PREFACE In the nature of international trade. many companies are exposed to the hazard of exchange rate fluctuation. The purchases from international providers in other states. and gross revenues to domestic purchasers with history payables and history receivables in different currencies will give rise to foreign exchange hazards. 1. General job statement In an attempt to run into the demand of the Vietnamese edifice stuffs market. Construction and Materials Trading Company is involved greatly in the international trade. Net income from stuffs merchandising makes up about 75 per centum of CNT?s entire net income. In CNT company. the imports of Steel such as Steel Beams. Steel Plate. Steel Sheet… frequently create account payables in foreign currency ( US dollar ) with the providers. The gross revenues of these trade goods frequently create history receivables in place currency ( VND ) with domestic purchasers.
Therefore. the company suffers from dealing hazards during its steel trading procedure from the beginning of the purchase made until the payment is settled. Harmonizing to CNT?s direction. the dealing exposure loss seldom happens. and is considered undistinguished because the State Bank of Vietnam uses many mechanisms to back up stableness of the VND/USD exchange rate. Therefore. there were merely minor minutess. which were hedged in the yesteryear. The fudging scheme used is merely limited with the monetary value determinations tool. However. it is a necessary undertaking for the company to plan a flexible hedge scheme with different hedge tools. A proper hedge scheme can assist the company to cover with the hazard of exchange rate volatility in different phases of the economic rhythm. Therefore. the research would wish to analyse other currency hedge tools which are possible to implement at CNT company. and plan a suited hedge scheme for the company for the long-run. There are two facets of the research job: 1. The influences of Vietnam dong fluctuation against US dollar to the histories collectible of CNT over the last five old ages.
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2. Determine which hedge tools are available for the company. and plan a suited hedge scheme for the company for the long-run. 2. Research objectives A company is capable to dealing exposure whenever there are receivables or payables in foreign currency denominations. The fudging construct in pull offing dealing exposure is to be able to cut down the hazard from currency fluctuations. In the terminal. the research will be performed as an input for farther betterment at CNT. Harmonizing to that. the research objectives of this thesis are: 1. Recognition of how CNT manage dealing exposure derived from the foreign exchange rate fluctuations of Vietnam dong against US dollar currency. 2. Analyze the hedge schemes available which CNT may perchance implement to cut down hazards from the exchange rate fluctuations. 3. Supply alternate picks for CNT fudging schemes in pull offing dealing exposures. 3. Scope of the thesis The thesis aims to place the consequence of foreign exchange fluctuation on the net income of some Steel import contracts of Construction and Material Trading company.
The timeframe of the survey is limited to the last five old ages. get downing with twelvemonth 2006 and stoping with twelvemonth 2010. depending on the handiness. and dependability of the information. In this thesis. the writer merely has allowance to demo certain parts of information that was given by the company because it is confidential. The informations are collected from the Import- Export gross revenues section No. 2 of CNT company. and focuses on Steel import contracts and relevant paperss. The foreign exchange rate used in this thesis is the rate offered by Vietcombank. non the foreign exchange rate in the black market. It is assumed that the company can near the US Dollar beginning at Bankss.
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4. Methodology The methodological analysis used to carry through the aim. is by making a literature survey. roll uping primary and secondary informations. treating the information. executing inductive and explanatory research. and analysing the consequence. Literature study- to intensify cognition about foreign exchange hazard. and the overview of the Vietnamese foreign exchange market. Roll uping data- From the reported informations provided by the company. specialised mention books. information from newspapers. magazines. cyberspace. and some research related to the subject. Processing the data- through these methods. Statisticss by tabular arraies. charts. expression: statistics to happen out common features of analyzed factors. Comparison methods: compare the same sort of Numberss to happen the increasing and diminishing in each twelvemonth. Methods of Experts: consult the experts.
5. The organisation of the thesis The thesis would be divided into three chapters which consist of: Chapter 1: LITERATURE REVIEW This chapter explains theories behind the analysis done in this thesis. the overview of the foreign exchange market. and the derived functions market in Vietnam. Chapter 2: Hazard ANALYSIS OF TRANSACTION EXPOSURE This chapter gives a brief overview sing the company. elaborate analysis of the dealing exposure in the last five old ages every bit good as the current hedge tool of the company. Chapter 3 DESIGNING HEDGING STRATEGY This chapter includes some available hedge tools. and long-run hedge scheme for the company and recommendations for the State Bank of Vietnam to pull off the derived functions market.
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Chapter 1- LITERATURE REVIEW 1. 1. Import 1. 1. 1. Definition of importing Importing is the buying side of trade and takes topographic point when one part acquires goods or services from another part. Importing is linked with international trade and by and large is distinguished from trade within a specific state because importing involves authorities ordinance. ( Importing. n. d. ) 1. 1. 2. The benefits and drawbacks of importing a. Benefits Many economic experts. concerns. and politicians continue to trust on the rule of comparative advantage and it still influences import theories and policies. Consequently. states continue to import merchandises because they can obtain them less expensively abroad. In add-on. given the engineering. labour costs. authorities inducements. and subsidies of different states. one state may be able to bring forth goods more expeditiously than other states.
Hence. other states will seek to import these goods because of monetary value and possibly quality advantages. For illustration. other states import Robusta Coffee from Vietnam. while Vietnam imports Machinery from other states such as Japan and China. Importing allows states to accomplish higher criterions of life by obtaining merchandises and resources that can non be obtained domestically. For illustration. in order for the Vietnam to keep its criterion of life. it must import gasoline. since the state can non bring forth a sufficient sum to fulfill consumer demand. B. Drawbacks Many economic experts and authoritiess believe that importing goods can take to the eroding of their national economies- particularly when imports exceed exports. Importing goods poses other jobs such as the silent credence of societal values that struggle with domestic values. Importing goods from states that pay low
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rewards. for case. can stultify domestic industries that can non vie because they have a minimal pay. duties to labour brotherhoods. and so forth. Furthermore. importing inexpensive goods. particularly fabrics. from states that force employees- even children- to work in sweatshop conditions overlooks the type of intervention of employees that many states condemn. 1. 2. Foreign exchange market An exchange rate is a monetary value of one currency against another currency. The foreign exchange market is a market in which national
currencies are bought and sold against one another. The foreign exchange market is an over the counter market because the market participants are located in the major commercial Bankss around the universe. The foreign exchange market comprises minutess among four groups of participants: traders. agents. cuctomers and cardinal Bankss ( Morris Goldstein. 1993 ) . Two cardinal types of the exchange rates ( Gaurav Akrani. 2010 ) : ? Spot exchange rate: This refers to the monetary value of foreign exchange in footings of domestic money payable for the immediate bringing of peculiar foreign currency. It is an bing or daily exchange rate. ? Forward exchange rate: There are several future minutess whose bringing would be made sometime in the hereafter. The rates at which these minutess are consummated are called as forward rate of exchange. It is the rate carry throughing the understanding between two parties based on future bringing of goods. 1. 3. Exchange rate determiners The exchange rate. merely like trade goods. find its monetary value reacting to the forces of supply and demand. Therefore. if for some ground people increase their demand for a specific currency. so the monetary value will lift. provided the supply remains stable and frailty versa. Some of the factors that influence currency supply and demand are rising prices rates. involvement rates. economic growing. and political and economic hazards.
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Furthermore. international para conditions describe the nucleus fiscal theories environing the finding of exchange rates. This economic theory links exchange rates. monetary value degrees and involvement rates together. The international para conditions encompassed: 1. 3. 1. Buying Power Parity ( PPP ) 1. 3. 1. 1. Absolute Buying Power Parity In it absolute version. buying power para states that monetary value degrees should be equal worldwide when expressed in a common currency. However. absolute Buying Power Parity ignores the effects on free trade of transit costs. duties. quotas and other limitations and merchandise distinction ( Alan C. Shapiro. 2009 ) . 1. 3. 1. 2. Relative Buying Power Parity The comparative version of Buying Power Parity states that the exchange rate between the place currency and any foreign currency will set to reflect alterations in the monetary value degrees of the two states. ( Alan C. Shapiro. 2009 ) . Formally. if ih and if are the rates of rising prices for the place state and the foreign state. severally ; e0 is the place currency value of one unit of foreign currency at the beginning of the period ; and e1 is the spot exchange rate in period 1. so ???? ????
1. 3. 2. Interest Rate Parity theory ( IRP ) Harmonizing to involvement rate para theory. the currency if the state with a lower involvement rate should be at a forward premium in footings of the currency of the state with the higher rate. More specifically. in an efficient market with no dealing cost. the involvement derived function should be ( about ) equal to the forward derived function. Interest rate para holds when there are no covered involvement arbitrage chances. Harmonizing to Alan C. Shapiro. ( 2009 ) this no-arbitrage status can be stated as follows:
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Rh factor: represents the nominal rate of place currency releasing factor: represents the nominal rate of foreign currency f1: the forward rate at clip 0 for bringing of one unit of foreign currency at clip 1. 1. 4. Foreign exchange hazard and foreign exchange exposures 1. 4. 1. Foreign exchange hazard Maurice D. Levi defined foreign exchange hazard as “the discrepancy of the domestic currency value of assets. liabilities. or runing incomes that is attributable to unforeseen alterations in foreign exchange rates. ” By definition. foreign exchange hazard depends on the exposure. every bit good as the variableness of the unforeseen alterations in the relevant exchange rate. “Foreign exchange hazard is related to the variableness of domestic currency values of assets or liabilities due to unforeseen alterations in exchange rate. ” ( Maurice D. Levi. 2008. as cited in Thummuluri Siddaiah. 2009. pp. 127 ) 1. 4. 2. Foreign exchange exposure Maurice D. Levi besides define the significance of foreign exchange exposure. “It is shown that exposure is a step of the sensitiveness of alterations in domestic currency values of assets. liabilities or runing incomes to unforeseen alterations in exchange rates” ( Maurice D. Levi. 2009. pp. 283 )
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Figure 1. 1- Types of Foreign Exchange Exposure Foreign Exchange Exposure
Operating exposure Alan C. Shapiro ( 2005 ) cateforized foreign exchange exposure into economic exposure and interlingual rendition exposure ( see Figure 1. 1 ) . ?
Economic exposure refers to possible alterations in all future hard currency flows of a house that result from unforeseen alterations in exchange rates. Economic exposure may farther be classified into dealing exposure and operating exposure. Transaction exposure refers to possible alterations in the value of contractual hereafter hard currency flows. or pecuniary assets and liabilites. ensuing from alterations in the exchange rate. Opreating exposure. on the other manus. represents the possible alterations in the value of nonmonetary or existent assests and liabilites due to unforeseen alterations in exchange rates. ? Translation exposure is besides knowns as accounting exposure. It arises when points of fiscal statements that are stated in foreign currencies are restated in the place currency of an transnational corporation.
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Table 1. 1- Comparison of interlingual rendition. dealing and operating exposure Comparison of interlingual rendition. dealing and operating exposure Translation Exposure Operating Exposure Changes in income statement points and Changes in the sum of future the book value of balance sheet assets runing hard currency flows caused by an and liabilities that are caused by an exchange additions or losingss are determined exchange rate alteration. The ensuing by alterations in the firm?s future exchange additions and losingss are competitory place and are existent. The determined by accounting regulations and are measuring of operating exposure is paper merely. The measuring of prospective in nature as it is based on accounting exposure is retrospective in future activities. nature as it is based on activities that occurred in the past Impact: Balance sheet assets and Impact: Grosss and costs associated liabilities and income statement points with future gross revenues. that already be. Exchange rate alteration occurs Impacts: Contracts already enterd into. but… to be settled at a ulterior day of the month. Transaction exposure Changes in the value of outstanding foreign-currency-denominated contracts ( i. e. contracts that give rise to the future foreign currency hard currency flows ) that are brought about by an exchange rate alteration.
The ensuing exchange additions and losingss are determined by the nature of the contracts already entered into and are existent. The measuring of dealing exposure mixes the retropective and propextive because it is based on activities that occurres in the past but will be settees in the hereafter. Contracts already on the balance sheet are portion of accounting exposure. whereas contracts non yet on the balance sheet are portion of operating exposure. Beginning: Alan C. Shapiro ( 5th ) . ( 2005 ) Foundations of transnational fiscal direction ( pp. 252 ) 1. 5. Transaction exposures and pull offing dealing exposures 1. 5. 1. Transaction exposure Harmonizing to Thummuluri Siddaiah ( 2009 ) . dealing exposure refers to possible alterations in the value of contractual hard currency flows that arise due to unexpected alterations in the foreign exchange rate. It is a step of the sensitiveness of the place currency
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value of assets and liabilities in foreign currency to unforeseen alterations in exchange rates. Harmonizing to Henri L. Beenhakker ( 2002 ) . dealing exposure arises from: ? Borrowing or loaning financess when refund is to be made in a foreign currency. ? Buying or selling on recognition goods or services whose monetary values are stated in foreign currencies. ? Bing a party to an unperformed foreign exchange forward contract. ? Acquiring assets or incurring liabilities denominated in foreign currencies. 1. 5. 2. Pull offing dealing exposures 1. 5. 2. 1. Identify the grade of exposures After identified the types of hazard which a company is exposed to. the following important measure in a company?s hazard direction determination is the hazard measuring. Harmonizing to South/Western Thomson Learning ( 2003 ) . to mensurate the dealing exposure a company should project the net sum of influxs and escapes in each foreign currency and find the overall hazard of exposures to those currencies. ( South/Western Thomson Learning. 2003. as cited in Yasmin Nur Annisa. 2008. p27 ) . 1. 5. 2. 2.
Make determination on fudging the exposures The determination whether to fudge or non required a depth analysis. The company needs to see to what widen a company are willing to take the hazard. whether the company has the hazard inauspicious attitude or non. The additions and losingss shouls be compared with the bing exposure and the preset exchange rate budget. which has been agreed by the direction. The company?s degree of certainty whether a specific event will happen or non besides determine the hazard direction determination. A company can make up one’s mind to make notthing or to fudge its exposure. ( Yasmin Nur Annisa. 2008. p28 ) 1. 5. 2. 3. Choose a hedge technique
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Harmonizing to Alan C. Shapiro ( 2005 ) . there are many techniques by which the houses can pull off their dealing exposure. These techniques can be loosely divided in to fudging techniques and operational techniques. Hedging refers to taking an countervailing place in order to lock in the place currency value for the currency ecposure. extinguishing the hazard originating from alterations in the exchange rate. The of import hedge techniques are forwards/futures. money market hedges. options and barters. Operational techniques include exposure gauze. taking and lagging and currency of invoicing. Figure 1. 2- Hedging techniques to pull off dealing exposure
Pull offing dealing exposure
Hedging techniques Operational techniques Netting and countervailing Currency of invoicing Leading and dawdling
Forwards and hereafter
Money market hedge
1. 5. 2. 3. 1. Hedging techniques * The Derived functions Market is meant as the market where exchange of derived functions takes topographic point. Derived functions are one type of securities whose monetary value is derived from the underlying assets. And value of these derived functions is determined by the fluctuations in the implicit in assets. These implicit in assets are most commonly stocks. bonds. currencies. involvement rates. trade goods and market indices. The Derived functions can be classified as Future Contracts. Forward Contracts. Options. Swaps and Credit Derivatives. ( Meaning Derived functions Market. n. d. ) . ( I ) Forward
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The forward market involves undertaking today for the future purchase or sale of foreign exchange. Forward contact is a lawfully adhering understanding between two parties naming for the sale of an plus or merchandise in the hereafter at a monetary value agreed upon today. The forward contract can non be traded in the stock exchange but they are traded among fiscal establishments or between fiscal establishments and its clients. Forward contract is tailor made on its currency rate. bringing day of the month and the sum involved which is negotiated by the party involved in the contract. The forward contract value is equal nothing but the future rate is altering and the bringing monetary value is fixed. Therefore. there is a possibility for addition or losingss realized on the colony day of the month from the exchange rate fluctuation. Forward contacts are the most common agencies of fudging minutess in foreign currencies because of its simpleness.
The problem with forward contracts. nevertheless. is that they require future public presentation. and sometines one party is unable to execute on the contract. When that happens. the hedges disappears. sometimes at great cost to the equivocator. ( two ) Futures In contrast to send on contract. a hereafters contract has standardized characteristics on its contract size. bringing day of the month. day-to-day relocation and so forth. Futures are exchange trade which means traded on organized exchanges instead than over the counter. A client wanting a place in hereafters contracts contacts his agent. who transmits the order to the exchange floor where it is transferred to the trading floor. In the trading floor. the monetary value for order is negotiated by unfastened outery between floor agents or bargainers. Futures recognized the addition and losingss daily because its day-to-day relocation characteristics. Frequently. a hereafters exchange may hold a day-to-day monetary value bound on the hereafters monetary value. that is. a bound as to how much the colony monetary value can increase or diminish organize the old day?s colony monetary value. Nevertheless. hereafters merely let companies to fudge about because futures? strandardized instruments on its contract size. bringing day of the month and so forth. In
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add-on. due to taging to market belongings. there are interim hard currency flows prior to the adulthood day of the month of the hereafters contract that may hold to be invested at unsure involvement rates. As a consequence. exact hedge would be be hard. ( three ) Option An option contract is a type of contract understanding which give the proprietor the right. but non the duty. to sell or purchase implicit in plus in a preset monetary value during a certain period of clip in the hereafter. A individual who buys an option contract pays a premium to the option?s marketer to counterbalance the ability of puting the floor or ceiling monetary value determination. The option holder has the right non to exert the contract it the market monetary value moves outside the jutting rate. There are two types of options. American and European. American option can be exercised anytime during the contract cogency. European option merely can be exercised at the adulthood day of the month. Option does non hold standardized characteristics and made harmonizing to the company?s specific demands. Option besides differentiated as: ? Call Option. which is an option to purchase an implicit in plus.
A company exercises the call option if the topographic point rate is in the money place. in this instance when the topographic point rate is bigger than the exercising monetary value. ? Put Option. which is an option to sell an implicit in plus. A company exercises the put option if the exercising monetary value is bigger than the topographic point rate. In fudging utilizing options. options with its premium is considered more expensive because of its flexibleness in the seamster made value. Options are peculiarly suited as a fudging tool for contingent cashflow. for illustration in command procedures. ( four ) Hedging with barter contracts A barter is an understanding between two parties to interchange a hard currency flow in one currency against a hard currency flow in another currency harmonizing to predetermined footings and conditions. to set it otherwise. a barter understanding requires periodic payments from one party to the other party in order to safeguard against unfavorable exchange rate motions. A house which expects certain hard currency flows in a foreign currency in the hereafter may come in into a barter contract in order to fudge those hard currency
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flows against foreign exchange rate fluctuation. Currency barter are by and large used to fudge long-run dealing exposures. ( V ) Money market Money market scheme for fudging involved the investment and adoption in the currency market. The company can put in the loan in the short term investing such as purchasing securities or sedimentation in a bank. For illustration. a company hedges a receivable by locking in the value of a foreign currency dealing in the place currency and hedges a collectible by locking in the value of a foreign currency dealing in the foreign currency. The execution of money market hedge for payables is explained as below stairss: ? Define how much is the liabilities?size at the due rate. ? Define the present value of the payables with the foreign currency sedimentation interst rate. and so covert it to the place currency. ? Loan the money in the place currency. covert it in the foreign currency. and invest in the foreign currency sedimentation. At the due day of the month. the sedimentation will cover the exact sum of the payables in the foreign currency. ? The hard currency escape at the due day of the month is precisely the same sum as the loan plus involvement rate a company had.
Therefore. the company can avoid the loss possibility for the exchange rate fluctuation if the place currency depreciated against the foreign currency. The most attractive characteristic from money market hedge is its liquidness. A company can easy turn the financess into hard currency. for case with composing a cheque. Money market is likely one of the safest topographic points for salvaging the capital. The financess are invested in comparatively unafraid authorities or other short-run. high-quality debt. However. a company has an chance cost by utilizing the money market hedge. The financess invested in a money market history could hold fared better in a different investing instruments such as a stock or a bond. Furthermore. money market can sometimes neglect to maintain gait with rising prices which means an investor?s buying
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power may worsen each twelvemonth. Thus. money market is non suited for an drawn-out period of clip. 1. 5. 2. 3. 2. Operational techniques ( I ) Invoice currency A company can fudge through the pick of invoice currency. The exchange rate can be shifted to another party by invoicing another party utilizing the company?s place currency. Furthermore. a company can portion the hazard by invoicing another party by half in another party?s currency and half in the company?s domestic currency. A company can diversify the exchange rate exposure through basket of currencies as the bill currency. Invoicing in currency baskets can be a utile hedge tool when no forward or currency contracts are available. However. a company should besides see the customer?s convenient degree. The clients may take another company which has simplier payment method. The of import factors that govern invoicing are historic relationships between the trading spouses and the comparative bargaining powers of spouses.
Sometimes. neither of the parties involved may hold any pick. as in the instance of petroleum oil exports. which are conventionally invoiced in the U. S dollar. ( two ) Lead/ Lag Strategy The scheme involve seting timing of foreign currency grosss and payables and to take advantage of an expected currency depreciation or grasp. Lead means to pay or roll up early and slowdown agencies to pay or roll up tardily. If a currency appreciating. a company should pay the measures in that currency early and allow client pay tardily every bit long as they pay in that grasp currency. It a currency deprecating. a company should give inducements to clients to pay early and the company should pay the payables tardily. If the paying or having currency are every bit weak or strong. ther is no advantage in taking or dawdling from a currency exposure point of view. A good relationship between providers and clients is required for implementing the scheme. as to be willing to allow excess recognition period or negociating price reduction for
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prompt payment. Therefore. lead and slowdown scheme normally applied to intercompany dealing as there would be minimum struggle between providers and clients. ( three ) Exposure sacking A house may hold a dealing exposure portfolio with exposures in different currencies. When exchange rates change. there may be additions on some currencies and losingss on others. Exposure gauze is a portfolio attack to hedge. harmonizing to which a house may pull off its trade minutess in such a manner that exposures in one currency will be offset by exposures in the same or other currencies. This. infact. provides a natural hedge. A house can hold more stable hard currency flows if it has currency variegation. which can restrict the possible impat of alterations in any individual currency on the hard currency flows of a house. ( four ) Price determinations The general regulation on recognition gross revenues overseas is to change over between the foreign currency monetary value and the dollar monetary value by utilizing the forward rate. non the topographic point rate.
If the dollar monetary value is high plenty. the exporter should follow through with the sale. Similarly. if the dollar monetary value on a foreign-currency-denominated import is low plenty. the importer should follow through on the purchase. All this regulation does is to acknowledge that a euro ( or any other foreign currency ) tomorrow is non the same as a euro today. This regulation is the international parallel to the penetration that a dollar tomorrow is non the same as a dollar today. In the instance of a sequence of payments to be received at several points in clip. the foreign currency monetary value should be a leaden norm of the forward rates for bringing in those day of the months. 1. 6. Overview of Vietnam Foreign exchange market 1. 6. 1. Background of Vietnam’s exchange rate government In line with the broader economic reform procedure. Vietnam?s exchange rate government has evolved from a system of multiple exchange rates to a individual announced fixed rate. so to the current system integrating a narrow adjustable set around the official rate. which is itself set on a day-to-day footing and is meant to reflect the interaction of market forces.
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The alterations in exchange rate government have allowed the creative activity of the necessary institutional model for the formation and development of an organized foreign exchange market in Vietnam. The state started to hold an organized. modern foreign exchange market since the early 1990s. There are two cardinal mileposts in this procedure. The first was the constitution of two foreign exchange trading floors ( in 1991 ) and the 2nd the birth of an interbank foreign exchange market ( in 1994 ) . 1. 6. 2. Vietnam’s exchange rate government during 1994-2011 periods ( I ) 1994-1996 – Conventional fixed peg agreement Replacement of the two foreign exchange dealing floors with an inter-bank foreign exchange market. Official Exchange rates were stable and set by the State Bank of Vietnam based on inter-bank Exchange rates. The Exchange rate set within which Commercial Bankss set their ain Exchange rates remained narrow at ? 0. 5 % – ?1 % around the official Exchange rate. ( two ) 1997-1998 – Crawling bands The Exchange rate set was widened continuously. from ?1 % to ?5 % ( 02/97 ) . and from ?5 % to ?10 % ( 13/10/97 ) .
Devaluation of the VND under force per unit area of falling foreign exchange militias and additions in balance of payment shortages. ( three ) 1999-2000 -Conventional fixed peg agreement Alternatively of declaring an official Exchange rate. since 26 Feb. 1999 the State Bank of Vietnam began denoting mean inter-bank Exchange rates of the old on the job twenty-four hours. but the set has been tightened unusually to 0. 1 % . ( four ) 2001-2007 – Crawling peg The mean inter-bank Exchange rates were bit by bit adjusted from
14. 000VND/USD ( 2001 ) to 16. 100 VND/USD ( 2007 ) . The Exchange rate set was widen from 0. 1 % to ?0. 25 % ( 07/2002 ) and from ?0. 25 % to ?0. 5 % ( 01/2007 ) .
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( V ) 2008-2011 – Crawling sets Table 1. 2- Changes of mean inter-bank exchange rates and allowable trading sets during 2008-2011 period. Average inter-bank Exchange rates ( VND/USD ) 06/2008: 16. 500 VND/USD 01/2009: 17. 000 VND/USD 12/2009: 17. 940 VND/USD 02/2010: 18. 544 VND/USD 08/2010: 18. 932 VND/USD 02/2011: 20. 693 VND/USD Allowable trading sets ( % ) 24/12/2007: ?0. 75 % 10/03/2008: ?1 % 27/06/2008: ?2 % 07/11/2008: ?3 % 24/03/2009: ?5 % 26/11/2009: ?3 % 11/02/2011: ?1 % Beginning: Assorted Decisions by the State Bank of Vietnam from 2008 to 2011 1. 6. 3. Mechanisms to back up stableness in the VND/USD rate Harmonizing to Nguyen Tran Phuc ( 2009 ) . the current exchange rate government operates within the model of an announced official exchange rate and an allowable exchange rate set. These two devices have been used to decelerate down short-run alterations in the exchange rate. even when there was strong market force per unit area for either a depreciation or grasp of the domestic currency. When the attendant commercial exchange rates failed to unclutter the market. the governments tended to trust on official intercession to run into portion of the instability between demand and supply. supplemented by moral suasion and administrative steps. 1. 6. 3. 1.
Official exchange rate Since 1999 the State Bank of Vietnam has determined the mean VND/USD exchange rate on the interbank market on each banking twenty-four hours and announced it as the official exchange rate on the undermentioned banking twenty-four hours. However. this finding procedure has non been crystalline and has contained to a big extent elements of the subjective will of the State Bank of Vietnam. Additionally. the proclaimed norm
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interbank rate has frequently appeared instead gluey or even stiff. despite grounds of rapid developments in the market. Table 1. 3- Changes of mean inter-bank exchange rates during 2007-2011 period. Average inter-bank Exchange rates 01/2007 06/2008 01/2009 11/2009 02/2010 08/2010 02/2011 16. 100 VND/USD 16. 500 VND/USD 17. 000 VND/USD 17. 940 VND/USD 18. 544 VND/USD 18. 932 VND/USD 20. 693 VND/USD 2. 48 % 3. 03 % 5. 53 % 3. 37 % 2. 09 % 9. 30 % Change
Beginning: Assorted Decisions by the State Bank of Vietnam from 2008 to 2011 2006-2008: During this period. the State Bank of Vietnam pegs Vietnamese Dong to US dollar at an one-year devaluation of 1- 2 % ( chiefly to manage the difference in rising prices between the two economic systems ) . In a stabilizing attempt. State Bank of Vietnam raised inter-bank exchange rate by 2. 48 % . from 16. 100 VND/USD to 16. 500 VND/USD on June. 2008. 2009: On December 25th 2008. the State Bank of Vietnam announced a new exchange rate ( 17. 000 VND/USD ) . with the dong depreciating by 3. 03 % against the US dollar as compared to June. 2008. This move contributed to easing export. commanding trade shortage. guaranting a sustainable international balance of payments. restricting the outlook of exchange rate hiking. hence helping endeavors to actively develop their stable concern programs. Besides. in this twelvemonth. short supplies of foreign currency have characterized the national economic system. The deficit appeared in the 2nd one-fourth of the twelvemonth. when export companies held onto foreign currencies and refused to sell dollars to Bankss. Commercial Bankss did non hold foreign currencies to sell to concerns. but
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have capital in foreign currencies since no 1 wanted to borrow in foreign currencies for fright of farther dollar monetary value additions. To chill the market. in late November. State Bank of Vietnam decided to contract the foreign currency merchandising set to control the lessening of the dong?s value and raise the interbank exchange rate by 5. 53 % from 17. 000 VND/USD to 17. 940 VND/USD. Meanwhile. the Prime Minister requested big state-owned groups and corporations to sell dollars to Bankss and better the supply. 2010-2011: On February 10th. 2010. Central Bank decided to raise the mean interbank foreign exchange rate by 3. 37 per centum from 17. 940 to 18. 544 dong per US dollar. Then the foreign exchange rate motions showed the really positive signals when free market’s foreign exchange rate was closer to the commercial Bankss. On February. 2011. the State Bank of Vietnam has decided to raise the interbank exchange rate by 9. 3 % from VND 18. 932 to VND 20. 693 to the dollar and narrowed exchange rate amplitude from 3 % to 1 % . Harmonizing to State Bank of Vietnam?s account. the accommodation of the exchange rate purposes to advance the liquidness of the foreign exchange market.
State Bank of Vietnam said that it would set the interbank mean exchange rate flexibly in the close hereafter harmonizing to the foreign currency supply and demand state of affairs. to guarantee the liquidness of the market. contribute to controling the trade spread and assist transport out pecuniary policies more flexibly. ?In conclustion. the State Bank of Vietnam tends to raise the interbank foreign exchange rate in recent old ages in order to increase the market liquidness and foreign exchange militias. and particularly to control trade shortage. However. Vietnam’s economic system relies to a great extent on stuff imports. A successful processing economic system is non allowed to be dependent on imports. Other states have to devaluate their currencies whereby their export merchandises will be more competitory. But theory is non right as for a
developing state like Vietnam. In Vietnam. strategic export points such as dress. footwear have the imported stuff ratio of over 80-90
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per centum. So. when devaluating the dong. the monetary values of stuff imports every bit good as the monetary values of merchandises will be higher. intending that devaluating the dong will harm the economic system. 1. 6. 3. 2. Allowable trading set Figure 1. 3- Allowable Variations around Official Exchange Rate Mar 1989 Mar 2011
Note: There was no lower set for the periods Aug 91–Sept 94 and Jan 98–Jun 02 Beginning: Assorted Decisions by the State Bank of Vietnam from 1989 to 2011 The trading set. within which commercial citations are allowed to fluctuate. has been rather narrow except for the periods around the 1997-1998 Asiatic Financial Crisis and the 2007-2008 Global Financial Crisis ( see Figure 1. 3 ) . It would look that additions in the breadth of the allowable trading set have been used chiefly to react to episodes of strong force per unit area for the VND to deprecate. In peculiar. the perennial widenings of the set in 1997 and 2008-2009 allowed the VND/USD exchange rate to be adjusted upward in response to major external dazes. When the immediate urgency had passed. nevertheless. the set tended to be narrowed once more. 1. 6. 3. 3. Official intercession Given the operation of administered pricing. through the scene of both the official exchange rate and the allowable trading set. frequent cases of non-clearance
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of the market were ineluctable. By default. the State Bank of Vietnam frequently found it necessary to step in in order to pull off such market instabilities. taking at maintaining the exchange rate VND/USD at the needed degree and within the allowable set. During much of the period under survey. the VND was under force per unit area to deprecate. and there was a relentless extra demand for USD at the commercially quoted exchange rates. which were already pushed to their upper bound. Consequently. the State Bank of Vietnam had to sell measures of USD. Due to the demand of conserving official foreign exchange modesty. nevertheless. the State Bank of Vietnam tended to run into lone portion of the prevailing extra demand. and to utilize administrative agreements to ration some of the available foreign exchange among possible purchasers. In peculiar. merely those commercial Bankss with short places transcending a certain size could near the State Bank of Vietnam to purchase foreign currency at the quoted exchange rates. Furthermore. the system allowed precedence to be given to the importing of indispensable goods ( such as crude oil. fertiliser and medical specialty ) . and to commercial Bankss that serve clients prosecuting in these precedence activities.
This means that other clients must turn to the parallel black market or other channels to turn to their unmet demand for USD. 1. 7. Overview of Vietnam’s derived functions market First looking in developed markets in the eightiess. fiscal derived functions have been used widely by commercial Bankss worldwide as risk-prevention tools. However. the state of affairs is different in Vietnam. Financial derived functions were foremost used in Vietnam ten old ages ago ( 2000 ) . but they are still far from popular in the state. In fact. several derived functions merchandises. including frontward. barters. options and hereafters. have been provided by some esteemed Bankss such as Vietcombank. BIDV. Techcombank. Eximbank and HSBC. However. the Bankss still can non carry their clients to utilize the merchandises more on a regular basis.
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1. 7. 1. Forward dealing Forward dealing were foremost introduced about 10
old ages ago. This type of dealing brings many advantages to clients: ? Suitable for foreign trade colony. abroad money transportation or investing to fudge the fluctuation of exchange rate. ? Customers may gauge in progress concern disbursals and incomes and warrant ability to do payment to other parties. In forward dealing. Foward rate is caculated harmonizing to the expression ( Phd Tran Hoang Ngan. Phd Nguyen Minh Kieu. 2008 ) : F=S ( ?? + ???? ) ( 1 ) ~ ( ??+ ???? )
( ????????? ) ?? ?????????????
~F = S + Forward spread Using a direct exchange rate: Home currency monetary value of certain measure of the foreign currency quoted ( Home currency/Foreign currency: VND/USD ) Rhesus factor: Interest rate of Home currency ( % ) Releasing factor: Interest rate of Foreign currency ( % ) F: Forward rate S: Topographic point rate Ns: dealing term ( 1 ) Based on the theory of Interest rate para – IRP. Before 28th May. 2004: harmonizing to the Decision 17/1998/QD-NHNN7 ( 10th Jan 1998 ) . forward rate consists of two parts: the topographic point rate and the forward spread ( besides known as forward points. frontward pips. etc ) . Forward spread is expressed as either premium spread or price reduction spread. Forward rate was determined as following expression: F = S + Forward spread The Forward spread was determined by Percentage of Spot rate offered by State Bank of Vietnam based on. For illustration:
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Forward spread= 0. 8 % *Spot rate ( of the sign language twenty-four hours ) for colony after 7 yearss.
This manner of forward rate finding was different with international
pattern and could non maintain up with the alterations in the market. Besides. colony day of the month was merely be at most 6 months after trade day of the month. This did non run into the demand of many companies. Therefore. non many companies used frontward minutess at that clip. After 28th May. 2004: Harmonizing to Desicion No. 648/20 in 2004. Settlement day of the month was extented to be at most 365 yearss after trade day of the month. Besides. Commercial Bankss are allowed to put the forward rate VND/USD so that it does non transcend the rate computed on the footing of: ( I ) topographic point rate ; ( two ) involvement derived function between the base rate of the dong and Fed Funds Target Rate of the US dollar ; and ( three ) frontward term. This manner of forward rate finding moves closer to international pattern. We have the undermentioned expression: Forward rate = S+ S* rVND: Base rate of the dong rUSD: Fed Funds Target Rate of the US dollar Many Bankss provide forward dealing with similar characteristics. Eximbank Transaction term: At least 3 yearss. at most 365 yearss. Transaction fee: No fee required. Documents: Economic entities. other organisations and persons deposit VND to purchase foreign currencies from Eximbank have to show paperss to the full supplying information on the intent. measure and type of payment currency. payment clip in conformity with current Foreign Exchange control ordinances. Forward rate: Forward rate of USD-VND dealing is the rate calculated on topographic point rate in the trade day of the month and the difference between VND basic involvement rate of State Bank of Vietnam ( on annually footing ) and the USD mark involvement rate of US Federal Reserve Bank. ( ????????????????? ) ?????????????
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Forward rate of VND against foreign currencies ( except USD ) dealing and forward rate between foreign currencies is based on the dialogue. Table 1. 4- Spot rate and forward rate of Eximbank on March 2011 ( For mention ) USD/VND Exchange rate Date 22 March. 2011 Rate Transaction term Bid 20. 885 Spot rate 01 hebdomad 20. 921 02 hebdomads 20. 956 01 month 21. 037 02 months 21. 200 Forward rate 03 months 21. 342 04 months 21. 494 05 months 21. 646 06 months
21. 849 Average interbank exchange rate: 20. 683VND/USD Trading set: ?3 % Note: These statistic can be varied during a twenty-four hours. Beginning: Eximbank ‘s Treasury Department Procedures: neodymium
Ask 20. 890 20. 926 20. 961 21. 042 21. 205 21. 347 21. 499 21. 652 21. 855
Contact with the Treasury Department to subscribe a forward contract. 3 % sedimentation of the contract value for USD/VND minutess is required. 7 % -10 % sedimentation of the contract value is required for minutess other than USD/VND minutess. ? Up to the present clip. outright frontward history for merely approximately five to six per centum of entire foreign exchange trading turnover. Such a portion is really little by international criterion. In add-on to low trading volume. the forward section appears to hold unnatural and immature features. ? First. the selling-buying construction of forward trading by commercial Bankss has been extremely imbalanced: the turnover of forward-selling by
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commercial Bankss made up around 75-85 per centum of entire forward trading ( Nguyen Tran Phuc 2009. pp. 15 ) . ? Second. commercial Bankss have tended to be rather inactive in taking the function of market-makers in the forward market. Vietnamese commercial Bankss by and large do non do their citation ready for forward minutess. in both client and interbank market. Any citation can be obtained merely upon a petition. ( Luu Minh Ngoc. 2008. as cited in Nguyen Tran Phuc. 2009. pp. 15 ) ? Third. the finding of forward rate VND/USD still contains administrative elements. Harmonizing to a counsel in 2004. commercial
Bankss are allowed to put the forward rate VND/USD so that it does non transcend the rate computed on the footing of: ( I ) topographic point rate ; ( two ) involvement derived function
between the base rate of the dong and Fed Funds Target Rate of the US dollar ; and ( three ) frontward term. This manner of forward rate finding moves closer to international pattern. but the mentioned mention involvement rates may non reflect the true market involvement rates that market participants realize in their minutess. This suggests that the current counsel has tended to keep back the ability of commercial Bankss in moving every bit market-makers as good. ( Nguyen Tran Phuc 2009. pp. 15 ) . 1. 7. 2. Currency options Currency options were foremost introduced by Eximbank into Vietnam?s forex market in 2003. Currency Option contract is a contract between purchaser and marketer of an option in which purchaser has the right ( but non the duty ) to purchase or sell a certain currency sum at a preset exchange rate at or prior to a certain termination day of the month. If purchaser chooses to exert the right. marketer has a responsibility to sell or purchase that currency sum at a declared rate as specified in the contract. Some advantages of currency options: ? To fudge the hazard of exchange rate fluctuation every bit good as to assist clients to acquire profitable chances if exchange rate alterations suitably.
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? Able to predetermine minimal fee ( premium ) of a Call Option or minimal net income of a Put Option. ? To supply clients with an acceptable rate. ? Have a opportunity to theorize on F/X fluctuation with a fixed premium and limitless net income. Eximbank Manners: American manner: the option can be exercised at any clip during its cogency. European manner: the option can merely be exercised at the contract adulthood day of the month. Eligible users: Buyer: eligible persons or entities populating or runing in Vietnam Seller: Eximbank Transaction premium: The sum that purchasers have to pay for the bank ( Sellerss ) to acquire the option. Table 1. 5- Option dealing premium of Eximbank in March 2011 Reference dealing premium 21st March 2011 Style USD/JPY ( Unit: pips ) ( strike monetary value 80. 90 ) 01 hebdomad Transaction period 02
hebdomads 01 month EUR/USD ( Unit: pips ) ( strike monetary value 1. 4170 ) 01 hebdomad Transaction period 02 hebdomads 01 month GBP/USD ( Unit: pips ) ( strike monetary value 1. 6220 ) 01 hebdomad Transaction period 02 hebdomads 01 month Transaction period: from 3 yearss up to 365 yearss Note: These statistic can be varied during a twenty-four hours. Beginning: Eximbank ‘s Treasury Department American Call Option Put option 82 85 99 102 126 130 Call Option Put option 85 89 119 121 197 203 Call Option Put option 95 97 128 132 181 186
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Exchange rate: The exchange rate agreed by the two parties and specified in the contract. Transaction currencies: USD. GBP. CHF. JPY. AUD. CAD. EUR Amount: Equivalent to at least USD $ 100. 000 ( one hundred thousand US dollars ) for each contract. Transaction period: from 3 yearss up to 365 yearss Contract cogency: The period that option can be done by the demands of purchasers from the contract subscribing day of the month to before 11:00 ( Hanoi clip ) of the contract adulthood day of the month. Documents: No demand for any paperss attesting the intent of currency usage Contract Exercise: When in demand of implementing the contract. clients submit the Request for Contract Exercise to Eximbank. *** In 19th March. 2009. the Government has issued a determination under Decree 160/2006/ND-CP to halt offering option contract between Vietnam dong and other foreign currency since 23rd March. 2009. 1. 7. 3. Swap Foreign exchange barters have been so far used for the intent of shooting local currency into circulation merely. They were first allowed in 1998. However. it was non until July 2001 that the first trades were really done when the State Bank of Vietnam issued a counsel on the execution of foreign exchange barters between the State Bank of Vietnam and commercial Bankss to help the latter in get the better ofing impermanent deficits of fund in local currency. Such specified minutess were popular in old ages 2001-2002 with dealing volumes of several hundred million US dollars. assisting commercial Bankss use beginnings of fund in foreign currency flexibly. Yet. they became quiet in the followers
old ages with a little dealing volume. Some benefits of currency options: ? Cheaper than hard currency markets by publishing foreign currency bonds straight. ? Can choose to interchange principal at the start if desired.
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? Simple certification process compared to hard currency markets through publishing a bond or set uping a loan. ? Customised and can be reversed at any clip. ? Off Balance Sheet. ? Suitable for fudging long-run dealing exposures. ? Be to the full hedged against foreign exchange hazards in footings of both chief and vouchers. ? The obtention of capital in the needed currency. in the necessary volume and with the needed due term. Eximbank Decription: Cross Currency Swap services include 2 dealing: Topographic point dealing +Forward dealing Forward transaction+ Forward dealing Eligible users: Buyer: Entities populating or runing in Vietnam Seller: Eximbank Exchange rate: The topographic point exchange rate at the clip of making the trade determines the chief sums. Transaction term: At least 3 yearss. at most 365 yearss. Transaction fee: No fee required. Documents: No demand for any paperss attesting the intent of currency usage Procedures: Contact with the Treasury Department to subscribe a forward contract. 3 % sedimentation of the contract value for USD/VND minutess is required. 7 % -10 % sedimentation of the contract value is required for minutess other than USD/VND minutess. 1. 7. 4. Evaluation There are some grounds why Vietnamese companies are rather indiferent to derived functions merchandises:
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? Most Vietnamese companies did non hold good apprehension of complicated operations of how to utilize these derived functions merchandises. For illustration. It took HSBC Vietnam six months to explicate and negociate with a client before a barter contract was reached. ? The turnover from derived functions merchandises is non large plenty for Vietnamese Bankss to pass more clip and money to pull clients. ? The policy on bracing the VND/US $ exchange rate has besides led to the fact that companies do non pay appropriate attending to these merchandises. Currently. the official VND/USD exchange rate has followed a gradual upward tendency with really small volatility except for the periods of the Asiatic Financial Crisis and the recent World Financial Crisis. This gives rise to a high grade of predictability and an outlook among market participants that the State Bank of Vietnam will often step in to restrict volatility in the official rate. The low volatility of the exchange rate. coupled with the one-way nature of most day-to-day motions. means that concerns by and large perceive small foreign exchange hazard. As a consequence. there is small incentive for market participants to develop greater edification in footings of ability to organize positions sing the future waies of the exchange rate. or to pull off exchange rate hazards. ? Most recognition loans on the market use fixed involvement rates ( 90 % ) . and with fixed involvement rates. borrowers do non necessitate derived functions merchandises to minimise hazards from involvement rate fluctuations. In decision. we can state that there is small demand for derivative merchandises as a agency of hazard direction during normal times. However. when exchange rates did go more volatile ( for illustration. during the recent World Financial Crisis ) . fudging devices would hold been really utile agencies to pull off exchange rate hazards.
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Chapter 2- RISK ANALYSIS OF TRANSACTION EXPOSURE 2. 1. Profile of CNT 2. 1. 1. Introduction
Established: 1976 Name in Vietnamese: CONG TY C? PH?N XAY D?NG VA KINH DOANH V?T TU Name in English: Construction AND MATERIALS TRADING JOINT STOCK COMPANY Director: Mr Pham Anh Tuan Charter Capital: VND 100. 150. 690. 000 Registered and Corporate Office: 9-19 ( Floor 6 ) Ho Tung Mau Street District 1 Ho Chi Minh City Website: World Wide Web. CNT. com. vn Table 2. 1- List of stockholders keeping over 5 % as of May 14. 2010 Number Owner Name of Shareholders Address of per centum Shares Construction Corporation 111 Pasteur P. Ben Nghe 3. 450. 000 34. 50 % No. 1 Ward. Dist 1. HCM metropolis VietNam Holding Property TMS Building. Floor 12. 172 1. 939. 975 19. 39 % Hai Ba Trung. Dist 1 HCM metropolis Beginning: Prospectus 2010
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2. 1. 2. Constitution and history Figure 2. 1-Establishment and history of CNT
Established with initial name Transport Materials Supply Enterprise straight under Construction Corporation No. 1
Ministry of Construction signed Decision to alter Transport Materials Supply Enterprise to Transport Materials Supply Company.
The company was renamed Construction and Materials Supply Company.
The Ministry of Construction promulgated determination refering equitizing the company with the new name Construction and Materials Trading Joint Stock Company ( C & A ; T ) .
Department of Planning and Investment of Ho Chi Minh metropolis issued the concern enrollment certification No 4103002148.
C & A ; T was the hundred-and-fifty-fifth company officially listed in Ho Chi Minh City?s Stock Exchange under the codification CNT.
Vietnam Steel Association certified C & A ; T as official member.
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2. 1. 3. Vision and mission a. Vision Until 2015. CNT continues to be a diversified company with the taking place in the Fieldss of building. stuffs trading and existent estate concern ; keeping the steady growing in substructure building. industrial production and existent estate investing. B. Mission Strive to supply clients with the high quality merchandises and good services at the competitory monetary value. doing a important part to the national economic growing. Strengthen direction system. increase efficiency of capital use and transparence in concern activities. Concentrate on raising employees? wages and making excess values to stockholders. Construct up the specific feature of the company civilization: Turn up together. Associate the single success with the growing of the company and be dedicated to national community development. 2. 1. 4. Scope of Business 2. 1. 4. 1. Construction With experient applied scientists and over 2000 skilled workers. CNT has performed civil. industrial undertakings. foundation and substructure undertakings which have been in highest rank and undertaking advancement completion on clip. Since 2000. CNT has invested tonss of machinery. work force. and applied new engineering in building field. As a consequence. CNT becomes one of the best building companies of Construction Corporation No. 1. 2. 1. 4. 2. Investing CNT has been transporting out many investing undertakings since 2003. particularly existent estate investing and industrial production. At present. CNT is concentrating all fiscal attempts on puting and constructing the complex commercial office-
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flat ( Green Pearl City ) at An Phu Ward. District 2. Ho Chi Minh City. This undertaking is regarded as CNT?s cardinal investing and trading undertaking from 2010-2012. 2. 1. 4. 3. Industrial and building stuff production CNT has produced the industrial merchandises and building stuffs as follows: Assorted sorts of building rocks Reinforced concrete heap and others such as centrifugal unit of ammunition drains. box drains. girders. etc. Assorted sorts of PP wadding ( for Baltic – Europe )
2. 1. 4. 4. Import – export trade With skilled staff in foreign trade activities. full of prestigiousness in mandating import export services. CNT has won the contracts to provide the imported stuffs and equipment for many big undertakings and natural stuffs for the building stuff production mills such as cinder. unsmooth steel. etc. The company has had the representative office in Ukraine. China since 2003 and concern publicity in the U. S. 2. 1. 4. 5. Local merchandise trade CNT has much experience for many old ages in the stuff and equipment supply to the big undertakings of Construction Ministry and Construction Company No. 1 such as Tri An Hydroelectric Plant. Thac Mo Hydroelectric Plant. Vung Tau Petroleum. Da My Ham Thuan Hydroelectric Plant. Sao Mai Hon Chong Cement Factory. National route No. 1 upgrading contract R. 100. Xuyen A Highway. Dong Tay Boulevard. H2O environment undertakings. etc.
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2. 1. 5. Organizational construction Figure 2. 2- Organizational construction
Beginning: Prospectus 2010
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2. 1. 5. 1. General Shareholder’s Meeting General Shareholder’s Meeting is the organic structure with highest determination power of CNT including all stockholders with vote right and held at least one time a twelvemonth. General Shareholder’s Meeting decides on the issues regulated by the Laws and the Articles of Association of CNT such as Passing one-year fiscal statements of CNT and fiscal budget for the subsequent twelvemonth ; electing. disregarding or let go ofing members of the Management Board. Supervisory Board 2. 1. 5. 2. Board of direction Board of Management has 05 members. two of which are independent of direction. Board of Management is the organic structure managing of the Company. which is entitled to move on behalf of the Company in exerting all the rights and duties. except those falling under the authorization of the Shareholders Meeting. 2. 1. 5. 3. Board of supervisors The main supervisor of the Company has expertness in accounting. working independent of finance and accounting section. 2. 1. 5. 4. Board of managers Full names 1. Mr. Pham Anh Tuan 2. Mr. Do Duc Minh 3. Mr. Hoang Ngoc Minh 4. Mr. Phan Trung Huy 5. Mr. Phung Dat Duc 6. Mr. Tran Cong Quoc Bao Position General Director Vice General Director Vice General Director Vice General Director Vice General Director Vice General Director Appointing day of the month December 2006 December 2006 May 2004 January 2010 June 2005 October 2006
2. 1. 5. 5. Functional sections ? Administration Department ? Finance and
accounting Department ? Planning and investing section ? General section ? Construction section
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? Sale section 2. 1. 6. Human resources Table 2. 2-Staffs and employees ( 2010 ) Level University and postgraduate College Genaral employees Total Beginning: Annual study 2010. Figure 2. 3- Staffs and employees Quantity ( People ) 161 16 405 582 Percentage ( % ) 28 % 3 % 69 % 100 %
Staffs and employees ( 2010 )
University and postgraduate 28 % Genaral employees 69 % College 3 %
As Table 2. 1 shows. employees with college. and university and postgraduate instruction makes up about 31 % of entire employees. The general employees are about 69 % of all the employees. In general. most of the employees in CNT have adequate making to take on of import duties and carry out largescale undertakings. In some instances. there are non plenty employees to run into demand of the company. particularly when the company has to transport out large undertakings. The chief ground is because the company does non hold many enlisting plans and developing plans to pull more qualified employees. Furthermore. in the context where the market in general deficiencies extremely qualified human resources. human resources for Construction and International concern become more hard. 2. 1. 7. Business public presentation 2. 1. 7. 1. Net income construction
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2011 ( Unit of measurement: Million VND )
Table 2. 3- Net income construction of CNT during 2006-2010
Items Net operating net income Net income from sale Financial net income ( loss ) 2006 Value 11. 958 31. 332 -19. 374 3. 270 21 % % 79 % 2007 Value 21. 802 38. 404 -16. 602 1. 396 23. 198 20. 040
2008 % 94 % Value 21. 720 85. 161 -63. 441 6 % 100 % 100 % 2. 962 3. 207 11 % 11 % % 78 %
2009 Value 24. 313 58. 469 -34. 156 26. 370 751 51. 434 45. 889 51 % 2 % 100 % 100 % % 47 %
2010 Value 16. 138 81. 073 -64. 935 5. 997 3. 281 25. 416 21. 099 24 % 13 % 100 % 100 % % 63 %
Net income in concern concerns and joint venture
Other net income Entire accounting n