Circular No 14 dated August 28, 2015 is believed to give more power to VAMC to buy bad debts from banks and settle them with the company’s charter capital, raised from VND500 billion to VND2 trillion. It also allows VAMC to buy debts at the market prices.

However, analysts noted that the circular does not mention the legal framework for the cash flow to enter the secondary market, where debts collected by VAMC from credit institutions can be traded.

Meanwhile, the secondary market plays a very important role in debt settlement. If a secondary market does not exist, the ‘debt store’ will never be ‘freed’.

Under current laws, foreign investors still cannot join the Vietnamese debt trading market despite the release of the new circular.

To allow foreign institutions to join the debt trading market, Vietnam needs to release legal documents that guide the implementation of the Investment Law, while foreign institutions need to have their operation licenses amended by the local planning and investment departments where they registered their business.

To date, no foreign institution has had licenses amended.

Analysts said that they don’t think foreign investors would ‘queue up to buy Vietnamese bad debts’ as people predicted. There are not many foreign institutions interested in Vietnam’s bad debts, while real debt traders would only accept to buy debts at prices equal to 15-20 percent of the book value instead of 30-50 percent, as expected by some domestic institutions.

As foreign cash still cannot flow into the domestic debt market, Vietnam would have to rely on domestic resources to settle bad debts.

However, currently valid legal documents still do not allow private investors to trade bad debts. Even banks’ debtors cannot buy back their own bad debts from banks and VAMC.

Under current laws, trading bad debts is a conditional business. Only some subjects are allowed to trade bad debts, including the Debt and Asset Trading Company (DATC), a unit belonging to the Ministry of Finance, VAMC and nearly 20 asset management companies (AMC) put under control by credit institutions.

A lawyer said it was still very difficult to sell assets which are collateral for loans in the market. To date, the sale of the assets has been done through intermediate parties – the courts or enforcement agencies. The complicated procedures have slowed down the sale of mortgaged assets and have made it impossible to settle debts.

Bank systems updated and decision of November 12 reversed.

Non-residents are foreigners who live in Vietnam for less than one year while foreign residents are those who live in this country for more than one year.

Vietcombank put on hold the money transfer service via ATMs and accounts or cards of non-residents and foreign residents in Vietnam in August last year.

On November 12, the bank announced on its website to suspend money transfers to non-residents and foreign residents. Transactions relating to transfer money from cards and accounts of other banks to Vietcombank foreigners’ accounts were also invalid.

The bank explained that the move was to comply with the existing regulations, as money transfer transactions via ATMs and cards and customer profiles were not properly checked.

According to the Foreign Exchange Ordinance and regulations of the State Bank of Vietnam, foreigners are allowed to open and use accounts in Vietnam dong at banks to transfer money of legitimate origins such as wages and consulting fees.

The ordinance also permits foreigners to use cards. ATM services are popular and legitimate for foreigners.

In reality, many more foreigners have come to Vietnam to live, work, study and travel and local banks have many foreign customers who have opened accounts in Vietnam dong to make transactions, including with ATMs.

Vietcombank has the biggest number of foreign customers in Vietnam. According to statistics of the Bank Card Association of Vietnam, Vietcombank’s sales from ATM debit cards had accounted for 20% of its total by end-June, the highest in the banking system. Total transactions via ATM debit cards exceeded VND141.8 billion and total sales from money transfer service amounted to over VND18.6 trillion. Foreigners account for 15% of the bank’s customers who hold Vietnam dong currency accounts.

Noi Bai and Tan Son Nhat, the two largest airports of Viet Nam, are the only two of 22 in the country estimated to make a profit this year.

Tan Son Nhat International Airport in HCM City at night. – Photo vietnamairport.vn

Speaking at a conference held in Ha Noi recently to introduce to investors its operations and plans before launching the IPOs in December, General Director of Airports Corporation of Viet Nam Le Manh Hung said of the total 22 airports managed by the ACV, only the operation at the Noi Bai and Tan Son Nhat airports were in profit, while all the others were running in losses, according to auditing results in 2014.

The small airports had weak financial results due to the lack of visitors and poor operations.

Chu Lai Airport in central Quang Nam province is one such example. It was designed to receive 500,000 passengers per year but it managed just over 8 per cent of that, making VND3.57 billion (US$159,000) in revenues last year. Meanwhile, Can Tho international airport could fill more than 15 per cent of its designed capacity of 2 million passengers – earning VND34 billion ($1.51 million) in revenue. Other airports including Cà Mau, Rạch Giá, Tuy Hia, and Điện Biên, in addition to Đồng Hới, Liên Khương and Phú Quốc, only managed between 11 per cent and 37 per cent of capacity.

Hung said that almost all of ACV’s small airports had been developing infrastructure and expanding investment so they needed more time to recoup their expenses.

A number of other airports such as Da Nang, Cat Bi and Phu Bai were trying their best to restructure operations and were on their way to recovery. Meanwhile, Noi Bai and Tan Son Nhat had made great contributions to the corporation’s revenue and profit in the past, Hung said.

Tan Son Nhat International Airport reached 111 per cent of its operation capacity, earning nearly VND3.6 trillion ($160.34 million) and contributing 45 per cent of the ACV’s sale revenue and service supply. It received more than 22 million passengers in 2014.

Meanwhile, Noi Bai International Airport carried more than 14 million passengers, bringing about VND2.5 trillion ($111.36 million) in revenue last year. After its international terminal T2 began operations by the end of last year, the airport reached 57 per cent of its capacity.

ACV has been managing 22 civil airports nationwide, of which seven international ones were designed to receive nearly 70 million passengers per year. In 2014, the corporation’s revenue gained VND10.56 trillion ($470.38 million) and an after-tax profit of VND2.43 trillion ($108.24 million).

BSC Securities Company has predicted that the ACV would earn a net revenue of VND10.13 trillion ($451.22 million) this year, with an after-tax profit of more than VND1.7 trillion. Its growth rate in revenue and profit in 2015 and 2020 would be 7 per cent and 9 per cent, respectively.

The corporation is seeking to sell a 3.47 per cent stake, equivalent to over 78 million shares, to the public at the initial offering price of VND11,800 (53 cents) a share.

After the IPO, the government will hold 75 per cent of ACV’s charter capital while a one-fifth stake is for a yet-to-be decided strategic investor. The remaining 1.53 per cent will be offered to employees and the trade union.

Prime Minister Nguyen Tan Dung delayed the monthly cabinet meeting from the morning to the afternoon to attend the forum. While the government leaders confirmed that the condition of the economy is very favorable with the economic growth reaching the yearly target (at least 6.53% this year and 6.7% for 2016), low inflation (only 1.5-2% for the whole year), local and foreign investors spoke about Vietnam overcoming the crisis and described their business plans for the future.

The discussion about the economic situation in Vietnam attracted attention of the CEO of Indochina Capital, Peter Ryder, who has been in Vietnam for more than 20 years. Ryder said he had just attended a meeting of big investors at a resort in the central province of Quang Nam. “The subject of the six-hour meeting was about investing in ASEAN, but investors spent up to five hours to talking about Vietnam,” Ryder said.

The interests of foreign investors in Vietnam that described by Ryder at the forum held by Euromoney and the Ministry of Planning & Investment partly helped explain why $17 billion of foreign direct investment had been (FDI) registered in Vietnam in the past nine months, more than half of the same period of 2014.

Chairman of Sunwah Group and VinaCapital – Mr. Jonathan Choi – recalled his feeling of risk a few years ago, when inflation highly increased. But now the opportunity has come back and foreign investors may be waiting in many areas, especially infrastructure development projects and agriculture – fisheries.

Along with FDI, the indirect capital flow from foreign investors has improved in recent years. According to Vice President of the State Securities Commission, Nguyen Thanh Long, the listed securities portfolio of foreign investors increased by an average of 20-25% per year. Currently foreign investors account for only 1% of the total trading accounts but the total portfolio value is over $15 billion, accounting for 25% of the transaction value of market.

Chairman of the Saigon Securities Company (SSI) Nguyen Duy Hung said the current situation of the economy is what investors were dreaming about 10 years ago.

Along with the stable macroeconomic indicators, Hung quoted statistics of the state agencies showing that per capita income (in purchasing power parity) of Vietnam today is over $5,000. This not only helps businesses have more opportunities for selling goods but also provides a basis for Vietnam to gradually reduce ODA funds.

“Recently a locality refused to receive ODA. We are very glad to hear that. It means that Vietnam will have a chance to get capital which requires greater efficiency, helps businesses improve competitiveness and sustainable development,” Hung said.

According to Hung, after a period of fierce competition from other countries in the region such as Indonesia, the Philippines and most recently Myanmar, Vietnam seems to have become an address of priority for investment again. However, to take advantage of the opportunity to once again become the “star in attracting FDI” as it was in the period of 2007-2009, many questions were raised at the forum about Vietnam and its biggest rivals.

Along with the insights shared at the forum such as reasonable labor costs, trained labor, large-scale markets and ohers, Prime Minister Nguyen Tan Dung said that Vietnam’s participation in 8 Free Trade Area agreements (FTAs) in recent years has brought many opportunities for the business community.

Particularly, the ASEAN Economic Community (AEC) has a GDP of about $2,500 billion and may reach $10,000 billion by 2030. If the Trans-Pacific Partnership (TPP) agreement goes through, Vietnam can enjoy many preferential incentives in trade with 55 countries.

However, the PM acknowledged that the achievements in integration and investment attraction of Vietnam is not commensurate with the potential. “We are working hard to come up with solutions to overcome challenges and our own limitations,” he said.

The Prime Minister stressed that the investment and business environment in Vietnam is still in the process of completion and renovation, especially the stage of implementation. However, he affirmed that Vietnam can achieve the targets of the business environment equivalent to the group of ASEAN 4 in 2016, even in this year.

He called on private and foreign investors to invest in infrastructure in the form of public-private partnership (PPP), and participate in the purchase and equitization of State-owned enterprises.

The Minister of Planning and Investment, Bui Quang Vinhm reaffirmed that Vietnam is pushing stronger integration with the FTA. Thereby, the biggest expectation of the Vietnamese Government and enterprises is to expand the market.

To do this, Vinh said that two things must be done: modify the economic institutions and the legal system in accordance with international practice besides the accepting the competition and expanding investment.

He cited textile-garment as an example, saying that if Vietnam is successful in TPP negotiations, Vietnamese textile-garment firms may enjoy tax rate of 0% in many markets, instead of the current 17-20%.

Answering the question about Vietnam’s rivals in the region in attract foreign investment, Vinh said the people who feel most clearly about it are international investors, who have invested in Thailand, Indonesia and other countries.

However, Vinh said that in the context of Vietnam’s participation in AEC, the Vietnamese Government wants all countries in the region to have the opportunity to grow.

“For Vietnam, it is necessary to overcome its own problems, otherwise many countries that are not our rivals today will certainly be Vietnam’s rivals tomorrow,” Minister Vinh said.