Viet Nam telecoms growing at rapid pace

Viet Nam telecoms growing at rapid pace

Nortel, headquartered in Toronto, Canada, one of the leaders in delivering communications capabilities introduced a new 40G/100G solution to the domestic market yesterday. Viet Nam News reporter Van Nga talked to Nortel director Anup Changaroth about the use of the new product as well as the local telecommunication environment.

When did Nortel penetrate the local market?

Nortel has been in business in Viet Nam since 1993 and we are proud to be part of the country’s growing progress. We see how the market has grown from year to year to catch up with the rest of the world and we are happy that Nortel has played a part in this significant time in Vietnamese history.

Nortel makes the promise of ‘Business Made Simple’ a reality for our customers. Our next-generation technologies, for both service providers and enterprise networks, support multimedia and business-critical applications.

Nortel’s technologies are designed to help eliminate today’s barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world.

How do you evaluate the Vietnamese market in the telecommunications field?

Nortel views the Viet Nam market as growing faster than many other markets in ASEAN. This is why we have launched the Nortel 40G solution here today.

Furthermore, Viet Nam is the third country, after China and the Philippines in Pacific Asia, where Nortel has chosen to develop the new product.

In terms of strong points, Viet Nam’s market doesn’t have a legacy of deploying technology, so it is easier for Viet Nam service providers to start deploying Next-Generation solutions like Nortel’s 40G solution.

The Vietnamese market has few weak points. The service providers are well educated and quickly understand the benefits, both commercial and technical, of all solutions that Nortel has introduced into this market.

Can you predict how telecommunications will develop in Viet Nam in the coming future?

We cannot provide any forward-looking statements about the Viet Nam market, except to say that Nortel is working with all the local service providers to ensure they understand all the benefits of next-generation technology available today from Nortel.

As for 40G, what are the long-term benefits and advantage compared to previous technologies and will the price be much higher?

In fact, Nortel’s 40G solution can provide immediate benefits to customers, not only long-term benefits. Firstly, Nortel’s 40G is the only solution that can quadruple a network’s traffic carrying capacity without complex network re-engineering – this is done through technological innovations that deliver both economic and operational benefits as well as the simplest migration from 10G to 40G and to 100G.

Secondly, Nortel’s 40G solution delivers a plug and play technology that can be deployed over any fibre-optic network.

Thirdly, Nortel’s 40G solution offers a unique non-regenerated reach of more than 2,000 kilometres, and delivers significant economic benefits through reduction/elimination of equipment and with the ability to use existing fibre.

Last but not least, Nortel’s 40G delivers the simplest migration from 10G to 40G to 100G, reusing technology to retain the same network architecture, reach and agility characteristics including optical layer restoration, for all line rates, thereby protecting future investments. —

Banks resume lending on stocks

HA NOI — Two local banks have expanded lending against securities collateral to take advantage of the recovering stock market.

The move brings to question whether bankers and investors have learned from experiences earlier this year, when the downturn of the stock market bankrupted many investors with similar loans, and the banking system entered a near crisis because of limited liquidity.

Sai Gon Thuong Tin Commercial Bank (Sacombank) has launched new securities loans totalling VND300 billion (US$18.02 million). Each investor can borrow up to VND5 billion ($300,300) for two months.

This move was followed by Export and Import Commercial Bank (Eximbank). The HCM City-based bank plans to lift total credit for securities investment to VND800 billion ($48.05 million) from the current VND200 billion ($12.01 million).

Securities loans cannot exceed 40 per cent of the market price of collateral and no more than three times the face value of collateral. Annual interest rates stand at around 20 per cent.

Eximbank and Sacombank’s relaunch of securities lending is based on the assumption of a stabilised economy, strenthened liquidity of the stock market and reduced inflationary pressure.

Wait and see

Many are welcoming back securities lending, confident it will help local markets.

“I strongly believe resuming lending against securities collateral is a good move,” Kieu Huu Dung, executive chairman of Asia Commercial Bank Securities (ACBS), told Viet Nam News in a phone interview on Monday.

“With more money, investors will trade more enthusiastically,” said Dung, “Then the stock market will boom once again.”

Adressing concerns about high underlying inflation of around 15 per cent (year-on-year estimation) and economic challenges ahead, Dung, who is also the former head of the Monetary Policy Department of the central bank, was optimistic that in 2009 the US Treasury plans to strengthen the US dollar, bringing down oil and commodities prices. Prices of imported commodities in Viet Nam would then be cut, reducing inflationary pressure.

“We are going to enjoy a good time of the stock market,” Do Dang Tu, a new investor at Bao Viet Securities, eagerly told Viet Nam News.

“I think banks have observed the upward-trend of the market, which is why they are offering securities lending,” Tu said.

In general, investors who have borrowed to invest in securities seem to be ready to get involved in securities loans on stock collateral if the stock market continues doing what it has done over the past few months.

On August 18 the HCM City Stock Exchange widened its trading band to 5 per cent from 3 per cent, while the Ha Noi Securities Trading Centre went from 7 to 10 per cent. Compared to its lowest mark on June 20 of 366.02, the VN-Index gained 45.54 per cent.

Careful steps

Despite the optimistic outlook, Phan Anh Tuan, a senior analyst at VincomSecurities, told Viet Nam News that lending against securities wasn’t such a good idea.

Pumping more money into the market could inflate the VN-Index, even make it overheat. Like any bubble, it could not continue to ride up forever, and the risk lies at the point when the index starts sliding down.

“The banks know when they should collect their loans. They have the power to do that. The highest risks will be put on borrowers or investors,” said Tuan.

“Taking out bank loans to invest in stock now is too risky,” another investor countered. “Especially when banks only offer very short term loans of two months and charge an annual interest rate of 20 per cent, forcing borrowers to surf [ride on stocks and sell them fast] in order to pay them back.”

Tran Thu Hoai, an investor at Habubank Securities, thinks that it’s “crazy” to accept an interest rate of 20 per cent, since the stock market could not increase by 20 per cent annually. Hoai found himself trapped in securities loans last year.

“Investors really should be cautious with loans against stock collateral,” he warned.

Stock analysts also warned banks about risk management. Loans equal to 40 per cent of the market price of collateral and no more than three times higher than face value are still a risk.

Old story to tell

With Eximbank and Sacombank taking the first in offering the loans, investors and bankers are now standing by to see the market’s reaction. Many predicted that we won’t see another flux of investors rushing for loans like last year.

Some investors will likely remember what happened at the end of last year and early this year, when the local market plummited, and both investors and banks were at a critical state because of loans using securities as collateral. Many borrowers could not pay back the loans and lost all their assets, while many banks faced a liquidity shortage, raising concerns of the banking sector’s potential collapse.

The near crisis arose because the local stock market had boomed, with banks practically giving away loans against stock collateral and investors eager to borrow.

The State Bank of Viet Nam (SBV) has strongly regulated lending against securities collateral. Banks are only allowed to give loans equal to no more than 20 per cent of the banks’ charter capital (previously the cap was equal to under 3 per cent of their total outstanding loans). They’ve maintained these tightened securities regulations as the economy continues through its rough patch.

Now that the stock market is gaining and the economic turmoil has seemingly eased, these two banks are eager to re-open up their pockets. The outcome of their willingness has yet to be seen. —

Blue chips continue downward spiral

HA NOI — Significant purchases of blue chips occured at the beginning of yesterday’s session which made the VN-Index fall by 2.10 per cent to close at 514.45.

Some blue chips yesterday recorded a bounce, including PetroVietnam Drilling (PVD), Kinh Do Corporation (KDC), and Viet Nam Dairy Products – Vinamilk (VNM).

“Substantial purchases of big stocks at the beginning of today’s session contributed to their rebounding. It also turned a potential crash of the VN-Index into a slight decline,” said broker Nguyen Hoang Hai, at An Binh Securities.

Hai also said that a massive sale of big stocks mid-session, when the buyers saw a noteworthy amount of money pumped into blue chips at the beginning, swept away all attempt to warm up large stocks.

“As a result, most blue chips continued to slip and the VN-Index stayed down,” Hai added.

Blue chips that suffered the biggest losses included Imexpharm Pharmaceuticals (IMP), Binh Dinh Minerals (BMC), and Financing and Promoting Technology (FPT).

Sacombank (STB) was the most active, with 3.27 million shares changing hands yesterday, followed by sugarcane producer Sucrerie De Bourbon Tay Ninh (BST), with 2.94 million shares, and Saigon Securities Inc (SSI) with 1.48 million shares.

In the market as a whole, 26.15 million shares changed hands, generating a turnover of VND860.89 billion (US$52.18 million).

In the Ha Noi Securities Trading Centre, the HASTC-Index made a consecutive downturn yesterday, slipping 0.94 per cent to 175.19 points. The centre saw 12.99 million shares transacted yesterday with a total revenue of VND540.88 billion ($32.78 million).

VINASHIN Petroleum Investment and Transport (VSP), Viglacera Ba Hien (BHV) and Dong Anh Ceramic (DAC) advanced most in the session. Yesterday also saw the bounce of one of the largest stocks, Kinh Bac Urban Development (KBC) after its recent continuous downturn. —

PM Dung talks trade with Guangdong Party official

HCM CITY — Viet Nam always tries its best to develop stronger ties of friendship and special co-operation with China, Prime Minister Nguyen Tan Dung said yesterday at a meeting with Guangdong Province’s Party Committee Secretary Wang Yang in HCM City.

Dung congratulated China on the success of the 2008 Olympics in Beijing, which he said had helped to raise the country’s profile in the world.

He said he greatly admired China’s development achievements – particularly in the case of Guangdong Province over the last year, which he said would help create favourable conditions for the two countries to co-operate more in the future.

The Prime Minister said he was pleased to have seen trade and investment between the two countries increase significantly, but said it had yet to reach its full potential.

The Prime Minister said he appreciated the great number of agreements and memorandums of understanding signed between Guangdong enterprises and Vietnamese partners, which he said had helped Viet Nam to attract investment.

Dung affirmed that Vietnamese Government agencies and local authorities would create favourable conditions for Chinese companies to operate in Viet Nam.

He also agreed with the secretary about establishing a regular dialogue regime with related authorities and localities in Viet Nam to tackle obstacles and put forward solutions to planned development co-operation projects.

The two sides should build teams of experts to discuss all aspects of the projects, he said.

The party committee secretary expressed his deep admiration for Viet Nam’s stable economy and society and said he was pleased that the two parties, two States and two peoples were working together for their long-term interests.

He said more and more Guangdong companies were seeking to invest in Viet Nam and said he wished that the Vietnamese Government and localities would create favourable conditions for those companies. He said the Chinese province’s investment in Viet Nam could double to US$5 billion in the next three years.

Boost for friendship

HCM City and China’s Guangdong province yesterday signed a memorandum of understanding on boosting friendship and cooperation between the two sides.

They plan, in the next two-three years, to focus co-operation in trade, investment, culture and tourism.—

Ex-farm boss on slush-fund charge

CAN THO — Can Tho city police on Tuesday officially indicted the former director of a State firm with creating a slush fund and other misdemeanours that had caused “serious consequences.”

The house of 59-year-old Tran Ngoc Suong, former director of Song Hau State Farm, on Dien Bien Phu Street in District 3 and the farm’s representative office in HCM City were raided yesterday in connection with the case.

Suong was out on bail as investigations continue, police said.

Initial investigations have showed that managers of the farm, once seen as among the most profitable nationwide, had set up an illegal fund worth VND29 billion (US$1.81 million) between 1994 and 2007.

VND20 billion of this amount had been gathered from 1994 to 2000 under the directorship of the late Tran Ngoc Hoang.

Tran Ngoc Suong, who replaced Hoang as the farm’s director after his death, allegedly added another VND9 billion ($562,500) to the slush fund.

Police said the VND29 billion had been squandered on gifts, guest receptions and other similar expenses.

Investigators also found that the farm management had spent VND9 billion ($562,500) from the farm’s coffers to buy 39 plots of land which were then given to several farm officials and their relatives in and around Can Tho city.

They had also illegally written off VND27.6 billion ($1.73 million) worth of debt for 20 individuals. Two of these were overseas Vietnamese residents in Poland and Germany, and the amounts written off for the two were VND2.72 billion ($170,250).

Police said the farm’s businesses had been stagnant and not earning profit for a long time, and its overdue debt owed to numerous banks had spiralled over the years to VND230 billion ($139.4 million), exclusive of accrued interest.

The farm’s managers are also alleged to have violated State regulations on farmland allocation to workers when they put aside 1,600ha for private use.

Besides, while the Government was receiving annually 830 kilos of rice per ha from the state farm’s workers, the managers of Song Hau Farm collected, without due authorisation, an extra 170 kilos per ha.

This malpractice had netted profits of VND33 billion ($2 million) for those involved, police said.

The investigators had earlier taken into custody for four months the farm’s deputy director Truong Hong Nhung, 55, cashier Nguyen Van Son, 48, and chief accountant Dang The Quoc Hung, 44.

The 29-year-old Song Hau State Farm in Can Tho city is located on 5,670ha of land with nearly 3,000 families and staff living on site. —