Ban Viet Bank recently announced it was issuing long-term CDs with record high interest rates. Specifically, an interest rate of 10.2 percent per year is applied for a 60-month CD valued at a minimum of 10 million VND (430 USD) for individual customers and 100 million VND for institutional customers.

The rates for shorter terms of 24, 36 and 48 months are also high at 9.5, 9.8 and 10 percent per year, respectively.

VIB and VietABank have also issued CDs with high interest rates of 9.1 percent per year to lure depositors.

The rates at many other banks, such as Sacombank, BIDV, SHB, MSB and SeABank, are averaging at more than 8 percent per year.

According to experts, CDs are increasingly popular as interest rates are currently some 1-2 percentage points higher than normal savings and they are easy to transfer.

Meanwhile, a bank leader, who declined to be named, said that banks are often willing to mobilise capital via the issuance of CDs with high interest rates when they need capital to fund projects or lend to customers at high lending rates.

Industry insiders also believed banks had to issue CDs at high interest rates as they faced difficulties luring long-term capital.

Many banks are in dire need of long-term capital as their ratio of medium- and long-term capital out of their total capital remains limited. According to State Bank of Vietnam (SBV) regulations, banks must reduce their short-term funds for medium- and long-term loans to 40 percent from this year against last year’s rate of 45 percent.

Banks also need more capital to meet a capital adequacy ratio (CAR) of 9 percent in 2020 as per the SBV’s Basel II norms. Fitch Ratings estimated the Vietnamese banking system could face a capital shortfall of almost 20 billion USD to meet the standards.

However, experts are also concerned that the rate hikes would cause a domino effect on interest rates of long-term loans.

HÀ NỘI — The Ministry of Finance plans to eliminate the import tax for auto materials and parts in order to support the development of the country’s automobile industry.

The tax cut was included in the Government’s revised decree on the schedule for preferential import tariffs, flat taxes, compound tariffs and out-of-quota import tariffs.

The Ministry of Finance said it will develop preferential tax policies for raw materials and auto parts for automobile manufacturing and assembly from now until 2023.

This decree is expected to remove bottlenecks in the development of prioritised industries, including the automobile industry, and promote the strengths of part suppliers to increase the localisation rate (the percentage of parts that are produced locally).

Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into force on December 30, 2018, the import duties on completely built-up cars (CBUs) from CPTPP member countries will gradually fall from 70 per cent to zero over the next seven to nine years.

The Europe-Việt Nam Free Trade Agreement (EVFTA), which was signed on June 30 this year, includes a similar commitment. It stipulates that the import tax on CBUs from EU countries will gradually decrease to zero per cent after nine to 10 years.

The import duty was eliminated for cars from ASEAN countries last year. By 2030, the Vietnamese automobile market will be fully open to major automobile production centres around the world including Japan, Mexico and the EU.

The ministry said Việt Nam’s part suppliers are mainly small- and medium-sized enterprises with low production capacity. Among about 1,800 spare part businesses, only about 300 are participating in the production networks of multinational corporations.

VNS

Of the total figure, the State will hold at least 65% of charter capital in four SOEs like Bank for Agriculture and Rural Development (Agribank), National Coal-Mineral Industries Holding Corporation Limited (Vinacomin)-parent company, Northern Food Corporation (Vinafood1), and Mineral One-member Company Limited.

The State will hold at least 50% to below 65% of charter capital in other 62 SOE, according to the Decision.

The Government chief tasked ministers and Chairmen of provincial people’s committees and councils of members of the SOEs to be responsible for designing equitization roadmap in accordance with current regulations.

Equitization progresses shall have to be reported to the Ministry of Planning and Investment, the Ministry of Finance and the Steering Committee for Enterprise Innovation and Development for synthesis before submitting to the Government chief.

Since 2016, 162 SOEs have been equitized compared to the set goal of more than 4,400 SOEs for 2016-2020.

Regarding divestment, the Government has pulled out capital from 30 SOEs with total volume of over VND 2.7 trillion in the first six months this year, sending the total divested capital to more than VND 4.8 trillion.

Also in Jan-June period, the number of newly-established enterprises increased to a record high of nearly 67,000, up 3.8% in number and up 32.5% in value compared to the same period last year.

According to Deputy Head of the Steering Committee for Enterprise Innovation and Development Nguyen Hong Long, in the first half of 2019, five SOEs conducted initial public offerings (IPOs) to help the State divest VND 562.707 billion.

In 2019, the Government set goal to equitize 127 SOEs but only 35 of the enterprises have been equitized in the first half, said Deputy Prime Minister Vuong Dinh Hue.

He also said divestment of state capital still remains slow compared to the Government’s set goal for 2016-2020, accounting for just 21.8% of the overall plan.

Slow equitization process has been due to the introduction of stricter regulations, including requirement of auditing project in which the State invests VND 1,700 billion and above.

On the other hand, some of business leaders have tried to pass the buck or elude their responsibility for handling equitization, Deputy PM Hue pointed out.