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VN traders expand across Asian market
Greater China remains the biggest target market for Vietnamese traders while the rest of Asia has overtaken Southeast Asia as the second biggest, a survey by the Hongkong and Shanghai Banking Corporation has found.
The majority of Vietnamese exporters and importers (58 per cent) continue to actively trade with Greater China, followed by the rest of Asia (38 per cent) and Southeast Asia (34 per cent). In ranking the most promising regions for trade growth in the next six months, there is a small increase (1 to 4 per cent) in the number of traders considering these three regions the most promising.
The HSBC Trade Confidence Index, compiled between July and early September and released last week, polled 5,124 trade-oriented small and mid-market enterprises in a total of 17 markets, including key economies in the Asia-Pacific, Middle East, Latin America, the US and Canada, and Europe.
They were asked about their six-month outlook on trade volume; buyer and supplier risks; the need for trade finance; access to trade finance; and the impact of foreign exchange and government trade regulations on their businesses.
The trade confidence index has dropped 10 points from the first half to 122, placing Viet Nam in fifth position, which reflects both the caution of Vietnamese traders towards these target markets as well as their views on potential challenges ahead. The scale is from 0 to 200.
Around 46 per cent believe the trade volume will only increase slightly in the next six months and almost a quarter each think there will be a significant increase and the volume will remain constant.
Eight per cent believe it will decrease, double the first half-year number.
Most respondents in the 17 markets do not expect buyer and supplier related risks to increase, and Vietnamese traders share this optimistic outlook – a higher proportion believe that the risk of buyers defaulting on payment will decrease.
More Vietnamese respondents think that the risk of suppliers not honouring agreed trade arrangements will stay the same (75 versus 63 per cent) and so are willing to accept flexible payment arrangements such as credit or payment terms.
When asked what they would do to overcome non-payment risk from buyers, fewer plan to offer flexible terms (14 vs 27 per cent ) other than that, Vietnamese traders say they will control buyer relationships by applying greater use of trade finance vehicles via banks (43 per cent vs 24 per cent), accepting smaller orders to reduce transaction exposure and often requiring advance payment for the time being.
Many also put their hopes on export credit insurance through financial institutions and Government-backed schemes.
Only 7 per cent favour tightening payment terms and doing less business with particular buyers.
Given the caution they are showing in planning their business strategies, the number of Vietnamese traders who say the need for trade finance will increase also dropped slightly from 74 to 67 per cent. Half the respondents will use finance from banks while over a third count on their own money to do business.
More respondents say the exchange rate volatility is the biggest barrier to import/export business growth (71 vs 48 per cent), followed by the cost of shipping, logistics and storage (43 per cent), and Government regulations (36 per cent). Only 20 per cent considered rising interest rates as a major threat versus 38 per cent in the last half.
Clean environment
Increasing pollution by factories has become a major headache for authorities in Binh Duong Province next to HCM City.
The local environmental police recently found Dong An 1 Industrial Park and a woodwork company within the park discharging untreated toxic effluents into the environment. The cases are under investigation.
In June the province announced a list of 91 industrial establishments and enterprises causing serious pollution and ordered them to stop the pollution by July 30 this year. However, by mid-August only four had done so.
Meanwhile, Thailand's SCG group, a diversified conglomerate with operations in Viet Nam, including those based in Binh Duong, organised a symposium in Bangkok last week to raise awareness and compare notes on sustainable development.
SCG, ranked by the Dow Jones Sustainability Indexes as a leader in the building materials and fixtures sector for seven straight years and this year as the world No 1 in the construction material super-sector, applies the "three Rs" concept in using natural resources – reduce, reuse/recycle waste, and replenish.
At its Vina Kraft Paper Co in Binh Duong, it uses recycled paper as feedstock and recycles wastewater. The group's president, Kan Trakulhoon, said businesses should not focus only on economic performance but strike a balance between economy, society, and environment.
Dr Kinzang Dorji, special envoy of the prime minister of Bhutan, said GDP is designed only to measure the volume of goods and services transacted in a market but his country has chosen GNH, or gross national happiness, as the criterion based on standard of living, culture, good governance, sustainable development of society and economy, and environmental protection.
This leads to policies like regulating forest coverage, stringent environmental regulations for industrial licensing, and tourism that emphasises high quality but low impact.
Deposit rates really down?
After the Viet Nam Banking Association told its members last week to lower dong deposit interest rates to a maximum of 11 per cent from the earlier 11.2 per cent, banks nominally complied.
However, most also simultaneously announced freebies for depositors raising the question if the rate cuts are for real.
Eximbank Viet Nam, for example, is offering depositors bonus points which will be paid in gold, bonus rates, and gifts depending on the amount and term.
TRUSTBank has cut its deposit rate for one month and above to 10.6 per cent but offers a VND500,000 voucher for three-month deposits of VND1 billion.
A banker admits it is hard to cut rates at this time of the year when credit demand by corporates usually rises and banks need to attract deposits.
Higher consumer prices and gold and US dollar rates are not helping banks' efforts either.
Trinh Van Tuan, general director of Oriental Commercial Bank, says there will be almost no changes in lending rates, which stand at 13-15 per cent.
Le Xuan Nghia, Deputy Chairman of the National Financial Supervisory Committee, explains the nominal deposit interest rate of nearly 12 per cent compared with the targeted 8 per cent inflation means the real rate is 4 per cent, much higher than global levels. This is putting businesses in a very difficult situation, he says.
Thuy Anh
vietnamnews
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