FINANCE. finance & business news. Reference exchange rate goes up on September 7

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1 finance & business news Reference exchange rate goes up on September 7 2 Banks worry about liquidity at year's end 2 Banks face difficulties from loans to real estate and transport projects 4 High-tech agriculture firms still hard to access VND100 5 Casino business: Commercial banks allowed to provide services 6 Farm innovators scramble for funding 7 Is banks' race to purchase treasury shares just unwilling? 8 More entities to buy compulsory fire and explosion insurance 10 Dai-ichi Life signs bancassurance deal with Sacombank 11 HSBC upbeat on VN economy 11 Central economic commission head attends Eastern Economic Forum 12 24th Apec SME ministerial Meeting on horizon 12 Apec 2017 SMEMM Week set for launch 13 Shrimp exports to US seen rebounding in late Domestic maker exports mooncakes to US, China 14 Catfish exporters need to unite as exports face trade barriers 14 Food exporters removed from US list as new regulations take effect 15 Ministry moots ethanol import tax cut 16 Binh Dinh boat hauls in 1.1 tonnes of tuna in off-season 16 Bumper crop, durian price in Dak Lak province hits record 17 FDI to Vietnam is mostly from Asia, with Korea ranked first 17 VAT increase necessary for national budget: official 18 Foreign house ownership rights in special administrative economic zone proposed 20 Vietnam to make customs reform 20 Minister slams slow pace of agriculture investment 22 VN to build customs bond system 22 Finance Ministry wants business registration fee lowered 24 Ministry proposes hiking wind power price 24 Special incentives in pipeline for agricultural investors 24 PM gives nod to administrative decentralisation in HCM City 25 Vitas proposes prime minister to stop wage increase 26 HCM City to remove unnecessary procedures to facilitate business 27 Hi-tech farms offer a vision of the future 27 Cosmetics manufacturers face thorny path to develop Reference exchange rate goes up on September 7 organic products 29 Two-thirds of enterprises ready for Industry High-tech farms offer vision of future 30 Vietnamese manufacturers 'forget' food market for Muslims 32 Wood industry feels the heat from Chinese buyers 32 Three contractors blacklisted by World Bank for fraud 33 Agri-businesses: State support still tough to reach 35 Vietnam, Egypt vow to raise trade value to $1 billion 36 BIZ NEWS Business Briefs 0, Stocks inch up with confidence low 37 Stocks rise to over 790 points 38 Market capitalisation on HNX reaches 190 trillion dong in August 39 Industry 4.0 demands coordination: deputy PM 39 New P&G initiatives help SMEs and startups access global business opportunities 40 Vietnam to serve 13 million foreign tourists in Warnings over previous Made in Vietnam car failure 42 HCM City to have more water bus routes 43 Tourist stays remain short in Can Tho 43 Egg origin made traceable from this month 44 HCM City sees retail sales boom during National Day holiday 44 Da Nang proposes reducing scale of 10 projects in Son Tra Peninsula 45 Coal company earnings up 9pct 45 Soc Trang, RoK firm cooperate in developing garment factory 46 Honda CRV joins Vietnam price war 46 Regina Miracle project increases capital to 500 million USD 47 CBRE Vietnam appointed as exclusive management agent for Central Point 48 AccorHotels to boost presence in Vietnam 48 Hanoi Museum fails to attract visitors 49 Fate of Lee & Man pulp mill project undecided 50 Large amount of illegally-traded ivory found at Saigon Port 50 Fake cancer medicine uncovered 50 Co.opmart to offer big discounts on fruits, gas stoves, detergents 51 Vo Quang Hue gives up Robert Bosch Vietnam to join Vinfast 52 Seminar mulls ways to develop HCM City firms 52 07/SEP/2017 INTELLASIA VNA The State Bank of Vietnam raised the daily reference exchange rate for VND/USD by 5 VND to 22,439 VND per USD on September 7. With the current trading band of +/- 3 percent, the ceiling rate applied for commercial banks during the day is 23,112 VND and the floor rate 21,766 VND per USD. The opening hour rates at major commercial banks saw strong fluctuations compared to September 6. The biggest changes were seen at Vietcombank, which raised its buying rate by 25 VND to 22,715 VND and the selling rate by 35 VND to 22,795 VND per USD. Intellasia No. 21, lane 173/63/17, Ngoc Ha Ward, Ba Dinh Dist, Hanoi All Rights Reserved Tel: Fax: Office@intellasia.com Websites:

2 At Vietinbank, both rates were revised up by 5 VND, with the buying rate now listed at 22,695 VND and the selling rate 22,765 VND per USD. Meanwhile the rates at BIDV remained the same as on September 6, at 22,695 VND (buying) and 22,765 VND (selling) per USD vnp Banks worry about liquidity at year's end 07/SEP/2017 INTELLASIA DTCK Current figures show that the liquidity of the banking system is rather plentiful but with the credit growth target of 21 percent assigned by the government, bank leaders share the same view that they need to prepare in advance right from now to meet the end of the year peak season. *No liquidity problem Although the credit growth of the banking system as of the end of August 2017 reached nearly 12 percent, compared to the deposit growth of just nine percent, a bank's monetary director said "There is no problem with the current liquidity". Firstly, the State Treasury mobilised nearly 144 trillion dong from the issuance of government bonds. Secondly, since the beginning of this year, the State Bank has bought nearly $3 billion foreign currency, meaning that the market has an additional of nearly 70 trillion dong". That liquidity is not a problem is also a common view of bank leaders in their talk with Dau Tu Chung Khoan. Specifically, "The current banking system is stable in all aspects including liquidity". On the other hand, Dr Le Xuan Nghia, an economic expert said "The liquidity of the commercial banking system has improved significantly, so the loan-to-deposit ratio has been maintained at safe level, the medium and long-term loans are stricter and interest rates in the interbank market are less volatile". In fact, bank leaders seem to feel assured with the system's liquidity situation because the medium and long-term credit continues to decline. Accordingly, short-term credit growth is estimated to reach 14.1 percent (compared with nine percent in 2016), reckoning for 45.9 percent of the total credit (44.9 percent at the end of 2016). Medium and long-term credit is estimated to improve 8.8 percent (up 11.1 percent in the same period of 2016), making up 54.1 percent of the total credit (reckoning for 55.1 percent at the end of 2016). Meanwhile, credit structure by type of money remains stable. Credit in dong reckons for about 91.5 percent, and foreign currency credit accounts for 8.5 percent of the total credit. Credit in dong is estimated to swell 11 percent from the end of 2016 (up 11.1 percent in the same period of 2016). Besides, customers' deposits are estimated to hike about 8.7 percent from the end of The issuance of valuable papers is estimated to surge 18.6 percent. Especially, deposits of the State Treasury at banks continue to rise. By the end of August 2017, deposits of the State Treasury were about 160 trillion dong, up 68 percent from the beginning of the year. Especially, interbank interest rates at terms maintained the low rates such as one percent per annum for overnight and 1- week terms, 1.6 percent/annum for 1-month term; just increasing percent percentage points compared to the end of July However, at this time of the year, "end of the year liquidity" has always been the key word that bank leaders seem to be cautious about. "The liquidity of the banking system is generally quite plentiful at the current moment but as of the end of the year, the liquidity will surely decrease a lot", said the aforementioned monetary director. *Increased credit demand at the end of the year, where is the source of money? As a rule, the end of the year has always been the time that the amount of money released to circulate in the economy spikes compared to any time in the year. This is the peak business season so businesses, households, individuals take advantage of this moment to accrue money for investment to make profits. Therefore, the amount of money withdrawn from credit organisations to pour into the economy is inevitable, causing banks to always be ready for solutions to liquidity stories. The current liquidity is good but it does not mean there will have sufficient capital to meet as demand for lending increases. This year, the government set the credit growth target at 21 percent. In this context, as per the source of Dau Tu Chung Khoan, the State Bank had a meeting with bank leaders to direct the implementation of credit growth in accordance with the target. Intellasia / 53

3 However, the issue is the actual mobilisation does not keep up with lending and even decreases. The data of the National Financial Supervisory Commission show that the capital mobilisation in the first eight months of the year has good growth, and is estimated to increase 9.1 percent from the end of 2016 but decrease from the same period of 2016 (growing 11.4 percent). Nguyen Thanh Phuc, director of Capital Resource Centre cum director of Capital Mobilisation Centre at FE Credit said "At the end of every year, financial companies find it very difficult to mobilise capital because businesses need money to spend. Accordingly, financial companies must compete with banks to seek for capital from businesses". Commenting about the liquidity situation at the end of the year, Dr Nghia said "There are two issues at the same time now. The first thing is deposits of the State Treasury at banks are withdrawn and public investment is accelerated. The second thing is the rising demand for spending of the population and the demand for payment of businesses. This will cause certain tensions in liquidity". In fact, disbursement of deposits at the State Treasury is strengthened. That also means money is withdrawn and will return to the system but will have certain lag, leading to difficulties in a certain period. Sharing difficulties in the capital mobilisation, CEO of a joint stock commercial bank said "The problem of capital mobilisation from the people is rather difficult because to mobilise more, it is necessary to raise deposit rates. The increase in input rates will lead to the increase in output rates, which makes it difficult for businesses to borrow. This affects the credit growth and more importantly, the government's credit growth target of 6.7 percent". To solve the problem of mobilisation, the monetary director suggests that the State Bank may increase the purchase price of foreign currency. For example, the interbank market price is about 22,730 dong/us dollar and if the State Bank purchases at 22,740 dong/us dollar, the highest in the market then banks will sell foreign currency to the State Bank and concurrently set a new price level. "However, how the market psychology after that will be still has not had a specific answer so this is not an optimal solution", said the director. Meanwhile, bad debt of the entire system is still a hot issue. The released H1 financial statements of 12 banks including Vietcombank, VietinBank, BIDV, ACB, MBB, Eximbank, VIB, VPBank, Techcombank, NCB, SHB and Sacombank show that the total bad debt was nearly 66 trillion dong, up nearly 11 percent from the beginning of the year. In terms of absolute value, all 12 surveyed banks had bad debt to increase. Meanwhile, debt in Group 5, or irrecoverable debt also improves approximately six percent, to nearly 32 trillion dong, reckoning for nearly 52 percent of the total bad debt. That is not to mention, statistics show that seven out of 12 banks have increased the provision for the first six months of 2017 with a total of nearly 24 trillion dong, up 27 percent from the same period of ACB had the strongest provision with more than 966 billion dong, accounting for 43 percent of the total net profit and 2.6 times higher than the same period last year. Meanwhile, MB put for provision more than 1.3 trillion dong, 2.3 times higher than the 582 billion dong put in the same period last year. Regarding the absolute figure, BIDV was the bank that put the largest provision with more than 6.2 trillion dong, up 38.1 percent year-on-year and reckoning for as much as 62.6 percent of the total net profit. "As credit growth is directed at 21 percent, liquidity will be particularly difficult at the end of this year", said Dr Hieu, an economist. Banks face difficulties from loans to real estate and transport projects 07/SEP/2017 INTELLASIA BAO DAU TU According to statistics, bad debts in the fields of transport and real estate are very low. That is in conflict with the continuous warnings issued by the regulator. While public opinion opposes the sharp rise of build-operate-transfer (BOT) stations surrounding large cities and arteries, banks are also on pins and needles. As of late 2016, about 20 banks granted a total credit limit of trillion dong to Intellasia / 53

4 BOT and BT (Build-Transfer) transport projects. The total outstanding credit of PT and BOT projects were trillion dong (accounting for percent of the outstanding credit to transport sector). As assessed by the State Bank of Vietnam (SBV), this number only accounted for nearly 1.6 percent of the total outstanding loans of the system, and bad debts only accounted for percent (2.6 billion dong). When being asked, bank leaders who have strongly offered loans to BOT and BT projects in the recent time also confirmed that there is no problem. But is that so? Nearly 90 percent of the capital of the current BOT and BT projects are bank loans. In period, tens of thousands of trillion dong of credit were massively injected by banks into these projects. In that period, lending to transport sector was considered as a gold seam in the context when the credit of the entire sector declined. However, so far, many BOT and BT projects suddenly turned bitter as various inadequacies have been revealed, such as slow progress, capital increasing by tens of times, actual fee collection accounting for just one third of the initial plan, and the fee collection facing serious objection of the people, etc. Answering question of Bao Dau tu's reporter, a member of the prime minister's Economic Advisory Group said that BOT credit is really a matter of concern. Since the borrowing terms are mostly medium and long periods, the bad debts of this field is currently low, because the loans are yet mature. Nevertheless, the value of latent debts is currently very large, reaching tens of trillions dong. Although they are not yet recognised as non-performing loans, they are the sinking ice that threatens many banks. Risk of bad debts may not happen soon, because many loans are on terms of up to years. However, the risks of imbalance in terms for banks may come soon. Currently, the proportion of medium and long-term mobilisation of banks is just about 15 percent (85 percent are short-term deposits). However, banks use 50 percent of the short-term funds for long-term loans. Not to mention that, the total credit limit banks granted to BOT and BT projects is very huge, often reaching trillions of dong per project. If only one project encounters problem, the fund of that bank will be affected. It is no coincidence that SBV has recently loosened the requirement to carry out the ratio of using short-term funds for medium and long-term of 45 percent in early 2018 instead of 40 percent as previously set. According to experts, this regulation actually aims to save banks from losing liquidity in terms of maturity. Previously, in late 2014, SBV issued Circular 36/2014/TT-NHNN expanding the ratio of using short-term funds for medium and long-term to 60 percent (from 30 percent). That led to the boom of lending to transport sector. "The current BOT loan projects are currently very risky while the borrowing terms are long. These two factors are posing risks for banks. Not to mention that the massive lending to transport projects of banks is shrinking the capital pouring in production and business areas", said Dr Nguyen Tri Hieu, an economist. He also suggested that SBV should be more drastic in tightening the capital flow into transport sector, based on the feasibility of the projects as well as the real capability of the investors. While the risks of lending to transport sector are gradually emerging, real estate credit remains attractive to banks. So far, almost 100 percent of banks have real estate loans. According to announcement of SBV, real estate lending currently accounts for about 8 percent of the total outstanding loans, reaching trillion dong. However, according to analysis of experts, loans to real estate sectors are actually hidden in many other areas. For example, the current consumer credit is about 650 trillion dong. According to the National Financial Supervisory Commission, 50 percent of these loans are home loans and home repair loans. Thus, about 300 trillion dong of consumer loans are actually real estate loans. In addition, a part of real estate loans are hidden in the lending to construction. Thus, in detail, real estate credit has reached up to 1,000 trillion dong, accounting for nearly 20 percent of the total outstanding loans of the economy. Intellasia / 53

5 High-tech agriculture firms still hard to access VND100 According to Dr Le Xuan Nghia, the preference of banks for lending to real estate sector is understandable, because the secured assets being real estate always have good value and high liquidity. Moreover, the real estate lending is only worrying if banks pour capital in the backyard projects of shareholders, bogus projects, and to incapable investors. Unfortunately, many real estate projects in Vietnam fall into the latter category. The recent seizing of Saigon Gone Tower the project which currently owns up to seven trillion dong of bank loansby Vietnam Asset Management Company (VAMC) is a typical example of real estate bad debt. Therefore, according to Dr Vo Tri Thanh, former deputy Head of the Central Institute for Economic Management, real estate loans must be carefully selected, avoiding lending to projects on paper. The lending must target feasible projects with high liquidity to avoid real estate bubble that comes with the "bomb" of bad debts as it was in the past. 07/SEP/2017 INTELLASIA VIR The introduction of a credit package to finance high-tech agriculture has been lower than expected due to many barriers. In March this year, prime minister Nguyen Xuan Phuc told the State Bank to instruct commercial banks to set aside at least VND100 trillion (US$4.4 billion) from mobilised capital to lend to high-tech agricultural activities. The credit package carries interest rates percentage points lower than current commercial levels. According to the State Bank of Vietnam (SBV), commercial banks have so far committed to provide total VND120 trillion under this package. Total outstanding loans in the field of hi-tech and clean agriculture has so far reached nearly VND32.3 trillion, accounting for nearly 27 per cent of the package. Nguyen Quang Huy, chair of the Huy Thuan Seafood Investment Ltd Co, said capital was one of pressing needs of agricultural producers. The difficulty in accessing loans is a factor that hinders local ability to compete with foreign bussinesses. "The credit package brings hope that more and more enterprises will be willing to invest in high-tech agriculture development," Huy said. However, Lai Xuan Mon, chair of the Vietnam Farmer's Association, said commercial banks actually hesitated to disburse the capital. Nguyen Canh Hau, head of Corporate Banking Division of the Vietnam Bank for Agriculture and Rural Development (Agribank)'s Hoa Binh branch, said that the bank was confused when trying to provide credits to enterprises as there were no specific criteria to determine what high-tech farming is. Sharing the same opinion, representatives of Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) also said that without the criteria, it would be hard to tell the difference between high-tech agriculture, clean agriculture and organic agriculture. High-tech agriculture often needed large amounts of capital with long-term disbursement, but this was very risky for banking business, Mon said. Collateral issue In fact, collateral is also one of the challenges for businesses when accessing this capital source. According to banks, collateral obtained from the use of loans is currently inadequate. Besides, owners of some facilities built on land they lease for agricultural production such as green houses or net houses are not granted certificates of ownership for the property, thus they could not be used as collateral for borrowings. Agribank chair Trinh Ngoc Khanh quoted by baochinhphu.vn as saying "When we have a bumper crop, these facilities are very valuable, but when the agricultural production is hit by natural disasters, a VND500 billion factory could be worthless." In reality, many high-tech farming firms have to lease land from rural households and they don't have the ownership right to the land plots, thus could not mortgage them Intellasia / 53

6 for banking loans. Duong Thi Quynh Lien, director of Van Hoi Safe Vegetable Cooperative in the northern province of Vinh Phuc, said that to borrow capital from banks, "we have to have some things used as collateral, but the cooperative has nothing". Her cooperative's headquarter is leased and production land is owned by farmers and cooperative farmers. "We mostly obtain trust loans," Lien said. However, the unsecured loans were only feasible based on transparent, reliable and trustworthy information, the Vietinbank representive said, adding that otherwise it was very risky for banks. Nguyen Duc Huong, chair of LienVietPostBank, said that other challenging problems were related to farm produce consumption. Huong said "When we have bumper crops, prices drop" but "when we have poor harvests, prices hike". This is a vicious circle that has not resolved thoroughly. Therefore, many banks are not very keen on lending for agricultural production, he added. Preferential credit policy In order to remove difficulties for enterprises, and at the same time open credit capital for hi-tech agriculture, Nguyen Hong Phong, general director of Tien Nong Agro-Industry Joint Stock Company in the central province of Thanh Hoa, said it was necessary to classify hi-tech agriculture projects according to different priority levels and preferences suitable to each type of enterprise or households. According to him, besides large enterprises that have the advantage of accessing capital, small and medium enterprises (SMEs), especially farmers, find it difficult to meet all lending criteria. Meanwhile, SMEs are more interested in investing in this sector, contributing significantly to its development. As for the output-related issues, Huong from LienVietPostBank suggested that the government should have incentive policies for businesses to collect and sell farm products. Forms of cooperation among farmers, especially between farmers with enterprises, aim to invest in production expansion, create stable production, improve quality of agricultural products, and build a prestigious brand name. According to Huong, businesses need to develop production chains from production to processing and consumption of products to increase added value of high-tech agricultural products and improve competitiveness in the market. trillion-credit-package.html Casino business: Commercial banks allowed to provide services 07/SEP/2017 INTELLASIA VNS Commercial banks will be allowed to trade and provide foreign exchange services related to the casino business from next month. This information was stated under Circular No10/2017/TT-NHNN on the management of foreign exchange for the casino business, which will come into effect from October 15 this year. Casino business is a conditional business and under close management of competent State agencies. It is regulated under Decree 03/2017/ND-CP, which allows foreigners and Vietnamese people residing overseas with passports licensed by a foreign competent agency to gamble at the country's casinos. Vietnamese citizens are also allowed to enter domestic casinos on a three year trial basis. They must be 21 years old or above with full capacity for civil acts of individuals according to Vietnamese law, have proof of regular monthly income of VND10 million (US$450) or be subject to third degree taxation according to the law on individual income tax. The Ministry of Finance is responsible for providing citizens with application forms to verify the above conditions. After the pilot period, the government will then decide whether or not to continue to allow domestic citizens to participate in gambling at casinos. According to experts, easing regulations for the casino business will help prevent cap- Intellasia / 53

7 Farm innovators scramble for funding ital from leaving the country by Vietnamese who visit casinos in neighbouring countries such as Cambodia and Macao, help better manage social order in the sensitive entertainment area in Vietnam and attract foreign tourists. Furthermore, Vietnam hopes to further integrate regionally and internationally, attract billions of dollars of foreign investment to sustain growth and make tourism a key sector to further development. 07/SEP/2017 INTELLASIA VNS The introduction of a credit package to finance high-tech agriculture has been lower than expected due to many barriers. In March this year, prime minister Nguyen Xuan Phuc told the State Bank to instruct commercial banks to set aside at least VND100 trillion (US$4.4 billion) from mobilised capital to lend to high-tech agricultural activities. The credit package carries interest rates percentage points lower than current commercial levels. According to the State Bank of Vietnam (SBV), commercial banks have so far committed to provide total VND120 trillion under this package. Total outstanding loans in the field of hi-tech and clean agriculture has so far reached nearly VND32.3 trillion, accounting for nearly 27 per cent of the package. Nguyen Quang Huy, chair of the Huy Thuan Seafood Investment Ltd Co, said capital was one of pressing needs of agricultural producers. The difficulty in accessing loans is a factor that hinders local ability to compete with foreign bussinesses. "The credit package brings hope that more and more enterprises will be willing to invest in high-tech agriculture development," Huy said. However, Lai Xuan Mon, chair of the Vietnam Farmer's Association, said commercial banks actually hesitated to disburse the capital. Nguyen Canh Hau, head of Corporate Banking Division of the Vietnam Bank for Agriculture and Rural Development (Agribank)'s Hoa Binh branch, said that the bank was confused when trying to provide credits to enterprises as there were no specific criteria to determine what high-tech farming is. Sharing the same opinion, representatives of Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) also said that without the criteria, it would be hard to tell the difference between high-tech agriculture, clean agriculture and organic agriculture. High-tech agriculture often needed large amounts of capital with long-term disbursement, but this was very risky for banking business, Mon said. Collateral issue In fact, collateral is also one of the challenges for businesses when accessing this capital source. According to banks, collateral obtained from the use of loans is currently inadequate. Besides, owners of some facilities built on land they lease for agricultural production such as green houses or net houses are not granted certificates of ownership for the property, thus they could not be used as collateral for borrowings. Agribank chair Trinh Ngoc Khanh quoted by baochinhphu.vn as saying "When we have a bumper crop, these facilities are very valuable, but when the agricultural production is hit by natural disasters, a VND500 billion factory could be worthless." In reality, many high-tech farming firms have to lease land from rural households and they don't have the ownership right to the land plots, thus could not mortgage them for banking loans. Duong Thi Quynh Lien, director of Van Hoi Safe Vegetable Cooperative in the northern province of Vinh Phuc, said that to borrow capital from banks, "we have to have some things used as collateral, but the cooperative has nothing". Her cooperative's headquarter is leased and production land is owned by farmers and cooperative farmers. Intellasia / 53

8 "We mostly obtain trust loans," Lien said. However, the unsecured loans were only feasible based on transparent, reliable and trustworthy information, the Vietinbank representive said, adding that otherwise it was very risky for banks. Nguyen Duc Huong, chair of LienVietPostBank, said that other challenging problems were related to farm produce consumption. Huong said "When we have bumper crops, prices drop" but "when we have poor harvests, prices hike". This is a vicious circle that has not resolved thoroughly. Therefore, many banks are not very keen on lending for agricultural production, he added. Preferential credit policy In order to remove difficulties for enterprises, and at the same time open credit capital for hi-tech agriculture, Nguyen Hong Phong, general director of Tien Nong Agro-Industry Joint Stock Company in the central province of Thanh Hoa, said it was necessary to classify hi-tech agriculture projects according to different priority levels and preferences suitable to each type of enterprise or households. According to him, besides large enterprises that have the advantage of accessing capital, small and medium enterprises (SMEs), especially farmers, find it difficult to meet all lending criteria. Meanwhile, SMEs are more interested in investing in this sector, contributing significantly to its development. As for the output-related issues, Huong from LienVietPostBank suggested that the government should have incentive policies for businesses to collect and sell farm products. Forms of cooperation among farmers, especially between farmers with enterprises, aim to invest in production expansion, create stable production, improve quality of agricultural products, and build a prestigious brand name. According to Huong, businesses need to develop production chains from production to processing and consumption of products to increase added value of high-tech agricultural products and improve competitiveness in the market. Is banks' race to purchase treasury shares just unwilling? 07/SEP/2017 INTELLASIA TRI THUC TRE Over the past few years, many banks such as ACB, Maritime Bank, TPBank, Techcombank, etc. have bought Treasury shares. Most recently, VIB has also made a similar plan. Normally, the purchase of treasury share of businesses will increase the confidence of investors because they expect that the stock prices will be pushed up when there is a large volume of purchase, especially in the context that prices have remained at low level or less fluctuated for a long time. But the recent move to purchase Treasury shares of banks does not seem to reflect that. *Techcombank spends four trillion dong to acquire all the shares held by HSBC Techcombank pioneered the acquisition of treasury shares this year. Under the initial plan, the bank will increase its chartered capital by approximately five trillion dong to meet the development capital as well as enhance competitiveness. But at this last minute, the bank unexpectedly postponed and prioritised the acquisition of HSBC shares to be treasury shares. HSBC is the major shareholder holding more than 19.4 percent of the chartered capital and had accompanied with Techcombank for a long period of time. During twelve years with HSBC, Techcombank made spectacular breakthroughs with most of major indicators to grow ten times faster compared with the beginning period. Prior to the capital divestment, HSBC also had the sign of "clearing the way" when withdrawing personnel from Techcombank in During five years waiting until the official breakup date, although the banking system faced difficulties in general, Techcombank is one of the few rare cases that had vertical acceleration. That might be the reason why when there was information about HSBC's recent divestment, investors not only did not feel surprised but even felt more excited because with the bank's current situation as well as its plan to list, they will be the ones who Intellasia / 53

9 benefit more than anyone else. HSBC, not to mention how profitable it is when pouring capital into Techcombank, what it has shown with its partner has proved to the market the strength of an experienced and admirable financial institution. *VIB also postponed the capital increase to purchase treasury shares VIB is another case. This bank also planned to increase chartered capital from trillion dong to 7.9 trillion dong by paying dividends in shares; bonus shares from capital surplus and funds; and ESOP shares from the profit after tax. But it has now cancelled the capital increase along with the new plan that is to acquire maximum 10.1 percent of the chartered capital to be treasury shares. Many people commented that Techcombank's scenario seems to repeat in VIB and it also does not exclude the case that the Commonwealth Bank of Australia (CBA) may consider divesting. That prediction is not groundless, especially when CBA transferred the all activities of CBA HCM City branch not long ago. At the same time, there are fears that the current equity is average low while VIB is one of 10 banks that piloted the application of Basel II, does VIB meet those standards and does it have enough capital to serve the bank's credit growth as well as to follow the overall trend of the economy or not? *Everyone has good reason Before acquiring treasury shares, Techcombank said that move "reflected Techcombank's understanding about the wishes of some shareholders to gain profits after six years the bank implemented no dividend payment policy to focus the investment for development". However, few will believe that it is the real reason and certainly, outsiders will also hardly know why HSBC and Techcombank broke up. The market used to speculate that the foreign bank did not find larger opportunity in Techcombank and Techcombank might also have another bank that HSBC was no longer suitable. As per analyses of experts from Hochiminh City Securities Company (HSC), the role of HSBC had been declining since 2012, possibly due to potential conflicts as both of them are banks that operate in the same Vietnam market. This assessment seems to be reasonable when HSBC is having 100 percent foreign owned bank in Vietnam that is competing directly with Techcombank in every segment. Whether VIB is taking the same steps like Techcombank or not, or frankly to say, whether the strategic shareholder Commonwealth Bank also wants to divest from this bank? Han Ngoc Vu, CEO of VIB confirmed to the writer that the purchase of treasury shares is not related to strategic partner because the two sides have committed to cooperate for three more years and CBA also has no intention to divest from VIB at this time. Referring to whether VIB will purchase shares from any shareholder group or not, especially when the leaders of this bank and their family members own a large proportion? The bank's representative did not answer directly but said that the purchase of treasury shares will be implemented in accordance with the regulations of the law on parties participating in the buying and selling through the order matching or put through methods that is best suited to the interest of VIB. As for the capital increase plan, the CEO of VIB said the bank will cancel the entire capital increase plan submitted to shareholders, and this will also seek for shareholders' comments in the near future. Regarding the question on whether VIB will take into account another option that is to increase Tier 2 capital to serve the development or not, the bank leader said there has had the plan right from the beginning of the year for the Tier 2 capital increase of banks from institutional investors in the market. The mobilisation of Tier 2 capital will help improve CAR while meeting the capital demand for the business growth demand of banks. Vu also said the bank plans to increase capital in 2018 by submitting for shareholders' approval to retain the entire earnings in 2017 to increase capital, not excluding the calling for capital from international investors. Regarding the question on whether the purchase of treasury shares will cause the eq- Intellasia / 53

10 uity to decrease in the context that the bank really needs capital, the VIB leader said the purchase of treasury shares just temporarily reduces the equity in the short term. In return, the bank will own more valuable assets that are their own bank shares. *Is this because of unwillingness or any other thing? Everyone has very good reason for the purchase of treasury shares. But it is not entirely so when seeing from outside. Even some people say that the share purchase of banks is unwilling. This must be true when there are many plans that need money behind them. That is not to mention, the excessive capital source is not only not much and they even have to take into account the mobilisation as much as possible, so spending trillions of dong to purchase treasury shares is obviously unreasonable. However, one certain thing is that the current plan for treasury share purchase of banks now is not related to the expectations on stock price developments of investors as having happened in the past, but it only reflects banks' strategy. On OTC, Techcombank still trades normally, and is still allowed to trade within trillion dong per share since having the news, while VIB is still having quiet trading at around 21,000 dong per share on Upcom. And whatever predictions about the recent decision to purchase treasury shares of banks, the market will never know exactly when they are not insiders. More entities to buy compulsory fire and explosion insurance Dai-ichi Life signs bancassurance deal with Sacombank 07/SEP/2017 INTELLASIA THE SAIGON TIMES The finance ministry has asked the government to expand the compulsory fire and explosion insurance coverage. In a draft government decree, the ministry suggests 19 groups of entities be obliged to purchase fire and explosion insurance. The list is included in the government's Decree 79/2014/ND-CP dated July 31, 2014 guiding the execution of the Law on Fire Prevention and Fighting. Compared with the current list prescribed in the government's Decree 130/2006/ND- CP issued in 2006 to regulate compulsory fire and explosion insurance, more establishments would be forced to buy fire and explosion insurance. Group one consists of institutes, universities, colleges, intermediate schools, vocational schools, high schools, other large educational institutions, and kindergartens with 100 kids or above. Group two includes television and radio stations, and post and telecom agencies at district level or above. Group three has plants whose functions are to build and repair vessels, or fix and maintain planes. Meanwhile, the proposed decree would still apply to those prescribed in the current one but their scale would be smaller. For instance, hospitals and other healthcare facilities with 21 beds or over, down from the current 50, would be subject to the new decree. In addition to a clear explanation of rights and responsibilities between the insurer and the insured, the draft decree specifies how to calculate insurance premiums, and solve disputes if the two sides cannot decide the value of goods. Especially, insurers would contribute a mere 1 percent of their revenues, instead of the current 5 percent, to the fire prevention and fighting fund if the draft decree is approved. 07/SEP/2017 INTELLASIA VNS Japanese-owned Dai-ichi Life Insurance Company of Vietnam and Sacombank on September 6 signed an exclusive 20-year bancassurance partnership agreement. Under the agreement, Dai-ichi Life Vietnam would be the sole insurer selling life insurance products through Sacombank's network. Sacombank and Dai-ichi will co-ordinate to provide specialised training in life products, consulting and customer care to Sacombank staff. They will regularly organise seminars to introduce financial protection solutions to Intellasia / 53

11 customers. Speaking at the signing ceremony, Takashi Fujii, chair of Dai-ichi Life International Asia Pacific and Dai-ichi Life Vietnam, said: "This cooperation will help Dai-ichi Life Vietnam strengthen its solid foundation to provide superior life insurance products and services, matching the long-term financial security of customers. Duong Cong Minh, chair of Sacombank, said: "I am confident that the 115 years of experience of Dai-ichi Life together with the strength and dynamics of one of the top commercial banks in Vietnam will provide the most premium, convenient and attractive insurance products to customers." He described it as a "win-win" deal. "The cooperation between Sacombank and Dai-ichi Life Vietnam in which the first step is the bancassurance model will be further expanded to many other fields to exploit and promote each other's strength." Sacombank is one of the top five banks in Vietnam with the network of 564 transaction points in 48 provinces and cities. Vietnam was the first foreign market where Dai-ichi Life Group set up a fully-owned subsidiary, which it did in HSBC upbeat on VN economy 07/SEP/2017 INTELLASIA VNS Vietnam's economy is well positioned for growth in international trade and will continue to experience high growth over the next three to five years, said Chief Executive Officer (CEO) of HSBC Bank Vietnam, Pham Hong Hai. Hai made the statement during an HSBC Annual Business event themed "Step into the Future", updating marketplace information and discussing Vietnam's economic prospects. "We are bullish for Vietnam's economic growth in the short to medium term and cautiously optimistic for the long term as it is dependent on the progress of our economic reforms," Hai said. "Reform is the only option and we do not have much time," he said, adding that Vietnam's engagement in key regional initiatives like the Asean Economic Community (AEC), the Regional Comprehensive Economic Partnership (RCEP), and EU-Vietnam FTA helps to accelerate the reform process. Vietnam's economy is likely to grow by only 6 per cent this year, HSBC said in its latest report, revising its previous forecast down from 6.4 per cent. The country's GDP grew 6.2 per cent in the second quarter, driven by gains in both the industrial and service sectors. This was higher than HSBC's forecast of 5.9 percent, but the bank has still reined in its 2017 growth forecast due to the country's sluggish first quarter. The credit growth rate reached 7.54 per cent at the end of June. In early July, the State Bank of Vietnam (SBV) reduced its lending interest rate by 0.25 per cent to 6.25 per cent for the first time in three years to boost economic growth, as Vietnamese companies still rely heavily on bank loans. "We do not expect any further easing by the SBV this year," Hai said. Foreign direct investment (FDI) in the first six months was estimated at $7.7 billion, up 6.5 per cent over the same period of Manufacturing attracted 66.7 per cent of total foreign investment, followed by mining at 10.6 per cent. With new factories commencing operation this year, we expect FDI to drive further gains in Vietnam's global export market share, Hai said. Forecasting the trend of global economic growth, Douglas Lippoldt, Chief Trade Economist at HSBC Global Research, said there were signs that the global trade situation is improving. Most of Vietnam's top 10 export markets, including the US, China, Japan and South Korea, are expected to improve in the period, compared to 2016, Lippoldt said. Intellasia / 53

12 Central economic commission head attends Eastern Economic Forum Increasing import demand in these leading markets would offer plenty of opportunities for Vietnam, he added. However, there are still particular challenges that Vietnam has to face, such as turbulence and uncertainty in global trade policy, together with rising protectionism in some developed countries including the US, he said, adding that further trade liberalisation is needed to support the upturn. 07/SEP/2017 INTELLASIA VNA Head of the Party Central Committee's Economic Commission Nguyen Van Binh joined top officials from 60 countries worldwide at the third Eastern Economic Forum (EEF) which opened in Vladivostok city on the Far East of Russia on September 6. Nearly 5,000 top public officials, representatives of respected organisations and leaders of large Russian and foreign companies get together at the event themed "The Russian Far East: Creating a New Reality". In his speech at the forum, Binh lauded the Far East region's positive changes in recent years. Vladivostok will become a new economic centre connecting Russia and other economies in Asia-Pacific thanks to its abundant natural resources and Russia's strategic policies to develop infrastructure, technology, finance, human resources and other mechanisms to branch out economic special zones, Binh highlighted. Meanwhile, deputy prime minister and Presidential Envoy to the Far East Federal District Yuri Trutnev said that Far East has created favourable conditions for the investors like reducing electricity costs and granting electronic single entry visas for citizens of 18 countries when entering Russia through checkpoints at the Free Port of Vladivostok. Russia is willing to cooperate with partners and ensure a good environment for the investors in healthcare, education, sports and culture, he added. After the opening ceremony, the Vietnamese official and the Russian deputy prime minister witnessed the signing of a cooperation deal between Vietnamese dairy firm TH True Milk and Russian Far East development group. The EEF was firstly held in 2015 to promote economic development in the Far East and enlarge international collaboration in Asia-Pacific. The second forum in 2016 recorded over 200 agreements valued at around 35 billion USD. President Vladimir Putin is expected to deliver a speech at the plenary session on September th Apec SME ministerial Meeting on horizon 07/SEP/2017 INTELLASIA VN ECONOMIC TIMES Meeting to be held in HCM City from September 10 to 15. The 24th Apec Small and Medium Enterprises (SMEs) ministerial Meeting will take place in HCM City from September 10 to 15, with theme "Raising the Competitiveness and Innovation of Micro, Small and Medium Enterprises in the Era of Globalisation". Prime minister Nguyen Xuan Phuc will direct the meeting on September 15, according to Ho Sy Hung, director of the Enterprise Development Agency at the Ministry of Planning and Investment (MPI). The meeting will contribute to the diversified activities of Apec 2017, being held in Vietnam later this year. It is an opportunity to exchange, discuss, and propose effective cooperation ideas within the Apec framework and improve the integration capacity of localities and enterprises in the context of deepening economic integration. The conference consists of three sub-themes: Facilitating business's access to markets and engaging more deeply in global value chains; Facilitating the business environment for SMEs; and Promoting the Apec business spirit in the digital age. The meeting is expected to adopt key documents: the Apec Declaration on Promoting Intellasia / 53

13 Apec 2017 SMEMM Week set for launch Business Enterprises; the Strategy to Promote Small and Medium Green, Sustainable and Innovative Enterprises, and the Report from the ministerial Meeting to the 2017 Apec Leaders' Meeting. A series of related meetings will take place during the event, such as the 45th Apec Small and Medium-sized Enterprise Working Group Meeting, the Apec Online to Offline (O2O) Forum, the Apec Startup Forum, and the Forum on Apec Digital Economy. Vietnam hosts Apec 2017 in the context of the region and the world changing profoundly with instability and vulnerability being more unpredictable. There is a shift of power from West to East, stiff challenges in traditional and non-traditional security issues, and the impact of the fourth industrial revolution on all aspects of life. 07/SEP/2017 INTELLASIA VIR With theme of "Strengthening MSMEs' Competitiveness and Innovation in the Digital Age," the 24th Apec Small and Medium Enterprises ministerial Meeting (SMEMM) promises to contribute to the diversified activities of Apec 2017 held in Vietnam. The 24th Apec SMEMM will take place on September in HCM City, and will include the 45th Apec Small and Medium Enterprise (Apec) Working Group Meeting (September 13-14), the Apec 020 Forum (September 10), the Startup Forum (September 11-12), and the Digital Economy Forum (September 12). Director general of the Ministry of Planning and Investment's (MPI) Enterprise Development Agency Ho Sy Hung said the SMEMM Week will create valuable opportunities for discussions and making suggestions within the framework of Apec to enhance the integration capacity of localities and enterprises, promoting socioeconomic development in the context of globalisation and deeper economic integration. Apec 2017 SMEMM will feature three sub-themes, including facilitating SME's access to the market and deeper integration into the global value chain; enabling SMEs through better access to technology, management, and capacity building in training, consultancy and business matching; and strengthening Apec entrepreneurship in the digital age: promoting startups and business ethics. Nguyen Thanh Le, head of the International Cooperation Division under Enterprise Development Agency, said the Apec 2017 SMEMM, which will be chaired and organised by MPI, is one of the important ministerial-level meetings of the Apec Year The event is expected to offer a platform to discuss and approve key documents, such as the strategy to promote small and medium green, sustainable, and innovative enterprises, and the report of the ministerial Meeting to the 2017 Apec Leaders' Meeting. Shrimp exports to US seen rebounding in late /SEP/2017 INTELLASIA THE SAIGON TIMES The Vietnam Association of Seafood Exporters and Producers (VASEP) expects the nation's shrimp exports to the US market could bounce back in the final four months of The US will have a lot of festive events in the coming months, which will drive up demand for seafood, including shrimp, according to VASEP. VASEP data shows that in the first half of the year, the country's shrimp shipments to the US fell 5 percent year-on-year to $306.5 million, triggered by the anti-dumping duties imposed on Vietnamese shrimp by the US Department of Commerce (DOC) and fiercer competition from India. However, VASEP said shrimp from all countries, including large exporters like India, Thailand, Indonesia and Ecuador, are also subject to anti-dumping tariffs in the US VASEP's forecast is different from that of experts. At the Vietnam Fisheries International Exhibition 2017 (Vietfish 2017) last week, experts projected Vietnam would not be able to see a strong improvement in shrimp exports to the US In 2016, Vietnam exported nearly $688 million worth of shrimp to America, becoming the fourth largest shrimp exporter of the US All the three largest shrimp exporters to Intellasia / 53