Beach beautiful, but travelers don’t loosen purse-strings

16:55' 30/07/2007 (GMT+7)

VietNamNet Bridge – Vietnam has many beautiful beaches, among which, Da Nang beach has been recognised by the US Forbes magazine as one of the most wonderful beaches on the planet. However, this is not enough to lure travelers and persuade them to spend money. While people in the world now tend to travel by sea, the number of foreign tourists coming by cruise ship to Vietnam remains modest. It is estimated that European travelers spend 50-70% of their time in Vietnam relaxing on beaches. According to Truong Nam Thang, Director of OSC travel firm, most foreign tourists stay in HCM City for one night only, and then travel to the central region to enjoy the fresh atmosphere and wonderful beaches there. Statistics of the Vietnam National Administration of Tourism (VNAT) show that Vietnamese sea areas attract 70% of foreign tourists. Lacking… ways to beaches While people in the world now tend to travel by sea, the number of foreign tourists coming by cruise ship to Vietnam remains modest. According to VNAT, the number of foreign cruise tourists just accounts for 6% of the total number of travelers visiting Vietnam. The tourists only stay in Vietnam for two or three days on average; therefore, they do not have much time for sightseeing, entertainment and shopping. Most of the cruise ships dock at merchandise ports, while there are not specialised ports for tourism ships in Vietnam. Many big ships cannot go far into the port, while travelers have to be ferried ashore, which takes time and discourages tourists. The Institute for Transport Development Strategy under the Ministry of Transport has acknowledged that the seaport development strategy does not mention the port system for tourism. An official said that the situation would be improved once the ministry drew up a plan on developing a port system modern and capable enough to receive big cruise ships at key tourism points like Ha Long Bay, Hue, Da Nang and Nha Trang city, HCM City, Vung Tau and Phu Quoc Island. Beaches beautiful, but still need advertisement Analysts have said that Vietnam has never paid appropriate attention to the advertisement of its seas and beaches. In fact, VNAT published bulletins with special issues on Vietnam’s sea landscapes, but they just provided general information. Vietnam has never participated in conferences and trade fairs with the focus on sea traveling and cruise traveling. Only recently, when working with the US CNN television, did VNAT mention advertisement for Vietnam’s seas and beaches with Ha Long Bay being the focus. The strategy on tourism development by 2010 and vision to 2020 also did not mention sea travel development. Meanwhile, Vietnam now has to compete with regional countries including Thailand, Indonesia and Malaysia in terms of attracting tourists. Director of the Tourism Department of Binh Thuan Ngo Minh Chinh has asked VNAT to build standards for types of sea travel: which sea areas should be reserved for rehabilitation travel, which ones for sea sports and entertainment, and which for open air sea travel. Local authorities would refer to the standards to programme their tourism development strategy. VNAT plans to submit to the Government a project on sea and island travel development by 2010 with a vision to 2020. One day, Vietnam will also have its trademarks for sea travel as other regional countries have, like Indonesia’s Bali and Thailand’s Phuket. (Source: Tuoi tre, Viet Nam Net)

HSTC’s strict requirements to create sub-licences?

17:11' 30/07/2007 (GMT+7)

VietNamNet Bridge – Newly set up securities companies have expressed concerns since hearing the news that the HCM City Securities Trading Centre (HSTC) will inspect their capabilities before granting HSTC membership. HSTC has set up a new rule, under which securities companies, after getting operation licences, must go through a process of being inspected in terms of technical conditions and material facilities before getting HSTC membership. A council to be established by the trading centre will examine the companies to find out if they are technically capable of being granted membership. What worries securities companies most is that the new regulation by HSTC will create the ‘ask-and-grant’ mechanism and the so called ‘sub-licence’, a big social problem that needs to be cleared up. Meanwhile, HSTC’s Deputy Director Le Hai Tra affirmed that HSTC acted within its authorised power and in accordance with international practice. Mr Tra said that a licenced securities company did not automatically become a member of HSTC. He said that the New York Stock Exchange only recognised the membership of 1,336 securities companies out the several tens of thousands of securities companies in the US. “It is not difficult to give more tables and seats for securities companies’ staffs at the centre. However, we need to examine securities companies to see if they can meet requirements in terms of technology, service quality and a lot of other requirements,” said Mr Tra. However, the explanation by Mr Tra does not help dispel the worries of securities companies. A lot of questions have been raised: Why didn’t HSTC inspect the securities companies which were set up before? Will the previously established companies be inspected? The chairman of a big general corporation which is applying to set up a securities company belonging to the corporation wondered if HSTC was setting stricter regulations because it wanted to stop licencing new companies. It is clear that the announcement by HSTC on setting up stricter requirements on new securities companies has put investors, who are applying to establish 50 securities companies, on the edge. Securities companies have to do a lot of things to get an operation licence, and after getting the licence, they still have to exert more effort to get HSTC membership, which they called a kind of ‘sub-licence’. If a company cannot be granted membership, it means that it will go bankrupt, because no client will use the services of companies which are not recognised by HSTC. Yen Trang, Viet Nam Net

US$ deposit interest rates and loaning up, why?

16:59' 30/07/2007 (GMT+7)

VietNamNet Bridge – Since mid March 2007, many joint stock banks have raised interest rates on US$ deposits by 0.05-0.57% per annum. Outstanding loans in US$ have also grown more rapidly than VND loans with the growth rates of 19% and 13%, respectively. Joint stock banks: lacking capital in foreign currencies US$ deposit interest rates and loaning up, why? The raising of US$ deposit interest rates was initiated by joint stock banks, especially banks in Hanoi like Military Bank, VIB and Techcombank. The move later was followed by HCM City-based banks like Phuong Nam and Nam A. Other banks, though they have not adjusted interest rates, have launched promotional programmes in order to attract capital in US$. Why are Vietnamese banks still raising deposit interest rates while the US FED has decided to maintain the US$ interest rate at 5.25% (the rate is expected to remain unchanged until the year’s end) and there are no big fluctuations in the international market? Analysts have said that local banks have to raise deposit interest rates because they lack capital in foreign currencies. In general, in Hanoi, the proportion of mobilised capital in use is not high, at 61.3%; however, the figure is high among joint stock banks, at 82%. The liabilities in foreign currencies of eight joint stock banks in Hanoi are VND12.9tril, while the assets have reached VND13.7tril. Since the end of 2006, joint stock banks have been largely unsuccessful at raising mobilised capital. In Hanoi, the mobilised capital in foreign currencies has even decreased by 2%. Joint stock banks have not been able to mobilise much capital in foreign currencies from the public because people prefer depositing in VND to get more interest. Meanwhile, companies which can supply big sums of foreign currencies only have relations with state owned banks. In order to raise more capital in foreign currencies, joint stock banks have no other choice than raising deposit interest rates. Enterprises prefer loans in US$? The growth rate of loaning in US$ remains relatively high because of two reasons. First, enterprises try to import more goods and it is the time for disbursement for big projects. However, many experts say that this is not the main reason behind the interest rate increases. As for big projects, disbursement always goes in accordance with a scheduled roadmap, while it does not come in the second quarter only. Moreover, enterprises that have high demand for capital in foreign currencies contact state owned banks rather than joint stock banks. Meanwhile, state owned banks all said that the demand for foreign currencies had not increased considerably in the last three months, and that they could still supply enough foreign currencies. In fact, state owned banks have not raised their US$ deposit interest rates. As for the demand for foreign currencies to make payments for import deals, bankers have said that the demand always decreases to the deepest low in the second quarter and that the demand only increases at the end of the third quarter. Bank officials have pointed out that loaning in US$ increases because enterprises prefer borrowing in foreign currencies. It is to enterprises’ advantages to borrow in foreign currencies in comparison with VND, and in the current context of the exchange rate. The sharp increase of loaning in foreign currencies has raised doubts about loaning to the wrong subjects. Under current regulations, credit institutions can only provide loans in foreign currencies to clients which have turnovers in foreign currencies for paying debts, and clients which do not have turnovers in foreign currencies but have permission from banks to sell foreign currencies for paying debts and can show contracts on buying foreign currencies. As for banks, they are ready to lend money, no matter in VND or foreign currencies, if they can make profit on the deals. The director of a bank even said that banks could get more profit when lending in foreign currencies as enterprises use derivative products of banks, from which banks can collect fees. State owned banks drawn into the game? Though only joint stock banks have joined the move of raising deposit interest rates, state owned banks may get involved in the game. State owned banks are considering raising interest rates because they fear that joint stock banks will attract their traditional clients. The escalating deposit interest rates will certainly lead to the increase of lending interest rates. This will make credit contracts signed in previous years difficult to be disbursed (medium- and long-term interest rates are never fixed, but always floating). Meanwhile, expenses for paying debts in the medium term will be higher for the credit contracts signed at this moment. Experts have also warned that the increased interest rates would be a burden on small- and medium-size enterprises, a sector that plays a decisive role in export growth and national economic development. (Source: Lao dong, Viet Nam Net)