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Delta development remains a trade focus

Update: October, 28/2013 - 08:31
Figures released at the conference revealed that in the first nine months of 2013, the region's industrial production and trade value grew by nearly 9 per cent compared with the same period last year.—File Photo

by Compiled by Le Hung Vong

Measures to Boost Sustainable Growth for Major Products of the Cuu Long (Mekong) Delta in the Integration Era was the topic of an annual conference held by the Ministry of Industry and Trade in An Giang Province this month.

Figures released at the conference revealed that in the first nine months of 2013, the region's industrial production and trade value grew by nearly 9 per cent compared with the same period last year.

In the same period, the region attained total retail sales of VND372 trillion (US$17.6 billion), a year-on-year increase of 19 per cent, and export value of $7.8 billion, up 7 per cent year-on-year, accounting for 8.13 per cent of the country's export turnover.

However, these growth rates were lower than those of the previous years.

The Cuu Long (Mekong) Delta's industrial production has scored a slow recovery due to the economic downturn that resulted in low purchasing power in the local market.

Representatives of the Departments of Industry and Trade from Mekong provinces said that prices of most farm produce in the region were low, resulting in low revenues earned by farmers.

Poor transport infrastructure development had also made the Delta less attractive to domestic and foreign investors, according to Huynh Van Ganh, director of the Kien Giang Department of Industry and Trade.

He said many bridges in the region are weak, allowing vehicles of 35 to 40 tonnes. This has caused inconveniences and raised transportation fees.

Other representatives asked the ministry to take measures to prevent the price of farm produce in the region to fall when the harvests come, and to encourage farmers to increase their production.

They also asked the ministry to help introduce projects in environmentally safe and energy-savings production, to improve goods promotion campaigns in local and overseas markets, and to use hi-tech services in the maintenance of farm produce.

During the meeting, An Giang's Department of Industry and Trade signed a memorandum of understanding to cooperate in the fields of energy saving and combat cigarette smuggling and promoting industrial goods and handicrafts with partners from Vinh Long, Dong Thap, Tra Vinh, Tien Giang, Soc Trang and Can Tho City.

State tightens the screws

To prevent unhealthy competition between commercial banks in opening branches and transaction offices, the State Bank of Viet Nam (SBV) has issued Circular No 21 that became effective on October 23.

The circular was issued after local residents on Phan Xich Long Street in Phu Nhuan District and Nguyen Van Linh Street in District 7 called themselves "residents of HCM City Wall Streets" as commercial banks had opened so many branches and transaction offices on these streets.

Up to 16 branch and transaction offices of commercial banks such as Dong A, Vietcombank, ACB, and Sacombank have opened on a 1km stretch of Phan Xich Long Street.

In addition, a 300m section of Khanh Hoi street from Hoang Dieu Street to Kenh Te Bridge in District 4 has 21 branches and offices.

Cach Mang Thang Tam and Truong Chinh Streets house 39 branches and transaction offices of banks, including four offices operated by Vietinbank and ACB.

Similarly, a 1.5-km section of Nguyen Van Linh Street have 22 branch and transaction offices of commercial banks.

A manager of a Ha Noi-based commercial bank that has opened a branch office on this section of Nguyen Van Linh Street in Phu My Hung Urban Area said that investments in the area were made with the future in mind.

The area is expected to become densely populated as a number of property projects will soon become operational.

According to SBV, HCM City has 2,012 branches and transaction offices of banks headquartered in Ha Noi and HCM City, doubling 2008's figures.

The city also houses 135 offices of saving funds, half of them established by banks headquartered outside HCM City.

However, banking experts have warned that the race in developing commercial banks' transaction networks would pose risks for the country's banking system.

"Many commercial banks have joined the race in developing their service network to seek profits. The State Bank of Viet Nam must issue warnings about this because many of these banks' branches and transaction offices have operated ineffectively," Nguyen Hoang Minh, deputy director of SBV told Tuoi Tre (Youth) newspaper.

The general director of a joint-stock commercial bank based in HCM City said apart from initial investments for establishment, a bank must spend VND500 million per month to operate a 300sq.m – 500 sq.m branch office in HCM City.

A transaction office must suffer losses for at least 12 to 18 months from the start of its operation.

Despite these losses, banks never close branches and transaction offices because it is much more difficult to get a license for a new transaction office.

However, Agribank decided to reduce the number of its branches in HCM City from 48 in the previous years to 40 in mid-2012, said Minh.

Under Circular No 21, banks will have two years to either turn their saving funds into transaction offices or close them down.

The circular also requires a minimum registered capital of VND300 billion ($14.2 million) to establish a branch or a transaction office in HCM City and Ha Noi.

In addition, the circular limits the number of bank branches. A bank can open no more than 10 branches in each inner district of HCM City and Ha Noi, with each branch having no more than two transaction offices. Branches in suburban districts must have no more than three transaction offices. — VNS

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