And now, here’s the good news . . .

Foreign visitors are keen to stay in Ha Noi’s Old Quarter. Ha Noi and HCM City have dropped by 35 places or more on the list of the world’s most expensive cities. according to a new survey by the Mercer consultancy company. — VNA/VNS Photo Thanh Ha

HA NOI — The price of everything in Viet Nam seems to have gone up recently, including petrol, food, rents , medicines and transport.

However, in the midst of all the inflation, now comes the good news.

Ha Noi and HCM City have dropped by 35 places or more on a list of the world’s most expensive cities.

This surprising news was revealed in a recent survey by the Mercer Consultancy Company, which annually surveys 143 cities around the world.

It measures the comparative cost more than 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.

The survey is the world’s most comprehensive cost-of-living survey and is used to help multi-national companies and governments determine compensation allowances for expatriate employees.

According to the survey, Ha Noi now ranks 91st on the list of the world’s most expensive cities, a decline of 35 places on last year – and HCM City has dropped 40 places to rank 100th.

And the reason for this much better rating, according to the survey, is that although Viet Nam has high inflation, the Vietnamese dong has remained stable against the US dollar this year.

Moscow remains the world’s most expensive city for expatriates for the third consecutive year. It scored 142.5 this year compared to 134.4 in 2007.

Tokyo is in second position (from 122.1 to 127) climbing two places since 2007. London has dropped one place to rank third (126.3 to 125).

Sydney is 15th on the list at 104.1 compared to last year’s 94.9 – and Melbourne has risen from 64th to 37th position (from 82.5 to 94.2).

In the Southeast Asian region, Bangkok has fallen from 95th place to 105th place and Jakarta from 55th to 82nd. However, Manila has become more expensive, rising to 110th place from 137th last year. Tokyo is still Asia’s most expensive city. Then there is Seoul, which is the fifth dearest city on 117.7, a small drop on last year’s 122.4.

Hong Kong has dropped from sixth to fifth (from 119.4 to 117.6), but Singapore has risen from 14th to 13th position (from 100.4 to 109.1).

And the Olympic city, Beijing, remains in 20th position, despite having risen from 95.9 to 101.9.

Yvonne Traber, a research manager at Mercer, said that current market conditions have led to a weakening of the US dollar which, coupled with the strengthening of the Euro and many other currencies, has caused significant changes in this year’s rankings.

“Although the traditionally expensive cities of Western Europe and Asia still feature in the top 20, cities in Eastern Europe, Brazil and even India are creeping up the list.” she said.

“Conversely, some cities, such as Stockholm and New York, now appear less costly by comparison.”

New York has dropped from 15th to 22nd position (from 100 to 106).

According to Tran Du Lich, head of the HCM City Economy Institute, Ha Noi and HCM City are no more expensive than other cities in the region.

“The price levels in both cities is not high if compared with per capita average incomes,” he said.

However, he admitted that the price of high-grade hotels, buildings and golf courses in Viet Nam was higher than in many other Asian cities but this was because of demand outstripping supply.

The Mercer survey is considered the world’s most comprehensive cost of living survey. —

Japan group wants support industries

HCM CITY— The Viet Nam-based Japanese Businesspeople Association (JBA) has called for Viet Nam to back the development of support industries that can attract long-term investment.

The plea was made at a recent meeting with officials from the Viet Nam Chamber of Commerce and Industry, that aimed to seek ways to prevent Japanese investors from following in the footsteps of electronics giant Sony, which last month announced an end to production in the country.

The head of the JBA’s Support Industry Department, Nobuhiko Murakami, said Sony has foreseen that locally made products will not be able to compete against imports, when tariff exemption ends in 2010, in line with Viet Nam’s commitments to the World Trade Organisation.

Murakami warned that lack of support industries threatens FDI investment, citing Toyota Viet Nam – of which he is Director General – as an example.

He said, Vietnamese producers can only supply a few components for Toyota Viet Nam, while peers in Thailand or Indonesia have been able to provide up to 90 per cent of components.

If Vietnamese producers fail to meet 60-70 percent of Toyota Vietnam’s needs by the time the country opens its automobile market completely in 2018, Toyota may shift production elsewhere, said Murakami.

Koichi Takano, Deputy Country Representative of the Japan External Trade Organisation (JETRO), said “Japanese business people are concerned about policies and strategies supporting their long-term growth.”

“Support industries are a key issue for Japanese businesses in their long-term development,” said the official.

VCCI Chairman Vu Tien Loc assured Japanese businessmen that his chamber will assist Vietnamese businesses to formulate a strategy to develop support industries, based on strategic alliances between Vietnamese and Japanese businesses. —

Business Banter : Eyes turn to auditors after BBT scandal

by Nguyen Duy

Never before in Viet Nam has the accuracy of a company’s audited financial reports raised so much concern, and never before has the quality of auditing companies come under such heavy fire.

The problem has grown so critical that the ministries of Finance and Public Security are drafting a circular to improve the circulation of information about listed company and auditor violations, according to director of the State Securities Commission (SSC)’s Investigation Department Hoang Duc Long.

Problems began with Bach Tuyet Cotton Corporation (BBT), a HCM City Stock Exchange listed company, when in mid-July, the exchange temporarily suspended transactions for BBT shares due to heavy losses in 2006 and 2007. The news came as a shock to investors, who had heard nothing but good reports about BBT.

Audited financial reports showed that the company was profitable, netting VND2.25 billion (US$136,360) in 2006 and VND3 billion ($181,820) in 2007. In actuality, combined losses exceeded VND17 billion ($1 million).

Suspicions quickly arose about the company’s management board, the board of inspectors and market managers in addition to the Auditing and Informatic Services Company (AISC), which audited BBT’s reports.

Le Dat Chi from HCM City Economics University’s Faculty of Corporate Finance said, “a basic principle of the [auditing] profession is to ensure reports are factual, but BBT’s audited reports were clearly not.” Shareholders had a legal right to accurate information to base their investment strategies on, Chi said.

Though solutions to the problem are underway, those not involved in the cotton company are still very concerned. The scandal has broadly shaken securities investors’ psychology at a time when the economy is already struggling and is suffering from increasingly lowered economic growth and high inflation.

Trung Hieu of Ha Noi said, “Investors buy shares according to their value, but how can real value be determined, when the authenticity of financial reports is compromised?”

“People should be more cautious in choosing shares for investment now, as some shares are likely to slump simply due to investor suspicions about a lack of transparency,” Hieu said.

Indeed, the phrase “if the financial reports are correct” is cropping up in many places now, particularly in analyst assessments about company performance.

However, Nguyen Thi Ngoc Trang from HCM City Economics University’s Faculty of Corporate Finance said it was unlikely that an audited report would be totally free of error. She said sometimes auditors “might not uncover some things” for “both objective and subjective reasons”.

Moreover, she said, “Many disasters caused by inaccurate financial reports are believed to involve some of the world’s leading auditors… The Enron and WorldCom cases in the US some seven years ago are examples.”

US telecoms giant WorldCom in 2002 shocked the business world after admitting a multi-billion dollar accounting fraud. It followed corporate scandals, at Enron and its accountant Arthur Andersen, which shook investor trust.

So it seems even the roles of even the world’s top auditors can occasionally be suspect.

Gains from loss

Director of Finance Ministry’s Department of Accounting Regulations Bui Van Mai said that despite the immediate negative impacts of the BBT case, the outcome would actually be positive for those involved in the stock market.

Authorities would now intensify their control of auditing companies, and auditors would be forced to take greater care before issuing results.

Investors would now pay more attention to financial reports and company performance, Mai said.

Obstacles

A financial analyst Ho Quoc Tuan said a professional market with knowledgeable investors would force companies to adhere to professional and moral business practices.

If authorities ensured proper punishment for violators, that would certainly help speed up the process, Tuan said.

However, the Ministry of Finance’s regulation is vague, stating, “Organisations and individuals that violate the law on pronouncing information, depending on the events’ nature and level, will be disciplined, fined or criminally prosecuted; if damages are caused, they must be compensated, according to the law” (Article 6, Circular 38/2007/TT-BTC).

SSC chief inspector Hoang Duc Long pointed out that fines SSC had set so far were not enough to deter violators. “Really, if an enterprise issues tens of billions of dong worth of shares, a fine between tens of million dong and even VND500 million (US$30,300) is trivial.”

Mai said the Ministry of Finance is drafting an Independent Audit Law which will address these problems that have recently arisen. The law will have a separate chapter for regulations on the auditing of public companies as “these kind of companies are connected to the interest of many people.”

“We hope that the law will help minimise unfortunate cases like BBT,” Mai said. —

Artex Securities ups services

HA NOI — Newly established Artex Securities will provide its two strategic partners Song Da Corporation No 9 and Viet Nam Engineering and Agricultural Machinery Corporation (VEAM) with financial services, as part of a deal inked today during the company’s launch ceremony.

Accordingly, the brokerage will work as a financial consultant and supply companies with necessary financial products.

Song Da Corp holds 27 per cent of Artex’s charter capital, and VEAM holds 24 per cent.

Previously, the securities firm partnered with the Bank for Investment and Development of Viet Nam (BIDV) to manage securities investors’ accounts, as per Government instruction.

Artex Securities provides customers with securities services like depositing and underwriting. It also offers an online trading system for diversified investor options.

Phan Van Ha, general director of Artex Securities, said that the firms would continue technological development to improve customer service and meet market demands.

“We are also developing a division focused on risk management,” Ha added.

Artex Securities, began operations at the end of 2007 and has a charter capital of VND135 billion (US$8.18 million). The founders of the company, also the strategic partners, include handicraft import-export Artexport Company, the machinery installation Song Da Corp and VEAM. —

VN-Index slowly inches upward

The electronic trading board at Dao Duy Anh Street, Ha Noi showed slight rise in VN-Index yesterday. — VNS Photo Doan Tung

HA NOI — Hopes for a prosperous market lingered yesterday as the VN-Index rose slightly by 1.38 points to close at 438.83 points.

More than 16.8 million shares changed hands yesterday at a total value of VND613.7 billion (US$37.2 million).

Of the 160 listed shares and fund certificates on the HCM City Stock Exchange, 72 were up, 57 were down and 31 remained unchanged.

The rise of the VN-Index was attributed to a spectacular return on Wednesday that excited investors during yesterday’s trading session. Many orders were placed as soon as the trading session opened.

By the end of consecutive matching orders, the price of major shares were down, as investors feared falling into a “bull-trap”. As a result, many penny stocks were down. However Do Hong Hanh, an investor with Bien Viet Securities, said the VN-Index was adjusting to find its psychologically important mark after two weeks of moving up.

Sacombank (STB) remained the most actively traded code, with more than 2.5 million shares changing hands. The stock was followed by Phu My Fertiliser (DPM) with 1.9 million shares, Saigon Securities (SSI) with 1.3 million shares, Hoa Phat Group (HPG) with 1.1 million shares and Sacom (SAM) with 832,610 shares.

An investor with ACB Securities said the support level of the VN-Index would be around 410 points, noting that he was keeping a watch on blue chips with high liquidity and good profits in the first six months of the year.

In the second quarter this year, most listed companies reported that their profits were down. He affirmed that authorised agencies have strictly curbed the soaring price of many essential items after the rise in the local petrol price by 31 per cent.

Also on the HCM City Stock Exchange, the board of directors of Bach Tuyet Cotton Corporation (BBT), which is on the verge of bankruptcy, has sent a letter to Maritime Bank to ask them to reschedule overdue debt payment, said Ta Xuan Tho general director of the corporation.

Tho said BBT would work with Gia Dinh Textile Garment, who owns 30 per cent of State capital in BBT, to develop a plan to get out of their current mess. The Maritime Bank is expected to have an official meeting with the corporation’s leaders to work out solutions for the debt.

In Ha Noi, the HASTC-Index was down 1.26 points or 0.94 per cent to end at 133.45 points.

The bourse saw 105 codes go up, 32 go down and five remain unchanged, with another four inactive. A volume of 8.768 million shares were traded, with a total value of VND250 billion, a decrease of 22.41 per cent in quantity and 29.9 per cent in value against Wednesday’s trading session.

Foreign investors were net sellers yesterday, selling 496,700 shares worth VND11.5 billion and buying 117,000 shares valued at VND2.9 billion. —

Joint-stock banks’ new share deal

HCM CITY — Once registered as public companies, joint stock banks are permitted to purchase their own shares, the State Bank of Viet Nam (SBV) confirmed in a public statement Thursday.

Joint-stock banks would be held fully responsible for risks that could possibly arise from the action, the document stated.

An official from the State Bank said the dispatch was simply an answer to some commercial banks that had asked SBV whether or not they were permitted to buy back shares.

“In fact, banks that have shares traded on the stock market are public companies. They are officially permitted by the Securities Law to buy back shares,” the official said.

As simply an answer to commercial bank queries, securities analysts said the dispatch would likely have a minimal impact on the stock market.

“The stock market now is governed by investor sentiment, which is quite sensitive to any news, however small. How well the market fares depends partially on this news,” said Phan Anh Tuan, an analyst of Vincom Securities.

Tuan said that the VN-Index yesterday closed up 1.24 per cent at 444.28, a sharp rise for the weekend’s session.

“However, the dispatch will no impact on the stock market next week,” Tuan said. —

VN-Index closes week on an ‘up’

Investors watch the market results on an SSI board. — VNS Photo Truong Vi

HA NOI — Buoyed by investor confidence, the VN-Index rose by 5.45 points or 1.24 per cent to close at 444.28 yesterday.

Around midday, as large sales were made, the index showed signs of reversing its upward trend, but purchases of major stocks brought it out of the red by the day’s end.

The HCM City Stock Exchange saw 100 gainers and 41 losers, and trading volume reached 14.23 million shares for a turnover of VND530.6 billion (US$32.15 million).

Hoa Phat Group (HPG) was the most active stock with 1.68 million shares changing hands, followed by Sacombank (STB) with 1.64 million and Phu My Fertilisers (DPM) with 1.3 million.

Foreign investors were active, buying 2.22 million shares and selling 2.57 million.

The last two days have stirred hopes that the market is on the mend. Wednesday, in particular, showed a spectacular return on domestic bourses when the VN-Index rose 7.19 points to close at 437.45 after steady losses in early August.

Pham Thanh Tung, director of investment consulting company Tri Viet, said some investors had concerns over the suddenness of the upward trend over the last three days given the overall downward direction of the market.

Still the move was normal, he said, as there had been a fair amount of good news, like world oil prices falling to a three-month low of below $120 a barrel, domestic exchange rates easing and banks making efforts to cut interest rates.

“August is a good month [for the stock market] as the economy is seeing signs of greater stability,” said Dao Trung Kien, analysis director at Vifinfo Company.

Kien said the market would remain steady in the short-term with the VN-Index levelling off between 405 and 480 points.

“But the macro-environment still hasn’t seen enough improvement for the index to make great leaps,” he said.

Tung said the long-term market outlook remained unclear. He suggested investors maintain a balance between cash and shares of 60-65 per cent/35-40 per cent.

Ha Noi Securities Trading Centre saw modest transactions with purchases exceeding sales, helping the HASTC-Index to rise 1.87 points to end at 135.32. Nearly 6.6 million shares were traded for a total value of VND218.44 billion ($13.24 million).

Meanwhile, gold prices yesterday fell VND1.8 million per tael (equivalent to 1.2 ounces), following its slump on the global market.

Sai Gon Jewellery Company’s (SJC) gold price closed at around VND1.770 million per tael, down VND32,000 per tael compared to Thursday’s figure. Gold closed at VND1.776 million per tael at Bao Tin Minh Chau Co, a fall of VND31,000.

The US dollar rose sharply yesterday, hitting a five-month high against the euro as investors expected the malaise that has afflicted the US economy to spread to other countries, according to Reuters. The dollar rally pushed gold down 0.5 per cent to $866.4 an ounce. —

Da Nang to host world trade fair

HA NOI — An international trade fair which aims to create more business co-operation between Vietnamese enterprises – especially those in the Central Key Economic Region – and foreign businesses, will take place in the central city of Da Nang on November, said the fair’s organisers.

During yesterday’s press conference, Deputy Minister of Industry and Trade Nguyen Thanh Bien said he hoped that the fair, as part of the ministry’s trade promotion programme in 2008, will make an effective contribution to the region’s economic development.

Bien described the fair as a good opportunity for provinces and enterprises in the region and nationwide to bring into play all advantages in trade, investment, tourism and commercial services, advertise their products and seek new trade partners.

The five-day Central Key Economic Region International Trade Fair 2008, beginning from November 19, is expected to attract the participation of over 200 domestic and foreign enterprises, displaying their products in 450 pavilions.

It will be co-organised by the ministry’s Trade Promotion Agency, Da Nang’s People’s Committee, the municipal Department of Industry and Trade and Viet Nam National Trade Fair and Advertising Co.

On display will be agricultural products, seafood, processed foodstuff, fine arts and handicraft, construction equipment, machines, interior, textile and garment, consumer goods and other services such as banking, insurance, IT and communication.

The Central Key Economic Region consists of five provinces and cities under direct central authority: Da Nang, Thua Thien-Hue, Quang Nam, Quang Ngai and Binh Dinh.

The region is considered to have many advantages in natural resources, land, forestry and great potential for the development of tourism. It aims to become the country’s largest hub for industry, finance, banking and transport by 2010, pursuant to the socio-economic development of the region in the next two years.

Top prioritised sectors for development in the region include agriculture and seafood processing, the petrochemical industry, engineering, electronics, construction material production, support industries and tourism. —

Greater Ha Noi calls get cheaper

HA NOI — All country subscribers living in the greater Ha Noi will pay cheaper, inner-zone prices starting from November.

Announcing this yesterday, the Viet Nam Post and Telecommunications Group (VNPT) said that, since August 1, subscribers living in former Ha Tay province already enjoyed the inner-zone tariff of VND120 per minute.

However, subscribers living in Vinh Phuc Province’s Me Linh District and four communes in Hoa Binh Province’s Luong Son District will not change over from the inter-zone tariff until November.

Also since August 1, all fixed-line telephone subscribers in Greater Ha Noi have the same area code, 04, previously just used in the metropolitan area. Greater Ha Noi includes the capital city and more than 219,000ha of Ha Tay Province, Vinh Phuc Province’s Me Linh District and four communes once in Hoa Binh Province’s Luong Son District. —

Viet Nam, US co-operate in IT training courses

HA NOI — A co-operative effort between Vietnamese and American universities will launch its first IT courses in October.

The Viet Nam Software Engineering Group (SEG Viet Nam) will offer a course focusing on software engineering and information systems. The curriculum will include four-year university courses and short-term classes for businessmen, the group said.

Established last June, SEG Viet Nam includes five Vietnamese universities and institutes along with the US’s Carnegie Mellon University (CMU). The group was formed to offer the most professional software technology training in Viet Nam and in the Asian region.

It also hopes to meet demand for IT human resources in Viet Nam and export IT workers to other markets.

The General Secretary of the Viet Nam Software Association, Pham Tan Cong, said that there was great potential for Vietnamese IT workers, both locally and abroad.

In the US, Viet Nam ranks 20th among 25 countries for software engineering, and was Japan’s favoured IT partner last year. The UK and Denmark have also pledged to offer jobs to trained Vietnamese IT workers.

According to the Ministry of Information and Communication, Viet Nam now has 18,000 students in 93 universities, 156 colleges and 60 training centres studying IT. —