Vietnam - Lacking capital, businesses look daggers at SCIC

VietNamNet Bridge – If the State Capital Investment Corporation (SCIC) only does the simple work of depositing the state’s money at banks for profit, it would be better for it to get dissolved.

SCIC, the powerful state’s corporation, has been facing the heavy criticism from the public after it released the 2012 finance report showing that it deposited trillions of dong worth of capital at banks for profit.

Vietnamese businesses have been thirsty for capital. A report by the HCM City Business Association showed that up to 64 percent of businesses find it difficult to access bank loans, or have to borrow capital at the sky high interest rates of 18-21 percent.

The State Bank of Vietnam has announced that the lending interest rate has been slashed to 12 percent per annum. However, since banks only target big enterprises, the majority of businesses still cannot access the 12 percent per annum bank loans.

Meanwhile, SCIC in 2012 deposited VND20 trillion worth of the state’s capital at banks, which allowed it make profit in an easy way and helped “fatten” banks.

A banker said that the huge sum of capital alone would be enough to bring the profit of hundreds of billions of dong to the banks. In principle, this is demand deposit, i.e. depositors may take back money at any time. However, the “rich institutions” rarely withdraw money. Therefore, the banks may enjoy the margin profit of up to 20 percent in this case.

Prior to that, in 2011, SCIC deposited VND4,227 billion to enjoy the interest rate of 3-14 percent per annum. In 2010, it deposited VND7,199 billion at the interest rates of 2.4-11.2 percent per annum.

Dr. Nguyen Minh Phong, a well-known Vietnamese economist, has affirmed that it’s quite an abnormal thing for SCIC, which is authorized by the state to make investment in enterprises, make money just by depositing state’s money.

SCIC receives capital from the State and then deposits the capital at state owned banks. The state owned banks then use the capital to buy government bonds. As such, the state has to pay interests for the state’s capital itself.

Phong said it’s understandable why SCIC did this. Making deposit money at banks for profit is obviously the easiest and safest way to make profit and preserve the state’s capital.

The current laws stipulate that SCIC, as the investor of the state’s capital, has to preserve the state’s capital, which means that the SCIC’s leadership must not lose the state’s capital while making investment.

Therefore, SCIC dare not take venture investments. It has just either injected capital in profitable and safe business fields, such as dairy production (Vinamilk), or deposited money at banks, which surely can bring profits. However, these are not the business fields where the state needs to invest in.

In 2012, SCIC got VND1,568 billion from the interests of the deposits at commercial banks and VND1.001 billion from Vinamilk, a leading dairy producer in Vietnam. As such, commercial banks and “milk cows” brought two thirds of the total turnover of SCIC.

Meanwhile, SCIC should be the finance institution which pioneers in making investment in new and risky business fields, which would create favorable conditions for the development of the national economy, science and technology. One of the most important tasks of SCIC is to make investment in the high technology sector.

Compiled by Thu Uyen

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Malaysia - Asean Bankers urged to identify areas of mutual collaboration

The Chairman of Asean Bankers Association (ABA), has urged bankers in Asean to identify areas of mutual collaboration due to the changing global landscape, which presents significant new challenges and risks for Asia as a whole and Asean in particular.

The call was made by Javed Ahmad, who is also the Managing Director of Bank Islam Brunei Darussalam (BIBD) in his opening remark at the 19th Asean Banking Conference and the 42nd Asean Banking Council Meeting held from November 7 until 9 at the Sasana Kijang, Kuala Lumpur, Malaysia.

The theme of the conference, hosted by the Association of Banks in Malaysia, was laying the Foundation for one Asean Market – ‘Identifying and Prioritising Initiatives’.

According to a press statement from Asean Bankers Association, the Chairman of the Association of Bank in Malaysia, Dato’ Sri Abdul Wahid Omar, meanwhile echoed the same sentiments, given the fragile global economy and the challenges faced by the Eurozone. This was an opportune time to meet and discuss the fundamental values of having one Asean market. The region’s high powered consumer spending and economic strength will provide ample opportunities for the financial sector to flourish.

In the ceremony, Governor of Bank Negara Malaysia, Tan Sri Dato’ Sri Dr Teti Akhtar Aziz, gave an inspiring keynote speech. She commented that despite the recent global financial crisis, the drive for Asean to achieve the Asean Economic community (AEC) by 2015 was well supported by the prevailing strong foundations and the tremendous growth prospects for Asean in the medium to longer term.

She also mentioned that given the diverse nature of Asean economies, the integration model adopted for Asean has been one that focuses on strengthening preconditions through collective capacity building, which in turn helps to promote more market access among the economies in Asean, progressively reducing barriers to facilitate cross border trade, developing the market infrastructure and enabling an environment to promote efficient and effective intermediation of cross border financial flows and establishing the appropriate safeguards for financial system stability, reports Borneo Bulletin.

Following the conference, a meeting was held for the three permanent committees of the Asean banking Council: Cooperation in Finance, Investment and Trade and Asean Inter-Regional Relations and Banking Education. Each of these meetings was attended by representatives of the ABA members.

The 42″d Asean Banking Council Meeting held on November 9 endorsed the following, that committee on the cooperation in Finance, Investment and Trade will continue to identify regionally relevant and topical issues as well as initiate ideas to the promotion of Asean banking co-operation in the areas of finance, investment and trade; committee on Asean Inter-Regional Relations will continue to identify countries (in the form of study visits) which will allow Asean participants to share in the development/ advancements in the area of banking trade and finance; committee on Banking Education will start a working committee with the goal of standardising certification courses across Asean and continue to actively solicit resource persons to match training needs of member countries.

The 43rd Asean Banking Council Meeting will be held in November 2013 in Yangon, Myanmar and hosted by Myanmar Banks Association.

http://www.theborneopost.com/ 

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Myanmar - Farmers Want National Association to Protect Interests

Farmers from rural areas around Burma are trying to set up the Myanmar Farmers Association (MFA) by cooperating with central executive committee members of the Myanmar Rice Federation (MRF) although government permission has not yet been granted.

“Executive-level people of the government worry about the Myanmar Farmers Association as more than 75 percent of the country’s population works in agriculture. Currently there are many protests regarding land grabs. If they can’t control this massive group, it will impact on the government body and current situation,” said a spokesperson for the Union of Myanmar Federation of Chambers of Commerce and Industry.

The MRF, the formerly Myanmar Rice Industry Association, has grown very quickly into a powerful organization since reformist President Thein Sein took office in March last year. At first, the MRF only gave recommendations for rice exports to support the work of the Ministry of Commerce. Later, the association also got permission to operate the “buffer stock” project. The MRF is just over one year old and led by famous tycoon Chit Khine.

Yet some analysts do not see the trade association as necessarily a positive development.

“Now the MRF has already set up the Myanmar Agribusiness Public Corporation (MAPCO), which is the first public company allowed by the government. MAPCO is currently selling shares to the public while another 17 private companies are waiting for permission from the government,” an economic expert told The Irrawaddy.

“MRF already handles rice exports and the local production sector. It also operates the buffer stock project. Now the MRF is trying to set up the MFA for other farming such as pulses, beans and sesame farmers. It is not good for market competition and will lead to domination.”

The MFA asked for government permission to establish an association in the first week of September yet has already announced that it will operate in the future as an arm of the MRF despite the absence of an official response.

“We will try to set up a National Farmers Conference during the next six months. We will invite President Thein Sein, opposition leader Aung San Suu Kyi and other related ministers. In that conference, farmers will speak out about their feelings and their rights. We will also elect the chairman and other committee members for the MFA,” said Soe Tun, the temporary chairman of the MFA as well as a central executive member of the MRF.

MRF central executive members are currently heading the MFA before the National Farmers Conference takes place and new leaders can be chosen. MRF members said they will network with farmers to ascertain their needs and promote their capacities.

“We can use our voice with this association. We will propose our ideas for the development of the agricultural sector and rural areas at the conference. We believe we are the only ones who can promote our lives,” said Than Tun, a farmer who owns more than 120 acres in Irrawaddy Division.

Currently farmers are suffering from floods in the main rice cultivation areas of the Irrawaddy Delta as well as drought farther north in the dry zone where bean and pulse crops are under threat.

Many farmers are struggling this year due to the lack of financial assistance from the government—50,000 kyat (US $60) per acre as opposed to the 150,000 kyat ($180) needed to be sustainable.

The current farming system run by MRF involves special rice companies supporting farmers on a contract basis. But only around 10 special companies can continue to support farmers this year compared with 58 in 2011 as around half of farmers have apparently not been able to repay last year’s loans.

“We will argue at Parliament for a law to protect farmers after our association becomes official,” said Soe Tun. “But currently we will continue trying to get permission from the government for the registration of the Myanmar Farmers Association.”

MAY LAY / THE IRRAWADDY

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Thailand - Retailers oppose draft bill, claim modern outlets harmed

Association believes current rules enough

The Thai Retailers Association (TRA) opposes a draft retail bill by the government, saying it would be unfair for many retailers and particularly modern trade.

President Busaba Chirathivat yesterday said the draft law appeared biased, as it would strictly control only modern trade operators.

Moreover, the law would freeze growth in the local retail sector and block several retailers from capitalising on the Asean Economic Community in 2015 due to business limitation and a lack of government support.

Instead, the association wants to see new retail regulations applied to all retail sectors, from modern trade to traditional retailers.

The current draft, drawn up five years ago, is seen as outdated for the dynamic retail situation. Today's retailers can sell products not only in physical shops but also online.

Ms Busaba cited six existing regulations on local retailers including city zoning and building controls, environmental restrictions and laws overseeing competition and consumer protection.

Modern retailers in Thailand are at the forefront of Asean. They can create a route to bring local suppliers, especially small and medium-sized companies, into the regional market.

"The government should see modern retail as a potential business area, not a sector it has to seriously control," said Ms Busaba. "It's not necessary to have the retail law to regulate us, as we have many regulations now."

Asked about the Internal Trade Department's intention to put one-dish meals on the price-control list and force retailers to cut fees for vendors at food courts to 20% from 37-40%, she said the department should look into the entire supply chain of one-dish meals.

"Modern retailers did not set too high a fee at food courts to make huge profits like many people believed," said Ms Busaba.

"The fee covers all expenses _ value-added and income taxes, electricity, water, air-conditioning and cleaning services."

She urged the department to probe one-dish meals sold by general street vendors and see whether they have raised prices.

Director Chatchai Tuangrattanapan said the TRA conducted a survey of one-dish meal prices at food courts owned by Tesco Lotus, Big C and Tops Supermarket and found prices were the same both the pre- and post-flood.

The rise of the daily minimum wage to 300 baht a day has heightened costs for the retail business, which contributes 13.1% of gross domestic product.

http://www.bangkokpost.com

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