOI(VNS) The Prime Minister has issued a decision on the establishment of the Phu Quoc Economic Zone, whose area totals 58,923 hectares, in the southern province of Kien Giang. According to Decision 31/2013/QD-TTg, the coastal economic zone covers the whole area of Phu Quoc Island district, encompassing Duong Dong town, An Thoi town and the eight communes of Cua Can, Ganh Dau, Bai Thom, Ham Ninh, Cua Duong, Duong To, Tho Chu and Hon Thon (including the islands to the south of An Thoi). The economic area will include a duty free zone(vung phi thue quan), encompassing An Thoi Port and Phu Quoc Airport. The remaining area outside of this zone will serve tourism and services, and port logistics. It will also include an industrial area, urban(do thi) and residential zones(khu dan cu), an administrative section and others. The economic zone's organisation, operation and policies will follow the Investment Law. The decision, which was signed on May 22, will come into effect (co hieu luc)on July 10. Phu Quoc is one of Viet Nam's tourist attractions set with beautiful white-sand beaches and quaint (co kinh)fishing villages More tourists headed to the island since the international Phu Quoc airport became operational in December last year. VNS

Strong cash flows bolster stock markets

Investors follow market movements at the VnDirect Stock Trading Floor in Ha Noi. Strong cash flows helped maintain the VN-Index uptrend yesterday. VNS Photo Viet Thanh HA NOI (VNS) Stocks declined slightlty yesterday afternoon on the HCM City exchange but strong cash inflow helped maintain the VN-Index uptrend. The benchmark VN-Index gained 0.41 per cent to close the session at 500.24 points with advancers outnumbering decliners by 140-82. Both market volume and value decreased about 20 per cent from the previous session but were still high at over 62.5 million shares, worth VND1.1 trillion (US$52.4 million). The General Statistics Office yesterday morning announced the nation's CPI in May fell 0.06 per cent against the previous month, the third decrease in the past three months.

The information failed to bolster investor sentiment as many expect CPI to rise again to boost consumption. "However, slowing inflation growth will also likely open up a new possibility for loosened credit policy to spur weakening consumption," analysts of FPT Securities Co commented in a report. Blue chips were mixed due to pressure of profit taking on some shares. Among the top 30 shares by market capitalisation and liquidity, 17 advanced while 10 declined and three were unmoved. While property giant VinGroup (VIC), PetroVietnam Gas (GAS) and dairy producer Vinamilk (VNM) climbed, other heavyweight shares like insurer Bao Viet Holdings (BVH), Vietcombank (VCB) and Masan Group (MSN) shed value. The VN30 was still up 0.36 per cent to stand at 563.81 points. Refrigeration Electrical Engineering (REE) was still the most active code in the morning with 3.44 million shares traded, hitting the ceiling price at VND26,000 ($1.24) a share. Meanwhile, strong cash flow in the last trading minutes helped lift shares on the Ha Noi Stock Exchange, with the HNX-Index up 0.85 per cent at 62.61 points. Around 43 million shares, worth VND371.7 billion ($17.7 million), changed hands by the end of the session. Sai Gon-Ha Noi Bank (SHB) was again the most heavily traded code with 9.2 million shares changing hands at VND7,200 a share. Pham Tien Dung, analyst of Bao Viet Securities Co, warned selling pressure increased when both indices reached their technical barriers, 505-515 points for the VN-Index and 62.5-63.3 points for the HNX-Index. "We believe how the market fluctuate around these barriers will decide the market trend in the future," he wrote in a report. Foreign investors suddenly became net sellers on both markets yesterday, unloading shares worth a combined VND84 billion ($4 million). VNS

VN set to embrace mobile banking

A woman withdraws cash at an ATM booth. Commercial banks are developing technology to expand mobile banking services and encourage more users, with ATMS seen as playing a lesser role during the next several years. VNS Photo Doan Tung HCM CITY (VNS) Most banking transactions in Viet Nam, around 80 per cent, will be one through mobile devices in the next five years, says Le Thanh Tam, CEO of International Data Group (IDG) ASEAN. Tam, who is also CEO of IDG Global Solutions Vietnam and MRD Joint-stock Company, told the Vietnam Financial Times that Internet banking services will rank second behind mobile banking, while transactions using Automatic Teller Machines (ATMs) will reduce significantly in the coming years. Wikipedia describes mobile banking as a system that allows customers of financial institutions to conduct a number of transactions through devices like mobile phones or personal digital assistants. It says mobile banking "differs from mobile payments, which involve the use of a mobile device to pay for goods or services either at the point of sale or remotely, analogously to the use of a debit or credit card to effect an electronic funds transfer at point of sale payment." Tam attributed the development of the mobile banking to the recent explosion in the use of smartphones. "By December 2012, there were 121.7 million mobile phones in the country, more than one for each Vietnamese citizen," he said, adding, "this is a rather high rate compared with some neighbouring countries." In comparison with other countries that also use mobile payment services, Viet Nam has enough conditions as well as advantages to develop payment services for residents of rural and remote areas who cannot easily access traditional banking services, Tam said. At present, most commercial banks in the country have not been able to fully tap the potential of rural markets, thus creating opportunities for intermediate payment services like mobile banking, internet banking, mobile payment and Automatic Tellers Machines(ATM)/ Points of Sales (POS) to develop, he said.

Since 2008, the State Bank of Viet Nam has allowed nine institutions specialising in supply of intermediate payment services to offer e-wallet services via the internet and mobile phones in order to meet the demand for e-transactions and the transfer of small amounts of money. A digital wallet refers to an electronic device that allows an individual to make e-commerce transactions, including purchasing items online with a computer or using a smartphone to purchase something at a store. By the end of 2012, the total number of e-wallets that had been issued by these nine organisations climbed to over 1.3 million, with the number of transactions reaching over 16 million worth nearly VND5.83 trillion. Non-cash payment In December 2011, the Prime Minister approved Decision No.2453 that aimed to boost non-cash payments through the banking system and further popularise them during the 2011-15 period. Under the plan, the Vietnamese market will have 250,000 points of sale (POS) installed that can handle about 200 million transactions per year. Market analysts say that Viet Nam has great potential to realise this target since 70 per cent of its working age population do not use modern payment services. According to data compiled by the World Bank, only about 30 per cent of Vietnamese people of working age, mostly in major cities and provinces, are able to use modern financial and payment services. However, these modern financial and payment services have only been developed based on individual accounts of customers at credit institutions. This means that people in rural and remote areas who do not have individual accounts cannot reach these services, said Nghiem Thanh Son, deputy director of the State Bank of Viet Nam's Payments Department. As of March this year, 48 of the 52 registered organisations had issued 57.1 million cards. Most of them, 93.6 per cent, were debit cards. Forty-six commercial banks have installed 14,300 ATMs and 101.400 POS that accept payment by cards. Over 76,000 POS belonging to 720 bank branches have been connected with 20,600 units that accept card payment (credit/debit) cards. Over the last few years, credit institutions such as the Social Policies Bank, Agriculture and Rural Development Bank and People's Credit Fund together with some other financial organisations have taken measures to expand and diversify financial products, especially for people who live in rural and remote areas.

Tam said, however, that the banks should update and acquire the latest technology to improve their management ability and meet customers' demand, to mention their ability to control risk and handle huge amounts of data. VNS