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HCM CITY — A second-half surge in merger and acquisition activities is expected in the financial and banking sectors, local reports say.

Their prediction is based on the directive from the State Bank of Viet Nam asking small-scale banks to increase their charter capital from the current VND1 trillion (US$52.6 million) or VND1.5 trillion to VND3 trillion (US$157.9 million).

To abide by the Government Decree No 141 ND-CP, banks have already made plans to offer new shares to existing shareholders as well as their staff after receiving permission from the State Securities Commission, according to the Dau Tu (Investment) weekly.

They are also considering selling stakes to some strategic investors to meet their capital increase targets, the paper says.

And to do this, many of the banks are opting for the M&A mode.

M&A allows the purchase, sale and merger of different companies that can aid, finance, or help a company grow rapidly without having to create another business entity.

Mekong Bank typifies the trend. In spite of having the Maritime Bank and a group of major shareholders that hold 49 per cent of its total shares, the bank plans to call for new strategic shareholders to raise its charter capital to VND3 trillion by the year-end.

Tran Thi Thanh Thanh, chairwoman of the Mekong Bank Managing Board, said they would set aside 30 per cent of the additional charter capital (VND2 trillion) for new strategic shareholders at home and abroad.

At present, the bank is negotiating with partners to seek strategic shareholders suitable for its development plan, Thanh said.

The Gia Dinh Commercial Bank is also taking similar preparatory steps to augment its charter capital.

After Vietcombank and Vietcombank Investment Fund sold 19 per cent out of their 30 per cent stake they held in the GiaDinh Bank, the latter found a major strategic shareholder operates in the securities and fund management areas. The new strategic partner now holds a 22 per cent stake in Gia Dinh Bank.

A representative of Navibank said they were looking to attracting strategic partners at home and abroad to raise more capital to meet the Government's legal capital requirements.

According to State Bank of Viet Nam Governor Nguyen Van Giau, there is no plan to extend the capital increase deadline.

The decree was issued in 2006 so the affected banks have had enough time to make necessary preparations to increase their legal capital by the end of this year, Giau said.

This is likely to give added momentum to M&A activities implemented by small banks during the second half of this year.

If banks are unable to raise their charter capital as required, they would be merged with others, or will have to sell part of their stocks to partners, said Tran Du Lich, a member of the National Advisory Council for Financial and Monetary Policies. — VNS

Leaders vow to build ASEAN community

HA NOI — The Southeast Asian leaders yesterday showed their firm commitment to building an ASEAN community with the adoption of two statements and significant guidlines for boosting regional co-operation after a two-day meeting in Ha Noi.

"We were satisfied with the progress in implementing the ASEAN Charter and the Roadmap for an ASEAN Community and reaffirmed our strong commitments to speed up the effective implementation through concrete measures and activities," said Prime Minister Nguyen Tan Dung in his statement to end the ASEAN summit which approved the joint declarations on the region's strategy for economic recovery and development, and its response to climate change.

The regional leaders, working under the theme ‘Towards ASEAN Community: From Vision to Action', were committed to strengthening co-operation in deepening regional integration and in addressing global challenges with a view to building a resilient, dynamic and sustained ASEAN Community which will be realised by 2015.

ASEAN's connectivity was among the discussions in the last two days' meetings, where the leaders emphasised to prioritise the enhancement of intra-region connectivity, including the need to complete all air, sea and land transportation links.

In the process of community building, education and human resources development should be given a priority and the regional ministers and senior officials were tasked to sustain concrete measures and activities to implement the Hua Hin Declaration on Strengthening Co-operation on Education, said Dung.

The member states agreed on the promotion of the ASEAN's central role in the emerging regional architecture.

"ASEAN wants to confirm its centrality and wants to be in the centre of the driving force to help pull the world out of the economic crisis," said Surin in a post-summit briefing in Ha Noi later yesterday, confirming that ASEAN was willing to respond to the world's expectation.

Regarding this they reaffirmed the importance of ASEAN's co-operation with external partners to expand its connectivity to the wider region with promoting its activities in the regional forums where ASEAN plays the key role like ASEAN+3, East Asia Summit, and ASEAN Regional Forum.

The leaders were satisfied with the significant progress achieved in the implementation of the ASEAN Political-Security Community Blueprint and tasked relevant ministers and senior officials to enhance the utilisation of ASEAN's existing tools and mechanisms, according to the Prime Minister.

Before the summit, the region's Economic Community (AEC) and Socio-Cultural Community (ASCC) had their third council meetings and the leaders all welcomed the outcomes and progress made in the implementation of the AEC and ASCC's Blueprints.

The ASEAN leaders yesterday reaffirmed to prioritise narrowing the development gap between member states among the priorities of intra-ASEAN co-operation as well as ASEAN's external co-operation.

"ASEAN has a big gap in the middle of it, which sees people in the least developed countries earn less than $2 a day while ones in the most developed members get up to $45,000 a day," Surin told media and representatives from international organisations of seven member states in a live video conference. "ASEAN needs to bridge the gap."

ASEAN member states showed their strong support to Viet Nam, as the chair of the regional association, in participating into the G-20 summit later this year.

Great fruits

The summit successfully worked out important orientations for ASEAN co-operation this year, Dung said a briefing to the press and media people after the summit yesterday.

"As the ASEAN chair this year, Viet Nam had co-operated closely and actively with other ASEAN members in putting forward many initiatives to boost co-operation among ASEAN members, which was proved by two joint statements on recovery and sustainable development, and climate change."

Answering Viet Nam News Agency reporter's question whether the summit discussed co-operation within Mekong sub-region, Dung affirmed that development co-operation in the Mekong sub-region was always one of ASEAN's priorities.

In the summit, leaders of ASEAN countries had discussed many measures to develop the sub-region such as boosting infrastructure connection to foster the sub-region's sustainable development and joining natural environment protection issues with climate change responding programmes.

Around 80 per cent of ASEAN people are living less than 100km away from coastal line and therefore effectively responding to the global climate change's impact is among the region's top priorities, according to the Secretary-General.

ASEAN highly appreciated results of the first Mekong River Commission Summit held in Hua Hin, Thailand, last week and supported commitments of commission members to enhance co-operation, usage, management and exploitation of natural resource areas in the Mekong River region, Dung said.

"I can say that the Mekong River Commission Summit held in Hua Hin, Thailand, were very successful and representatives of China and Myanmar also expressed their agreements with the summit's joint statement."

Related to the East Sea issue, the Prime Minister said that maintaining peace, stability, security and safety on the sea was a great concern of ASEAN countries and regional countries.

Related countries in the region had reached many agreements, building co-operative mechanisms to ensure peace, stability and joint co-operation in the region, including the Declaration on the Conduct of Parties in the East Sea (DOC).

DOC was an important document signed between ASEAN and China to boost the confidence and co-operation. Related parties affirmed their commitments to comply with DOC and they were making efforts to join hands realising the commitment, he added.

"We believe that with parties' goodwill and for common interests of the whole region, related parties will continue complying with and implementing well DOC as well as the United Nations Convention on the Law of the Sea concluded in 1982, to contribute practically to the maintenance of peace, stability, security and safety on the Eastern Sea, because it is the common interest of ASEAN member nations and regional countries."

Regarding the election issue in Myanmar, Dung said that as an ASEAN member and a neighbour country in the region, ASEAN in general and Viet Nam in particular always paid much attention and follow the construction and development process of Myanmar.

"In this summit, Myanmar Prime Minister shared with us recent developments in Myanmar. He also informed us preparations for the general election scheduled to be held this year."

"In the recent visit to Myanmar, besides exchanges of bilateral co-operation, in the position of ASEAN Chairman, I had sent to Myanmar Government and people ASEAN's message that wish Myanmar to implement efficiently roadmap of democracy for peace and national reconciliation, organise a fair and democrative election with the participation of all parties, thereby, shortly stabilise and develop the country."

ASEAN members would continue supporting Myanmar's active regional and international integration and were ready to help Myanmar when requested in the spirit of ASEAN Charter, Dung affirmed.

The ASEAN Secretary-General Surin Pitsuwan agreed with the host Prime Minister in this point.

Myanmar needed to follow the ASEAN roadmap and the region hoped that this year would be a turning point for ASEAN to integrate fully into the world community without any problems standing in between, Surin said in a live conference to Cambodia, Indonesia, Laos, Philippines, Singapore, Thailand from Ha Noi.

Indonesia would serve as the next chair followed Jakarta's request due to schedule conflicts, said Surin, adding that Indonesia, replacing Brunei which agreed to the request, had a long list of summit meetings in coming years including possibility of hosting G-20 and APEC.

Cambodia had been confirmed as the ASEAN chair in 2012 as scheduled after Indonesia and Brunei would take the role in 2013, said Surin. — VNS

Weaker dong shakes up markets

Most traders and producers are keeping a watchful eye for any new developments on the forex market before deciding whether to increase prices of commodities following last week's 2 per cent depreciation of the Vietnamese dong.

The State Bank of Viet Nam on August 17 decided to increase the inter-bank exchange rate between the Vietnamese dong and the US dollar to VND18,932 from the VND18,544 that had been kept unchanged since February. This means a depreciation of the local currency by almost 2.1 per cent, a move expected to contribute to reducing the trade deficit.

Giving the trading band of 3 per cent on either side of the official exchange rate, commercial banks have vied with each other to raise their US dollar prices.

Three days after the dong depreciation decision took effect, many commercial banks had the cost of the US dollar against the dong at VND19,500.

Major commercial banks such as Vietcombank, Sacombank, Eximbank, Asia Commercial Joint Stock Bank (ACB) on August 20 quoted prices of VND19,425-VND19,460 per dollar from VND19,100 on August 17.

The unofficial market reacted swiftest with rates ranging from VND19,400 – 19,500.

The depreciation has had immediate impacts on the prices of some essential goods. On August 20, gold prices jumped sharply to VND28.78-28.82 million per tael (equivalent to 38 grams), up by about VND240,000 compared with the previous day. The hike sparked a rush to sell gold.

Gas traders including Sai Gon Petro, Vina Gas, Gia Dinh Gas and Petrolimex also decided to raise the prices of a 12-kg cylinder by between VND4,000 and 6,000. Petroleum importers were also considering a plan to adjust domestic retail prices.

Some steel companies also began raising steel prices by VND300-400 per kilo for all products over rates recorded in late June.

While traders in essential goods have already increased their prices, most small merchants and enterprises were still cautiously watching the market.

Vu Van Minh, CEO of the Giay Viet Company, a shoemaker, said any sharp movement, upwards or downwards, always had ripple effects, and they would have to keep a close eye on the market.

Manufacturers that rely on imported materials are said to be feeling the pinch most.

Trang Van Tot of Glomed Pharmaceutical Company in the Viet Nam-Singapore Industrial Park 2 (VSIP2), said that their input costs would increase, but medicine prices would not be raised due to the price control policy of the State.

The bigger concern is that the company may find it difficult to borrow dollar for imports due to forex uncertainties, he said.

Nguyen Van Hung, chairman of the Tan Phu Plastics Company, said the increase in the forex rate had distressed many plastic producers.

The cost of credit needed to import raw materials would increase dramatically with the new forex rate. This means that the companies cannot think of profits any longer, he said.

Experts said that the increase in the forex rate would increase costs for importers, and this would affect commodity prices as well as the consumer price index.

Now they would have to carefully consider their imports, even for raw materials. The habit of borrowing the greenback to import materials and maintain reserves cannot be persisted with anymore.

These changes would help the country better control its trade deficit as well as inflation in the coming months, they said.

At present, chain store operators have still kept prices unchanged due to good inventories. However, many of them, mainly retailers involved in importing goods, have said they have plans to raise prices in the coming weeks.

Local investors set pace

Domestic investment in HCM City's industrial parks has for the first time outpaced foreign direct investment (FDI) in the year to date, with respective figures of US$235 million and $49.2 million.

The HCM City Export Processing and Industrial Zones Authority (Hepza) said that 35 local investors have so far this year been granted investment certificates with a combined capital of more than US$235 million. If additional funds for operational projects are included, local investment will amount to $297 million.

Meanwhile, FDI inflow into IPs and EPZs over the past seven months was just $49.2 million pledged in 13 projects. Additional capital for operational projects would push total FDI in the January-July period to slightly over $136 million.

Hepza attributed the FDI drop to the global economic recession, the lack of infrastructure and land in the zones as well as less attractive incentives for new investment projects. Besides, Hepza's move to confine foreign investment to eco-friendly and hi-tech sectors while limiting projects in polluting and labour-intensive industries also has an impact on the FDI inflow.

Meanwhile, domestic enterprises are aware that technologies are cheaper due to the global crisis so they have managed to upgrade and expand operations to become more competitive.

Hepza expects to attract more than $680 million in domestic and foreign investment this year.

Online advertising heats up

With increasingiInternet use alongside consistent IT development, online advertising is on rise in Viet Nam.

By June this year the number of Internet users in Viet Nam had reached 24.6 million, up 12.7 per cent compared to the same period last year. Meanwhile, the number of people using the broadband internet also grew by 24 per cent to over 3.34 million subscribers.

These figures are really attractive conditions for the domestic online advertising industry to develop.

However, its development is still at the primary stage in Viet Nam, experts say, adding it has great potential to go much further.

The market would not be well developed until 2012, and it would achieve stable development in 2015, they predict.

At present, the country's spending on online advertising accounts for only 0.4 per cent of the total ad expenditure. Per capita expenditure on online advertising in Viet Nam is estimated at just $0.5 oer year, much lower than $10 in China and $14.5 in Russia.

Consequently, the online advertising industry earned revenues of just $15.5 million in 2009, according to the Cimgio Market Research Company.

The main reason for slow development of the online advertising industry is a lack of tools that can be used to effectively measure the impact of online advertising campaigns.

This means enterprises lack information on benefits that online advertising can bring.

Local consumer habits and the opening of many websites are other inhibiting factors.

At present, most enterprises prefer putting their banners and logos on popular websites to using text advertising while the latter can create more benefits for advertisers.

According to AC Nielsen – the US-based global marketing research firm, banner advertising accounts for up to 80 per cent of online advertising market now.

The opening of many websites at present has also left enterprises confused about the right online site to advertise their products and services. Experts however believe that text advertising in Viet Nam will catch up with banner advertising in four or five years. — VNS

Should schools ban mobile phones?

Despite the reputed health risks of exposure to microwaves, more and more parents are buying mobile phones for their children.

Pham Thanh Dam, a lecturer at HCM City-based Post and Telecommunications Institute, said microwaves could potentially harm a child's immune system, lead to skull-development problems and even cause brain cancer.

However, most primary – and secondary-school students would rather be dead than go without their trusty mobile.

And parents are more concerned about being able to contact their children than of the health risks involved.

"I heard about the effects of mobile phones on health but they do help me keep in touch with my child when he is out. It takes just a phone call to find out what he is doing and where he is," said Vuong Thi Hien, whose son is an eighth grader in Ha Noi.

Nguyen Thu Dao, a teacher at Chu Van An Secondary School in Ha Noi, said two-thirds of her class of 45 now had mobile phones.

Parents buy their children a mobile phone so they can keep in touch when they are away from home, Dao said. However, she said students who skip school to play on computer games could simply lie to their parents about where they are or even refuse the call.

She also said that students in her class often sent text messages covertly or listened to music. She said she was also annoyed by the phones' ring tones.

"Students often fail to concentrate on the lesson because they are too busy texting friends, while ring tones disrupt the class," Dao said.

A school vice principal in Ha Noi said that some students used their phones to cheat in exams.

Worse still, camera phones have also been used to humiliate peers, as was the case of the school girl in Ha Noi who was beaten up by her fellow students. On-lookers, rather than intervene, simply posted pictures of the fight on the internet.

In addition, students can also download inappropriate material on phones that have internet, he said.

Nguyen Huong Quynh, a teacher at Nguyen Cong Tru Secondary School, said students were only permitted to use mobile phones to make calls or send messages, rather than access the internet.

Nguyen Ngoc Hung, an 8th-grader, said he would be lost without his phone.

"It is a part of my everyday life. My friends and I exchange messages quite often, tens of times a day. I can even write messages quickly without having to look at the keys." Hung said.

Education and Training Ministry regulations prohibit students from using mobile phones in class or during school activities. There is, however, no minimum age limit for possession of a mobile phone.

Nguyen Thu Ha, a primary school teacher, said busy parents bought their children phones so that they could be called when they needed to be picked up after school.

However, Ha said parents could just as easily ask teachers to keep an eye on their children if they were going to be late.

She said she thought there was nothing wrong with mobile phones, provided they were used sparingly and only when necessary. — VNS

Kalmykia wants to boost Vietnamese co-operation

Khang
HCM CITY — The head of Russia's Republic of Kalmykia Kirsan Ilyumzhinov offered to help Viet Nam sell rice in Russia and former Soviet Union countries.

Ilyumzhinov, who is also President of the World Chess Federation (FIDE), made the statement during a meeting with President Nguyen Minh Triet in HCM City yesterday.

He suggested Viet Nam turn Kalmykia into a gateway for Vietnamese goods to be sold in Russian and European markets.

Viet Nam should also build Vietnamese garment factories and a quarter in Kalmykia to generate jobs and stabilise the life of Vietnamese people working and living in Russia, he said.

In reply, President Triet spoke highly of his guest's work to strengthen co-operation between the two sides.

He said Viet Nam would support him in his role as FIDE president when the 81st chess congress is held this September.

Ilyumzhinov praised the development of chess in Viet Nam, and the achievements of its players.

He also conveyed greetings to Viet Nam and President Triet from chess players and FIDE members throughout the world. — VNS