Lawyers: ACB illegally accessed investor’s account

VietNamNet Bridge – Lawyers believe that the action by the Asia Commercial Bank (ACB) of accessing investors’ accounts and spontaneously placing gold sale orders was illegal.

Gold traded at VND 17,000/tael on ACB trading floor

There is no perfect legal framework for the operation of gold trading floors

On December 10, some of VietNamNet’s readers, who are also investors on the ACB gold trading floor, came to VietNamNet’s office, and said that ACB did not contact them to explain the employees’ mistakes in quoting the gold sale prices as the bank wrote in its press release.

Meanwhile, the lawyers who VietNamNet has consulted with all said that ACB’s actions were illegal.

Lawyer Bui Quang Nghiem, Head of Nghiem & Chinh Law Office, said that the transaction between a legal entity and an individual is covered by the Civil Code. Article 389 of the law says that the transaction must be ‘voluntary, fair, good-willed, cooperative, honest and straightforward.’ The behavior by ACB of spontaneously selling investors’ gold and amending investors’ accounts must be seen as violating the said above article.

“The fact that an individual or legal entity spontaneously accessed other people’s accounts to sell other people’s assets or amend the information of the accounts to benefit the individual or the legal entity is illegal,” said Lawyer Tran Duy Canh, Head of the Luat Viet Law Office.

Canh stressed that the behavior should be seen as illegal even when the individual or legal entity changed the information to bring benefit to the owners of the accounts. In this case, ACB did this without asking for the permission from the account owners, and without the direction of competent agencies.

Canh said that under the current rules, there are not ceiling nor floor gold prices, which means that investors’ successful purchase of gold at the low price was legal. If ACB wants to repair the damages caused by the employees’ mistake, it must negotiate with investors, while it should not have spontaneously accessed the investor’s account.

When gold trading floor runner also makes trading deals

Lawyer Bui Quang Nghiem said that the current laws do not prohibit the runners of gold trading floors to make trading deals for themselves. Therefore, Nghiem said, this requires very strict requirements in order to ensure the fair and transparent operation of trading floors.

The problem now lies in the fact that state management agencies have not set up a perfect legal framework of the operation of gold trading floors. That explains why, in most disputes, investors always are at a disadvantage.

ACB is acting as both the owner of the gold trading floor, and the investor who makes trade deals for themselves. It also provides technology solutions, and it sets the rules for the trading floors, which means that ACB holds the handle of the knife. Therefore, ACB has not taken any responsibility for the troubles on the trading floor that occurred recently. Investors could not understand why the computers were suddenly suspended when the gold prices skyrocketed, which made them unable to sell gold, but able to buy gold.

ACB must not repair a mistake by another mistake In principle, ACB must bear all the damages as the transactions have been completed. Also in principle, ACB must not repair a mistake by another mistake, i.e it must not spontaneously buy or sell gold in investors’ account. The amendment of the entries can be carried out only when this is allowed by the laws, or it is sure that this will not cause any damage to clients. If ACB apologizes to clients and the apology is accepted by clients, the issue will be settled by negotiations, which are respected and encouraged by the laws.

Nguyen Nga – Phuong Nam

Consumers tighten belts ahead of Tet

VietNamNet Bridge – Financial troubles will cause consumers to tighten their budgets and alter traditional spending habits for the upcoming Tet holiday.

The Ha Noi Industrial and Trade Department said it expects total retail sales of goods and services to reach VND9.5 trillion for the Tet festival in 2009 in Ha Noi.

The purchasing power of consumers is expected to be lower during the month of the holiday, as compared with the month of the holiday last year. This will particularly affect consumer choices at supermarkets and wholesale markets.

Vu Vinh Phu, chairman of the Ha Noi Supermarket Association, said consumer purchasing power at supermarkets in Ha Noi is forecast to increase only 20 per cent this coming January, much lower than the 30 per cent growth rate in the same festival period in 2008.

Enterprises in the capital city have not had good business results this year, and they will not be handing out customary high bonuses for their workers. This will be one big driver behind the public having a lack of funds for Tet preparations, Phu said.

In the past, each citizen in ha Noi spent an average of US$17.85 for supermarket purchases in every year's Tet festival month. However, this coming Tet, the amount for shopping is expected to be only $11.9 per person, he said.

The Ha Noi Industrial and Trade Department said it expects total retail sales of goods and services to reach VND9.5 trillion ($565.5 million) for the Tet festival in 2009 in Ha Noi.

In the month of Tet, residents in Ha Noi are expected to consume 70,000 tonnes of foodstuff, 13,000 tonnes of pork, 3,000 tonnes of beef, 4,000 tonnes of poultry, 80,000 tonnes of fruit and vegetables, 1,200 tonnes of confectionery and 7-8 million litres of beer, alcohol and other beverages.

The People's Committee of Ha Noi made a decision already to provide five-month loans worth a total of VND160 billion ($9.7 million) from the city's budget, for key enterprises that produce and supply foodstuffs in the capital to stock goods for the upcoming Tet.

Meanwhile, food traders at Dong Xuan Market, specialising in wholesale and retail of all kinds of goods, and the temporary market in Phung Hung Street, receiving traders who moved from Hang Da and December 19 markets due to construction at these sites have not had stocks of goods for the Tet festival due to low purchasing power.

The owner of Kim Dinh Shop, specialising in the trade of confectionery, alcohol and beer at Dong Xuan Market, said the melamine scandal has caused consumers to shy away from sweets and candies, which means businesses are not stocking as much for the Tet festival.

Nguyen Thi Nghia, the owner of Loi Nghia Shop said that fluctuations of the price of goods and slow sales make shop owners nervous about stocking up.

The owner of Lien Hoa Shop specialising in the trade of fresh and dry food, fruits and vegetables at the temporary market said there are simply not enough customers to warrant keeping a lot of products in stock.

(Source: Viet Nam News)

Exports to Japan may soar after trade deal

VietNamNet Bridge – The number of Vietnamese exports to Japan is expected to soar, following an agreement between Japan and Southeast Asian countries on the elimination of tariffs on nearly 80 per cent of Vietnamese goods.

Vietnamese agricultural exports to Japan that will be tariff-free, include ginger, garlic, durian, rambutan, apricot, canned litchi and fresh bamboo sprouts. Mushrooms, potatoes, tea, coffee, frozen fish, shrimp and crab.

The agreement, called the Association of Southeast Asian Nations (ASEAN)-Japan Comprehensive Economic Partnership, came into effect on December 1.

"The agreement creates more advantages for some of our strongest exports, but it will also raise obstacles," said Le Quang Lan, deputy head of the Ministry of Industry and Trade's Multilateral Trade Policy Department.

The Japanese market, for example, imposes strict trade standards on country of origin and sanitary standards for imported goods, two areas that remain underdeveloped and poorly enforced in Viet Nam.

"Viet Nam will co-operate with Japan to set up a joint commission that will define quality and food safety and hygiene. Additionally, Japan will help Viet Nam set up a centre on international sanitary standards," Lan said.

Under the new agreement, the import tariff on Vietnamese garment and textile exports has dropped to zero from 5-10 per cent.

Textile and garment exports to Japan, however, remain modest. Last year's total value was US$800 million, or only 9 per cent of the total export value of the industry.

In exchange for the elimination of tariffs, the ASEAN member countries including Viet Nam, will have to meet certain criteria on the use of materials.

Raw materials used for garments and textiles, for example, must be sourced only from Japan or Southeast Asia, including Viet Nam.

The raw material requirement also applies to leather shoes, a major Vietnamese export to Japan.

"The biggest goal of Viet Nam is not focusing on export growth to Japan, but creating an improved position in the global market by meeting the strict criteria set by Japan," Lan said.

Vietnamese agricultural exports to Japan that will be tariff-free, include ginger, garlic, durian, rambutan, apricot, canned litchi and fresh bamboo sprouts. Mushrooms, potatoes, tea, coffee, frozen fish, shrimp and crab.

(Source: Viet Nam News)

Crude oil price falling, lubrication oil rising

VietNamNet Bridge – The lubricants for engines have not seen any price decreases, but have even been increasing, despite the sharp falls of the crude oil prices in the world market. Why?

Many lubricant trading companies said that they cannot slash the sale price of lubricants because they still need to sell the stocks that they previously imported at high prices.

However, the explanation seems to be unconvincing. A General Director of a domestic lubricant trading company, who has 10 years of experience in the field, said that the companies are proving to be unfair in not having slashed the sales prices. He said that while the lubricants for production are seeing decreases in consumption, the lubricants for engines can be sold as soon as they are churned out. The biggest dumps for the companies are just big enough to store lubricants for less than two months of consumption.

The quotations of base oil in the markets of Singapore, Saudi Arabia, Japan and Europe have all showed that the base oil products, from which lubricant is made, like SN150 and SN500, have all been decreasing sharply in price since September.

In September 2008, the price of oil products hovered around $1,300-1,400/ton, but the prices then dropped to nearly $900/ton at the end of November.

According to baseoilreport.com, South Korean base oil N-60/70 products have decreased by $200 in price to $890-910/ton. Meanwhile, J150 and J500 of Singapore have reduced by nearly $300/ton to $885-905/ton.

Experts said that the current prices have represented the ½ price decrease when compared to the period when the crude oil price was at over $140/barrel at the end of July.

Meanwhile, in HCM City, the lubricant sales agents on Tran Huy Lieu and Hoang Van Thu streets in Phu Nhuan district, or the sales agents on Nguyen Trai street in district 1, all said that the lubricant prices have not seen any decreases. They even said that the prices went up by VND 3-4,000/litre in November.

A salesman at a motorbike shop specializing in selling Piaggio model bikes, on Cong Hoa street in Tan Binh district, said that Mobil lubricant for scooters has been offered at VND 245,000/litre, an increase of VND 30,000.

Lubricant market dominated by foreign brand names

It is estimated that there are over 30 companies in the south that import base oil to make lubricant domestically, including big names of the world, like BP, Castrol, Exxon Mobil, Shell, Caltex and Total.

As for the market of lubricant for engines, foreign brand names are now holding 75% of the market share, while they hold 90% of the market of lubricant for equipment and machines in production workshops.

In fact, Vietnam also has its own brand names for lubricants like Petrolimex, Vilube, Solube, S-lube or T-lube. However, they just hold a modest market share, and the sale prices of the products are also modest. While a foreign brand name lubricant tank is selling at over VND 50,000, a domestic brand name tank is priced at VND 35-47,000.

Representative from Shell in Vietnam said that the price of base oil proves to have no direct relation to the crude oil price. The base oil prices have not decreased in accordance with the crude oil price decreases.

However, domestic experts still insist that, in general, the base oil prices always increase or decrease one month after the crude oil price increases and decreases. They affirmed that the retail price of lubricants should have been lowered since November.

(Source: Tien phong)

Vietnam economy in good shape

WB Acting Country Director, Martin Rama.

VietNamNet Bridge – Speaking at a ceremony, held in Tokyo on Wednesday, to release a new World Bank report about East Asian economies, Vikram Nehru, the WB’s chief economist for East Asia and the Pacific, advised the economies that have a strong reliance on foreign investment to be cautious to avoid risks.

Nehru said the world is now in the most serious financial crisis in history, which is affecting even countries with good management capability. However, Vietnam has taken suitable measures to deal with difficulties and stabilize its economy.

While East Asian countries have entered the current crisis substantially better prepared than they were for the 1997 Asian financial crisis, none have been spared the full fury of the global economic storm, says the WB’s latest six-month assessment of the East Asia and Pacific region’s economic health.

The report notes that the downside risks to East Asia are substantial in the near-term, but highlights that countries will be better positioned to deal with the crisis if they are able to maintain macroeconomic stability, shift exports to faster growing regions in the world, substitute external with domestic demand, and continue with structural reforms to strengthen competitiveness.

According to the WB, economic growth in all East Asian countries, except for Malaysia and Indonesia, was slowing down before the crisis reached its peak in mid-September. Despite efforts to encourage demand in many countries, economic growth is anticipated to continue slowing down in 2009. Despite the slowdown, East Asia will contribute to approximately one-third of total global growth in 2008.

World Bank Vice President for the East Asia and Pacific region, Jim Adams, applauded East Asian governments for their swift and effective policy interventions to avert the worst impacts of the global crisis so far.

"Thanks to the quick action of policy makers from virtually every East Asian country, banking systems have been able to deal with the crisis so far and in a number of countries, economic stimulus packages are being put in place. These actions are helping East Asia to continue playing a key stabilizing role and are acting as a growth pole for the global economy," Adams said.

"Despite the difficult road ahead, those countries that sustain sound policies pursued thus far and tackle new challenges decisively will be the ones to emerge in a strengthened position when the global economy begins to recover," said Nehru.

With regards to Vietnam, Nehru said Vietnam has had an outstanding economic development period. In the difficult situation, the country had suitable measures to stabilize its economy.

In Hanoi, the WB Acting Country Director, Martin Rama, said the global economic downturn would hit Vietnam but at slower pace than other economies. But the expert emphasized that Vietnam needs to take flexible and quick responses to possible impacts.

Vietnam is perceived as reacting well to the crisis with its impressive performance this year, demonstrating the resilience of its economy, Rama said.

The growth of the economies of developing East Asia countries will slow down to 6.7% in 2009 and 7.8% in 2010, from 8.5% in 2008, as the impact of the financial crisis reaches the region, the latest economic update of the WB said.

The WB’s report forecasted approximately a 6.5% economic growth rate for Vietnam in 2009, which is similar to the Vietnamese Government’s goal. However, Martin Rama said that the figure may be closer to 6% or just over.

Related to the Vietnamese Government’s $1 billion package to stimulate production and consumption, the WB said the spending may increase. Rama said the most important thing for Vietnam is that it has to “take this opportunity to perform financial reforms.”

The report warns that the region’s most vulnerable countries are those with more open capital accounts, large non-resident holdings of equities, and a strong reliance on foreign portfolio investment. According to WB, the outside capital flow accounted for 30% of Vietnam’s GDP in 2006.

Poverty rates are likely to fall further in 2009, declining to 10.68 percent for developing East Asia as a whole, compared with the 10.36 percent projected earlier this year. While the number of poor people in the region will continue to decline, an estimated 5.6 million more people would have emerged from poverty next year if not for the slump.

Developing East Asia includes China, Indonesia, the Philippines, Thailand, Vietnam, Cambodia, Lao, Mongolia, Papua New Guinea and the island economies of the Pacific.

XL

Many companies lowering 2008 business targets

VietNamNet Bridge – The fiscal year is ending, but several companies have just announced adjustments of their turnover and profit plans for this year, surprising shareholders with big adjustments. Are the late announcements the result of poor forecasts by enterprises or were they deliberately delayed to prevent share price decreases?

Investors need update information

Construction Joint-stock Company No 5 (SC5) has announced its 2008 turnover plan of VND818bil is kept intact, but the targeted pre-tax profit has been lowered to VND40.48bil from VND87.2bil.

Invesco, an investment and construction development, has lowered its targeted production value from VND660bil to VND480bil, targeted turnover from VND570bil to VND400bil, and pre-tax profit from VND30bil to VND17bil.

Vinaconex 11, a construction company, has cut its 2008 turnover target from VND500bil to VND380bil, and post-tax profit from VND22bil to VND13.2bil.

It has come as quite a surprise that these companies did not begin consulting with shareholders about adjustments of production and business plans until December. UIC, an investment and urban development company, is another example. It is asking for shareholders’ opinions about the lowering of its post-tax profit target from VND19.48bil to VND13.172bil, and dividends from 15% to 13.5%. It announced that the collection of opinions would last from December 10 to December 22. When will the company make a final decision on the adjustment then?

Explaining the adjustment of its business plan for this year, a representative of SC5 said that earlier this year, when drawing up the 2008 business plan, the company anticipated that fuel and construction material prices would increase in 2008, which prompted the company to ask partners to sign open contracts (contracts which allow for adjustments of material prices in accordance with price increases in the market).

However, the company could not anticipate other changes. Bank interest rates increased sharply, high petrol prices were kept for a long time, and the wages the company has had to pay have increased from VND40-50,000 to VND120-150,000 per day. All these increases have led investment costs to skyrocket. As a result, the company thinks that it will still be able fulfill its turnover plan, but not the targeted profit one.

Why has the company just announced its new targets recently? The representative said that even in Q3, the company still believed it would be able to fulfill the plan thanks to the open contracts. However, the company is now sure that the previously set profit target is impossible, and that the more realistic profit goal is VND40bil.

“We have made the announcement so that shareholders know exactly how much profit we will earn this year. We want to provide updated information for investors; the tardiness in making the announcement should not be seen as a deliberate action,” he said.

Vietcombank, one of the biggest banks in Vietnam, has also consulted with shareholders on adjusting its 2008 business plan. The total assets of Vietcombank are expected to see a decrease of VND9tril to VND200tril, the credit growth rate is expected to reach only 15%, while the capital mobilisation growth rate 0%.

A member of Vietcombank’s board of directors said that the bank believes it will still be able to fulfill the planned profit target, but fail to fulfill the plans on capital mobilisation and non-performing loans.

In fact, investors well understand the reasons why listed companies have to adjust their business plans. However, Nguyen Hong Quan, acting Director of An Binh Securities Company, said that in general, companies do not adjust business plans in the ‘last days of the year’ as this affects investors.

Nguyen Thi Hoang Lan, Deputy Director Hanoi Securities Trading Centre (HASTC), also said that it is quite normal for companies to adjust their business plans. However, companies need to announce target adjustments earlier in order to help investors make the right decisions.

Lan said that listed companies should change their viewpoints about information exposure. Enterprises tend to conceal information about labour-cost cuts and production decreases, which they consider ‘bad information’. Lan stressed that investors need to be well informed about the health of businesses, or they will seek unofficial information in the market.

(Source: DTCK)

WB, ADB to lend $110 mln to Vietnam

The World Bank (WB) and the Asian Development Bank (ADB) will offer a combined credit of US$110.3 million to help Vietnam improve its agriculture, reduce poverty and rebuild rural infrastructure damaged by typhoons.

According to an agreement signed in Hanoi Tuesday, the WB will loan $59.8 million to help Vietnam improve its agricultural competitiveness.

The loan, funded by the International Development Association (IDA) – the WB’s concessional lending arm for low-income countries – will be used to help smallholding farmers in eight central Vietnamese provinces through the Agriculture Competitiveness Project.

The funds will also be used to help smallholding farmers access markets through the provision of technology services, public infrastructure for agriculture, and will facilitate farmer organizations and linkages to agribusiness.

Meanwhile, the ADB will provide a $25 million loan to help Vietnam carry out policy reforms for its poverty reduction program in cooperation with a number of other development partners, according to a press release Tuesday.

The ADB will also offer $25.5 million in supplementary financing to an existing emergency assistance loan to Vietnam for the rebuilding of rural infrastructure severely damaged by typhoons and storms in 2005.

The project was initially approved in 2006 by ADB with a loan of $50.97 million. However, high inflation has increased the cost of civil works, materials and labor. Additional damage to rural infrastructure caused by typhoons in 2006 and 2007 has contributed significantly to cost overruns.

The supplementary ADB funding will ensure completion of the project, which targets 10 of the most badly affected provinces in Vietnam’s northern and central regions.

Reported by Bao Van