Motorbike makers race to meet demand

Honda Viet Nam Company Ltd has recently decided to expand its production capacity to an additional 500,000 motorbikes per year to fully tap the Vietnamese market.

Last year, the company provided more than 1.43 million vehicles while its current production capacity is 1.5 million per year.

HVN general director Koji Onishi said such a capacity would not be able to ensure supplies of vehicles for the market in coming years.

In 2009, the company achieved a sales growth rate of 18 per cent compared with 2008. This year, it is expected to grow with more than 1.5 million motorbikes to be sold.

Koji Onishi said the use of Honda motorbikes in Viet Nam was growing. Viet Nam is the fourth largest strategic market of Honda motorcycles in the world, after China, India and Indonesia.

Viet Nam is a lucrative market for motorbike makers, particularly foreign companies. In the last five years, between 2.5 and 3 million vehicles were sold each year. In 2009 alone, motorbike makers sold more than 2.7 million vehicles, of which 2.3 million were from foreign-invested companies.

The motorbike demand is estimated to increase since income and living conditions are improving.

Manufacturers of luxury motorbikes are also optimistic about sales. The Indochina Automotive – IC Auto recently introduced new expensive models, like the Ducati, each with prices ranging from US$24,000 to $60,000.

The Vietnamese motorbike market has large potential. Although the market share for expensive vehicles is still small, it shows signs of expanding rapidly in the future, according to IC auto director Lawson Dixon.

Banks vie for savings

Commercial banks are competing with one another to open savings funds to attract more depositors. This was done to cope with the central bank’s new policy to restrict banks from opening new branches and transaction offices.

Recently, the State Bank of Viet Nam has issued a new policy that aims to reduce risks by preventing commercial banks from widening their networks of lenders.

Under the change, banks that have more than two branches in Ha Noi and HCM City will not be able to open more, while others who have fewer than two branches could do so if the central bank approves.

To cope with the new regulation, many commercial banks have opened more savings funds.

On July 6, Viet Nam Technological and Commercial Joint-Stock Bank opened a savings fund at District 1 in HCM City, only days after opening one in An Dong Plaza. Sai Gon Commercial Joint-Stock Bank in early July moved its headquarters to a new place and reserved the old premises for a savings fund.

Viet Nam Tin Nghia Commercial Joint-Stock Bank in May and June also opened four savings funds in the city. Viet Nam Maritime Commercial Joint-Stock Bank late last month opened its first savings fund in HCM City.

These savings funds are seen as the fastest way for banks to widen their networks. These affiliates are allowed to mobilise funds, issue and discount valuable papers issued by the commercials banks, and offer money remittances and transfer services.

Although the savings funds are not allowed to give loans, if customers have such demands, staff of the savings funds would help them complete a loan document and transfer it to a transaction office with the function in the bank’s system.

Thus, the savings funds could satisfy the demand of banks to mobilise as well as widen their credit activities in big cities including HCM City and Ha Noi.

An official from the central bank’s HCM City branch admitted that some banks are not permitted to open new transaction offices in the city, but still could open savings funds while the opening work did not require strict conditions.

Later, these banks could easily upgrade a savings funds to a transaction office.

To open a savings fund, banks have to register with the provincial branches of the central bank where banks place the fund.

In addition, banks must satisfy criteria, including being in operation for at least one year. They also must not have been imposed administrative fines for a year. The banks are required to ensure a capital adequacy ratio. In addition, a bank can open as many savings funds as they want in a city.

Banking sector experts said that the phenomenon of banks rushing to open savings funds would not affect the financial market if they managed risks well.

Stock market to revive

Although the VN-Index traded in a narrow range during June and early sessions of July, securities companies expect this month to witness a better performance of the local stock market, given stable economic conditions as well as better second quarter business results of listed firms.

Au Viet Securities Company said the positive news was that banks had agreed to lower lending rates, which would help companies access cheap capital for business and production activities for the rest of the year.

Meanwhile, stocks have recently returned to attractive price levels and the VN Index to around a 500-point level. Given stable economic conditions and that many companies had disclosed positive business results, the market is expected to show signs of improvement soon.

SME Securities Company said in its July report that after a long time of trading in a narrow range, investors now hope the market will improve in July.

If business results of enterprises are positive, such a scenario could come true.

This is because the market this month was affected by three factors: second quarter business results of enterprises; the macro economy; and the global economy. Company results, however, could mainly affect the market.

However, SME Securities said if the macro-economy did not experience a breakthrough,enterprises’efforts would only support short-term growth.

Viet Nam International Securities Company, however, said that recent poor performances on global stock markets had affected local investors’decision making, so it was too soon to hope for a strong run this month.

However, it would be unlikely for the market to have a deep fall due to the positive business results of listed enterprises.

Hotel rates fall 18%

The room rate at three – to five-star hotels in HCM City fell by 18 per cent in the first half of the year to an average of US$92 per room per night while the average room occupancy reached around 63 per cent, up 10 per cent year-on-year.

The Department of Culture, Sports and Tourism said in its report that the room rate fell strongly as some international hotel management groups had cut their rate after a period of strong rates in 2006-2007.

In addition, a greater supply of rooms has helped bring rates down. The city had more than 600 new three-to five star rooms during this period.

The city currently has 60 three – to five-star hotels with nearly 8,600 rooms. While the average room tariff has fallen, the number of foreign visitors has increased 12 per cent to 1.5 million in the first half of the year. Around 50 per cent of the visitors come as tourists and 30 per cent for business. The rest are for other purposes.

The department said the city needed to develop new tourism products and services to attract visitors to stay and spend more time in the city instead of moving on quickly to somewhere else.

The agency also said that it was focusing on promoting and developing tourism products. — VNS

Tags: Vietnam automotive, Vietnam automotive industry, Vietnam Motorbike