State Bank puts priority on
by Thuy Anh
State Bank of Viet Nam’s Governor Nguyen Van Giau confirmed in a
recent meeting with commercial banks that there would be no changes in the
annual 7 percent base interest rate until the early months of 2010. The
Government wants to control the inflation rate at 7 per cent this year.
He also said there would be no major supplies of Vietnamese dong
put into circulation by the year’s end.
The unchanged rate means the lending interest cap for corporate
customers will remain at 10.5 per cent per annum.
According to the State Bank, commercial banks have achieved
around a 29 per cent credit increase which is subject to a limit of 30 per cent
growth this year from the end of 2008. Thus, there is only 1 percent left for
the remaining months of the year.
The State Bank official reminded banks to maintain a balance
between capital mobilisation and lending.
In the coming months, mobilisation is forecast to slow down as
corporate depositors will withdraw cash to pay the year’s bonus to employees as
well as purchase materials for future operations.
Giau also said inspection would be carried out on all operations
of commercial banks that offered yearly deposit interest rates of over 10 per
This has resulted in the lowering of interest rates higher than
10 per cent by a number of banks, with the highest one now standing at 9.9 per
Meanwhile banks also increased other rates. The Maritime Bank
has pushed up the rates from 0.1 to 0.2 per cent per annum for deposits in dong
and the Saigon Hanoi Bank, 0.2 to 0.25 per cent, depending on different deposit
terms, to levels still lower than 10 per cent.
The governor confirmed there would be no devaluation of the Viet
Nam dong against the US dollar and the State Bank would maintain flexible forex
rates to ensure the market’s stability.
Japanese insurer hits town
Japanese life insurance Dai-ichi Life Vietnam yesterday opened a
general agent office in the northern province of Hoa Binh, following the opening
of another office in Phu Tho, increasing its network of more than 50 across the
country, serving 500,000 clients.
General director Takashi Fujii said expanding business to rural
areas, a potential sector of the market, is part of the company’s strategy.
These moves were aimed at achieving 10 per cent of the market share in terms of
premiums, in 2012, from the current seven percent. It is now among the smaller
insurers compared to the larger companies, including Bao Viet Life, Prudential
Korea Life Vietnam also opened its second office in the capital
city last Wednesday. Though it has a modest clientele of more than 5,000, as it
officially began operations only early this year, it is striving for a 10 per
cent share of the market within five years. It now has just 1 per cent.
General Director Jung Seop Hyun expects to gain no less than
VND40 billion in premium turnover for 2009, surpassing the year’s target of
This South Korean insurer plans to open an office in the Central
Highlands province of Dac Lac in December and one additional office in Ha Noi
will follow next year, then others in Da Nang, Khanh Hoa, Gia Lai and Binh
Taiwan’s Cathay Life, which has 16 months of operation
experience, has made its presence known in the major cities of Ha Noi, HCM City
and Da Nang, with Can Tho as the latest, and others in the pipeline.
Statistics from the Association of Vietnamese Insurers showed
that Bao Viet Life, the single local life insurance company to date, Prudential
and Manulife had, respectively, a premium share of almost 40 per cent, 33 per
cent and over 10 per cent for the year’s first half. Together, they held a
dominant stake of 83 per cent, leaving 17 per cent to the remaining eight life
Domestic brands surge
During its clients’ annual seminar to review Viet Nam’s consumer
market last week, the market research firm TNS showed that Vietnamese brands are
becoming more popular.
Based on urban consumption TNS found that in the first half of
the year, up to eight local brands were listed among the 10 fastest-growing
brands. The figure was only two in 2007, and grew to four last year.
These brands are soya milk Vfresh, fish sauce Nam Ngu (Chinsu),
fruit juice Vfresh, ice cream Trang Tien, magarine Tuong An, soya milk Fami,
powdered milk Dielac Anpha 1 and fresh milk Vinamilk. The remaining two were the
foreign brands of Kotex pantyliner and Sting soft drink.
Ralf Matthaes, managing director for TNS Vietnam, said the
Government’s call for Vietnamese to use Vietnamese products and price policies
had a positive effect.
He also noted that Vietnamese had become more savvy about
brands. He, however, also raised the question whether Vietnamese brands "have
the quality and aspirational brand equity to thrive when the economy rebounds."
Around 81 per cent of TNS survey respondents said they were
equally concerned about price and quality, while 73 per cent preferred brands
with a health/environmental focus. Seventy-one per cent of the respondents said
they would be willing to pay more for higher quality brands.Well-known brands
were the favourites of 56 per cent of respondents, while 50 per cent said
Vietnamese brands were as good as international ones. Around 39 per cent
confirmed that they preferred Vietnamese brands.
The survey also revealed that 52 per cent of respondents said
they would reduce their spending in 2009. Entertainment and dining out, home
appliances, household utilities and personal equipment suffered the hardest hit,
while education and health care were the least affected.
Speaking at the seminar, Katryna Mojica, managing director of
Ogilvy&Mather Vietnam, said that companies that cut their marketing spending
took longer to return to their pre-recession market shares. She cited that 60
per cent of brands which dropped TV advertising for six months showed a decline
in brand usage or brand image.
"If cutting the marketing budget is necessary for the company’s
survival, do it for the smaller brands, then exploit seasonality to make cuts in
off-peak periods and prune product lines," she said. — VNS