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Vietnam - BUSINESS IN BRIEF 26/10  DinarDailyUpdates?bg=330099&fg=FFFFFF&anim=1

Vietnam - BUSINESS IN BRIEF 26/10

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Post by lexie Wed Oct 26, 2011 6:38 pm



Enterprises employing more than 300 workers and cooperatives in certain sectors will have their 2011 tax payments delayed for one year, according to a prime ministerial decision.

Decision 54/2011/QD-TT inked by the Prime Minister last week following a Ministry of Finance proposal is aimed at helping enterprises cope with current tough market conditions such as high inflation and high interest rates.

In addition to labor-intensive businesses, cooperatives in sectors such as agriculture, forestry, aquaculture, textiles, footwear, electronic components, and infrastructure construction will not have to pay 2011 taxes until next year.

The taxes whose payment can be delayed from the end of next month should be roughly calculated every quarter and declared in the firm’s tax statements for 2011, excluding the tax on incomes from other activities than business and production.

Tax payments in Q1 will be rescheduled to end-April next year, those in Q2 to end-July 2012, those in Q3 to end-October 2012, and those in Q4 to end-March 2013.

Duong Thi Ninh, an official from the Finance Ministry, told the Daily that the ministry would issue a circular this week guiding the implementation of the decision for local tax agencies.

The ministry suggested tax payment delays totaling around VND6.7 trillion for small and medium enterprises (SME) and labor-intensive companies.

The ministry also suggested raising the personal income tax threshold to VND9 million per month. Those leasing out homes or providing babysitting services should have their income tax slashed by half while stock investors should be exempt from income tax. The total amount of tax breaks is estimated at VND4.2 trillion this year and VND2.2 trillion next year.

Animal husbandry to become conditional sector

Livestock farming will be turned into a field of conditional business with requirements being worked out by the Ministry of Agriculture and Rural Development.

Deputy Minister of Agriculture and Rural Development Diep Kinh Tan was speaking about this in a review meeting in HCMC last Friday on the sector’s January-September performance.

According to the ministry’s Animal Husbandry Department, the industrial farming model has been expanding over the past years while household livestock breeding has been dropping. The nation now has nearly 23,600 farmhouses, up 13% against 2010.

However, family-run livestock farms still make up a majority with around 8.5 million families holding 70% of the nation’s poultry and livestock herds. Only 10% of them meet environment standards, which means building biogas cellars for treating animal waste.

The department, therefore, will choose biogas cellars as a compulsory criterion for breeders with large volumes in the future.

For small breeding households, Tan said, local authorities will need to encourage them to join the value production chain or provide outsourcing services for large companies to receive support in breeding techniques, animal feed and consumption.

“Local authorities have to map out plans to support small breeding families and solve environmental problems as infrastructure and techniques are not their strengths. If there is no arrangement for them, I think the model will be hard to exist within the next five or seven years,” Tan added.

According to the ministry, the local animal husbandry sector is not well prepared for competition and integration.

North-central provinces talk unity

Provinces in the north-central region should strengthen relations to enhance their potential to attract investment for the region's socio-economic development, heard attendants at an investment promotion conference held in Nghe An Province's Vinh City yesterday.

The conference, which was held by the Ministry of Planning and Investment (MPI) in co-ordination with the provincial People's Committee, aimed at assessing the region's potential to lure investment and develop an infrastructure strategy.

Speaking before 1,000 participants, Deputy Prime Minister Nguyen Xuan Phuc said the provinces should promote their economic structure with a focus on some specific investment areas and innovative strategies.

Chairman of Nghe An People's Committee Ho Duc Phuoc said the north-central region, including Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri and Thua Thien - Hue, had a long history and traditional culture as well as the favourable conditions of location, synchronised infrastructure and rich natural resources to attract investment.

If it effectively exploited its strengths, the region would contribute to the country's growth, he said.

The region had enjoyed a relatively high growth rate of 10 per cent per year and the associated boost in living standards in recent years.

However, the provinces had not fully tapped into their potential, especially when it came to foreign investment, he said.

Deputy minister of Planning and Investment Dang Huy Dong said the provinces lacked high quality human resources and support functions for big foreign-direct investment (FDI) projects.

A representative from the Ministry of Transport said the provinces should improve their transport system because the existing infrastructure was not synchronised and was in a degraded state.

World Bank Country Director to Viet Nam Victoria Kwakwa and ADB Director Tomoyuki Kimura said they would continue to support the region to further develop its key economic zones and deal with challenges posed by the economic crisis.

The provinces attracted 45 domestic investment projects and 162 foreign projects with a total US$18.8 billion in capital. Coastal Nghi Son and Vung Ang Economic Zones alone attracted 87 projects with VND350 trillion ($16.8 million) in total investment.

The six provinces have called for investments into 342 projects. Statistics from the MPI's Foreign Investment Agency showed that in the first nine months of this year, the region welcomed 243 FDI projects worth a combined value of $19.9 billion, accounting for 10 per cent of the country's total 13,000 projects in terms of value.

The region has five coastal and three border gate economic zones and several tourism areas. It also has many key industrial sectors and large industrial parks.

JICA project to boost Vinh Phuc investment

Construction of a key road in northern Vinh Phuc Province's Me Linh new urban township was begun yesterday by the Japan International Co-operation Agency (JICA) and the provincial People's Committee.

The 15km road is one of five components within the purview of a US$151 million Japanese official Development Assistance (ODA) loan project signed in March 30, 2007. It is known as the Vinh Phuc Province Investment Climate Improvement Project.

Other project initiatives include the expansion of the water supply system and the improvement of sewage and waste water treatment both in Vinh Yen, and the rehabilitation of the power supply network in Vinh Yen and Phuc Yen town.

"Once the project is completed, it will help solve our current problems with power shortages, insufficient clean water, outdated waste water treatment and water drainage facilities, all things which are essential for every investor," said chairman of the Vinh Phuc People's Committee Phung Quang Hung at the event.

"Developing infrastructure to meet the growing demands of foreign investors has become one of the province's top priorities," added Hung.

JICA Chief Representative in Viet Nam Tsuno Motonori affirmed that improving the investment climate has been one of JICA's highest priorities in Viet Nam during the past several years.

Vinh Phuc Province, which is 60 km north of Ha Noi, is home to many big economic groups such as Japan's Honda and Toyota, Italy's Piaggio, Taiwan's Foxconn, Compal and Fullpower, South Korea's G.O. Max, Kumho and Lotte and Singapore's YCH and CPK Group.

The project is scheduled to be completed by July 2014.

PM approves vast IZ for Tra Vinh

The Cuu Long (Mekong) Delta province of Tra Vinh yesterday received approval from the Prime Minister to develop an economic zone covering 39,000 ha of land with 42 kilometres of coastline.

The Dinh An Economic Zone will contain areas for industry, trade, services, tourism, agriculture, forestry and fishery. Ports, roads and facilities for education, vocational training and research will be built in the zone, which is designed to boost Tra Vinh's economy, one of the poorest provinces in southern Viet Nam.

Speaking at the announcement ceremony, Deputy Prime Minister Nguyen Thien Nhan asked the local authorities to create detailed designs for sub-regions and urban areas in the zone and make them available to investors.

He said that authorities must pay special attention to the human-resource demand of investors.

"There should be a human-resource support centre to receive demand from investors," he said, adding that authorities should work with universities and vocational schools so they can satisfy labour demand. In addition, he told provincial officials that preparation on transport infrastructure, water drainage and electricity were needed to attract investors.

According to the province's chairman, Tran Khieu, the project development will be in two phases, with the first toward 2020 and the second by 2030. There will be 456,000 people living in the zone by 2030.

The first phase covering over 15,000 hectares will include 3,200ha for industrial and storehouse projects; 2,000ha for tourism, recreation and service facilities; 2,700ha for Duyen Hai Township; 2,600 ha for the Dinh An Urban area and Tra Cu Port; and over 1,000ha for agriculture, forestry and fishery, among others.

On this occasion, the province handed over investment certificates to 11 projects worth VND211 trillion (US$10 billion).

The Ha Long Investment – Development and Commercial Joint-Stock Company has three projects with a combined acreage of 3,000 ha and a total investment of $5 billion. The projects include development of infrastructure for Ngu Lac Industrial Park, Petrochemical Industrial Park and Duyen Hai Urban Area.

According to Pham Tiet Khoa, deputy head of the Tra Vinh Economic Zone Authority, several preferential policies will be offered to investors.

Investors will not be required to pay a land lease fee if their projects are in areas of special encouragement by the province, such as infrastructure, education and apartments for industrial park workers.

In addition, they will have a tax holiday over four years beginning from the year they make profits.

Preferences will also be given in import and export taxation and income tax for individuals working in the economic zone.

Port project postponed; millions of dollars wasted

Making no progress after two years, the Van Phong international transshipment port project in central Khanh Hoa Province has been postponed, resulting in a waste of millions of dollar.

The US$3.6-billion project to build Vietnam’s first international transshipment port in Van Ninh District is now a deserted construction site with thousands of steel and concrete stakes left rusting on the sand.

Construction works have in fact ceased since last August due to disagreements between the project’s investor, the Vietnam National Shipping Lines (Vinalines), and the contractor, Korea-based SK Engineering & Construction Corp.

Now that the project is completely stopped, none of the involved parties know when it will be reactivated, while the total investment is expected to rise by at least 50 percent.

This means more VND3 trillion ($146.3 million) will be thrown into the project when it resumes, though this project has already been wasting a hefty sum by remaining sluggish in the past two years.

Tran Huu Chieu, deputy CEO of Vinalines, told Tuoi Tre that the Van Phong port would not follow the origin design as consulted by Portcoast Consultant Co. to receive 6,000-9,000 TEU container ships but would have a Vinalines subsidiary work out on a new design to accommodate 12,000-15,000 TEU vessels.

But Portcoast’s spokesperson said although their design was not used, Vinalines still had to clear the VND20-billion consultant fees as contracted.

Moreover, more than VND200 billion have been disbursed to build certain units of the project will also be wasted since they will not be reused once construction works resume.

A source told Tuoi Tre that Vinalines chief executives had also frittered away some VND325 billion by accepting the exorbitant prices of raw materials as suggested in the contract.

And another massive sum of VND150 billion Vinalines paid a Korea-based insurer to guarantee for the money payment in advance to the contractor is also likely to be lost due to some unclear clauses in the contract.

However, seaport experts said the largest damage caused by this stalled project was the annual loss of $160 million since the port failed to handle 0.71 million TEU a year as expected.

A contractor who used to participate in the Van Phong project said the cause of the whole mess was Vinalines' poor finance.

He said since the capital needed for the project had unexpectedly soared to VND9 trillion, Vinalines had to attract more foreign investors to ease its burden and speed up construction.

Chieu said Vinalines had signed a memorandum about the Van Phong port with Netherlands-based Rotterdam Port Co.

He said the Dutch company was planning to come to Vietnam to discuss further about which part of the project it would join in.

“Vinalines wants to have Rotterdam open its wallet,” he said.

Vietnam tourism piggybacks on English football

Vietnam has begun a new tourism advertising campaign by putting up LED signs at English Premier League football stadiums, Tran Nhat Hoang, an official from the Ministry of Culture, Sports and Tourism told Tuoi Tre.

Hoang, director of the ministry’s Center for Culture, Sports and Tourism Promotion, said the ministry had hired the UK-based Sports Revolution to make the LED banners saying “Vietnam – Your Destination” and display the Vietnamese tourism website at stadiums from October to December.

In that period, 10 matches would be played at stadiums belonging to clubs including top ones like Manchester United, Arsenal, Chelsea, Manchester City, Liverpool, Tottenham, and Everton.

The ads would scroll eight to 12 times during a match, for 30 seconds each time.

The campaign had cost the national Tourism Promotion Fund VND3 billion (US$146,000).

The ministry was also negotiating for putting up medium- and large-sized posters about Vietnamese tourism at 48 stadiums around England.

“We are also planning to show videos on Vietnamese tourism on the large screens at the stadiums.”

The ministry had chosen the English Premier League since many foreign airlines and travel agencies advertised there.

“Moreover, Vietnam Airlines has achieved good results by advertising its new direct flight between Vietnam and London at English stadiums since August.”

State firms dominate tax payers list

State enterprises account for all 10 of the top corporate income tax payers this year, the V1000 list of the biggest payers compiled by the Vietnam Report Co shows.

The Vietnam Posts and Telecommunications Group, or VNPT, tops the list, followed by Petrovietnam Exploration Production Corporation, Vietsovpetro, PetroVietnam, and Viettel Telecom Group.

The rest of the 10 include the Vietnam Mobile Telecom Services Co, Vietnam National Coal - Mineral Industries Group (VINACOMIN), PetroVietnam Gas, Bank for Foreign Trade of Vietnam (Vietcombank), and Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank).

Vietnam Report said the total tax contribution by the top 10 payers more than doubled from last year to VND64.8 trillion (US$3.1 billion).

State-run companies accounted for 57.29 percent of the tax paid by the top 1,000 businesses.

Payments by foreign companies increased from VND19.8 trillion last year to VND38.9 trillion, or 24.92 percent of the total.

Private businesses accounted for only 17.8 percent of the contribution, down from 20.62 percent.

Vietnam Report said 16.3 percent of the businesses in the list appeared for the first time. Of them, 42.9 percent are state-run enterprises and 31.3 percent are private.

Vung Tau cancels license for amusement park

The Vung Tau administration has accepted a proposal by the provincial Department of Planning and Investment to cancel the license issued for a US$1.3-billion amusement park to a US company.

In 2008 Good Choice USA – Vietnam Co Ltd was licensed to build the Wonderland World Vung Tau complex consisting of a five-star hotel with 2,500 rooms, four four-star hotels with 1,000 rooms each, and an entertainment in the city’s Nguyen An Ninh Ward.

But the investor has failed to proceed with the project since.

Ho Van Nien, deputy chairman of the provincial people’s committee, told Tuoi Tre that the province would look to continue with the project since it had been approved by the government.

“We will look for other investors, and the government will do it if we cannot find anyone,” he added.

Lao Cai to host international trade fair

The northern border province of Lao Cai has made great efforts to link China's south-western localities with Vietnamese provinces and cities, said the provincial People's Committee vice chairman Nguyen Thanh Duong at a press conference in Ha Noi yesterday.

The province had upgraded transport infrastructure and improved facilities in the Lao Cai International Border-gate Economic Zone while expanding its Kim Thanh Economic Zone to facilitate Vietnamese and Chinese businesses, Duong said.

"The province is co-operating with China's Yunnan Province to build the Kunming-Lao Cai-Ha Noi-Hai Phong economic corridor, which will make an effective contribution to accelerating the bilateral relationships, especially in trade and tourism," he said.

Lao Cai will also join hands with Yunnan authorities to organise the Viet Nam-China International Trade Fair 2011 in the province from November 11-16.

In its 11th outing, the event would be the largest of its kind in the northern border region and provide an opportunity for businesses from the two countries to advertise their products, better understand each other's demand and seek new trade partners, said Deputy Minister of Industry and Trade Nguyen Thanh Bien.

It would also offer provinces in the region opportunities to introduce advantages and potentials as well as projects seeking investment capital from Chinese investors, he said.

This event was expected to attract the participation of about 300 enterprises showcasing goods at 700 pavilions, said the provincial Trade, Investment and Tourism Promotion Centre director Le Tien Dung.

Displays would showcase agricultural products, seafood, automobiles, machinery and equipment, electronics, clothing, footwear, furniture and handicraft, he said.

A forum aimed at fostering trade and investment relations between Vietnamese and Chinese firms would also be held on the sideline of the trade fair.

At the previous exhibition in 2009, 14 contracts worth US$114 million were signed between Vietnamese and Chinese partners.

Ha Noi targets $5 billion IT sector

Ha Noi aims to earn US$5 billion from information technology revenue in 2015 and $10 billion during 2020, according to a programme on developing the IT industry.
The city plans to develop at least seven production centres – in software, services and digital content – as well as train 60,000 IT engineers to meet the industry's increasing demand for skilled personnel.

Software and digital content sectors are expected to post an annual growth rate of 30 per cent, reaching $900 million and $1.1 billion each year, respectively, while the hardware sector hopes to generate $3 billion from revenue per year.

To this end, the capital would continue to upgrade infrastructure facilities for the IT industry with a focus on preparing sufficient land funds for the establishment of hi-tech parks, said deputy director of the municipal Information and Communications Department Dang Vu Tuan.

Tuan said authorities would also work on drawing up incentive policies to attract large IT groups to invest in hi-tech parks and help local IT enterprises improve their production capacities, develop and protect trademarks as well as sharpen the competitiveness of their products.

Taxes on import cars to be cut

The import duty on cars will be cut by 3-5 per cent from next year if a proposal drafted by the Ministry of Finance is approved.

Under the draft, cars with less than 10 seats will be taxed at a new rate of 68-78 per cent as of January 1 instead of the current rate of 72-83 per cent.

Tax on small trucks with loads of less than five tonnes will also be cut from 68 per cent to 65 per cent. The taxes imposed on large trucks will remain unchanged under the draft.

The new tax rates will be applied to all cars imported from member countries of the World Trade Organisation and the regional Southeast Asian bloc ASEAN.

However, car traders said that the tax cut would not help reduce prices of imported cars and would not affect the domestic market.

Nguyen Tuan, director of the Thien An Phuc auto company, explained that supply of imported cars in the domestic market was currently restricted in the wake of the application of Circular 20. Since the circular took effect three months ago, most car traders have been unable to import cars.

Echoing Tuan, Vu Chung Nam, director of the Tin Phat auto company, said despite the tax cut, car prices would only increase because supply was restricted, adding that consumers would not benefit from the move.

Circular 20 stipulates that importers of cars with less than nine seats have to show proof that they are authorised dealers for the foreign car manufacturers. The documents have to be notarised by Vietnamese diplomatic representatives in the country of origin.

Many dealers said it was practically impossible to obtain the necessary documents. Foreign auto companies who had joint ventures in Viet Nam would not give any such authorisation to importers, they said.

Strategic pact to help build UK trade ties

The UK and Viet Nam are enjoying expanded trade and investment relations after the signing of a strategic partnership agreement last year, Tim Brownbill, British Consul General in HCM City and Director of UK Trade&Investment, told the media yesterday.

The agreement was a real boost for British businesses looking to invest in Viet Nam, he said.

Bilateral trade between the two countries was expected to rise to US$3 billion by the end of next year, Brownbill said.

The UK was a leading investor in the financial services sector, but British businesses were also interested in the infrastructure, retail, and education sectors, he said.

"Viet Nam should apply the public-private partnership (PPP) model, particularly in infrastructure and drinking water supply projects. The UK stands ready to share its PPP experience with Viet Nam."

In the coming years, the UK would promote co-operation with Viet Nam in the infrastructure sector under the PPP model in a sustainable manner for the benefit of both countries, Brownbill said.

"We will hold further ministerial level discussions soon to finalise the details of development co-operation over the next five years," he added.

He also noted that Viet Nam seemed to be a "slow-burn market" with some problems in its investment environment including licence application and decision-making process. It needed to speed up transparency and fairness in the investment procesesses, he added.

The UK's Deputy Ambassador in Viet Nam, Kate Harrison, also highlighted the impact of the strategic agreement in boosting bilateral commercial ties.

She said the launch of direct flights from Ha Noi and HCM City to London, for instance, would facilitate the development of trade, investment, tourism and culture between Viet Nam and the UK.

Another important factor in bilateral co-operation was education, she said, pointing to the UK-Viet Nam International University in Da Nang as a model that could be followed in the future. The UK had also agreed to increase co-operation in providing vocational training, she said.

She also noted the support provided by the UK's Department For International Development to the Anti-Corruption Initiative of the Vietnamese Government, saying it would nurture innovative ideas on improving transparency and accountability, thus reducing corruption in Viet Nam.

Shares sour on growth forecasts

Shares sank to a two-month low yesterday on both of the nation's stock exchanges after Deputy Prime Minister Vu Van Ninh the same day indicated that the Government would soon lower economic growth forecasts for the next four years.

Speaking at a seminar entitled World Economic Outlook and Viet Nam's Policy Response, Ninh said the Government would propose that the National Assembly reduce the economic growth target for the 2012-15 period from 7-7.5 per cent to 6-6.5 per cent.

Investor sentiment further worsened after the State Bank of Viet Nam yesterday fanned inflation fears and again devalued the dong, changing the interbank exchange rate to VND20,723 per US dollar – the eighth change to the exchange rate since the beginning of October and the most significant change since April.

The interbank exchange rate has now increased 0.46 per cent since September, underscoring the fragility of the central bank's target to keep the dong from depreciating by more than 1 per cent through the end of the year.

On the HCM City Stock Exchange, the VN-Index declined by another 1.6 per cent from Monday to close at 404.32 points. The value of trades fell by over 16 per cent to just VND370 billion (US$17.6 million) on a modest volume of 24.4 million shares.

Decliners overwhelmed advancers by 176-46, with none of the 10 leading shares by capitalisation posting gains. Eximbank (EIB), with over 1.5 million shares traded, became the most-active code in HCM City but lost another 2 per cent to close at VND14,600 per share.

To date, only three of the top 20 companies on the HCM City bourse have posted their business results for the first nine months of the year. Of the three, PetroVietnam Drilling and Well Services (PVD) posted a profit of VND820 billion ($39 million), Sacombank (STB) saw a profit of VND2.17 trillion ($103.5 million), and Saigon Securities Inc (SSI) posted a loss of VND17.4 billion ($828,600) during the period.

Phan Dung Khanh, head of analysis and investment consulting for Kim Eng Securities Co, said it would be infeasible to expect high earnings from listed companies in the context of such a difficult economic situation.

Khanh said that, in the current defensive trend, information about the third-quarter business results of companies hardly concerned investors and little affected share prices.

On the Ha Noi Stock Exchange, the HNX-Index also fell nearly 1 per cent to conclude yesterday's session at 67.81 points. Only 52 stocks gained while 189 lost ground.

The value of trades increased slightly to VND262.6 billion ($12.68 million) as 28.8 million shares changed hands. Kim Long Securities Co (KLS) was the most-active share, with around 3.8 million traded, but it slumped by 3.8 per cent to VND9,900 per share.

Foreign investors continued to be net sellers on both exchanges, unloading a combined net of nearly VND30 billion ($1.4 million) worth of shares.

Decision details extension on corporate income tax payments

The Prime Minister issued Decision No 54/2011/QD-TTg on October 11 on the extension of corporate income tax payments in 2011 for enterprises with large numbers of employees and operating in specified sectors.

Under the decision, enterprises with an average of 300 employees during 2011, not counting workers with contracts of three months or less, as well as co-operatives lawfully established and operating which have revenue from the production or processing of agricultural, wood, seafood, garment, footwear, or electronic products, or from development, construction, and installation of infrastructure works, have the right to delay payment of 2011 corporate income taxes for one year from the due date as governed by the Law on Tax Administration.

Decision No 54, which takes effect on November 30, also specifies how to compute the amount of tax subject to the extension and the tax payment extension period for each quarter during 2011.

Accounting standards for small business issued

The Ministry of Finance issued Circular No 138/2011/TT-BTC on October 4, amending the accounting standards for small- and medium-sized enterprises included in Decision No 48/2006/QD-BTC of September 2006. New provisions relate to Government bond transactions, unemployment insurance, budgeting for science and technology development and other areas. The new circular takes effect on January 1, 2012.

Logistics firms to enjoy swifter licensing process

The Government issued Decree No 89/2011/ND-CP on October 10, amending Decree No 87/2009/ND-CP of October 2009 on the licensing of logistics businesses. Under the new decree, the time limit for granting a business licence to an international transport business has been reduced from 10 working days to seven. The licence is valid for five years from the day it is granted. If the licence appplication is denied, the Ministry of Transport will make a written response within three working days clearly stating the reasons. The decree takes effect on November 25.

Phu Quoc to develop markets at cost of $600 million

VND12.5 trillion (US$601 million) is being spent for developing a trade system on the Phu Quoc Island, in the southern province of Kien Giang, by 2020, according to provincial Department of Industry and Trade.

The development project will be divided into two phases: Up to 2015, the first phase includes upgrading and modernising central markets, building Duong To International Trade Centre and opening many trade centres and supermarkets in the province's residental areas, towns and tourist areas.

From 2016-20, the second phase focuses on upgrading the traditional shops network and developing a modern shop network.

Rung Co apartments to be completed next August

Rung Co Apartments, built in the first phase of Ecopark, the largest township in northern Viet Nam, will be completed next August, the company said in its press release last week. Rung Co Apartments comprises five blocks on over 40,000sq.m. Ecopark is being developed by Viet Hung Urban Development and Investment Co in northern Hung Yen Province.

Vietnamese bank to open office in Czech Republic

The Bank for Investment and Development of Viet Nam (BIDV) will open a representative office in the Czech Republic's capital city of Praha.

In the next 18 months, BIDV has the responsibility to fulfill all legal procedures as stipulated by local authorities.

Viettel launches plant to make handsets, computers

Viettel has officially launched a production line of electronics and telecommunications worth over VND200 billion (US$9.5 million).

The line is designed to develop 5 million 3G USB, 3 million mobiles and 900,000 computers per year to sate Viettel's domestic and international market demand.

This will be the first modern production line in Viet Nam to produce mobile phones, tablet computers and networking infrastructure.

Hong Kong investor says paper mills on schedule

The local People's Committee reported that Hong Kong-based investor Lee&Man Paper Manufacturing Limited has been running its two paper mill projects in Chau Thanh District on schedule.

As reported, Lee&Man has completed 98 per cent of site clearance work, construction of storage and fences as well as preparation of construction machinery.

Construction is set to kick off early next year.

Business mood recovers in third quarter

Viet Nam's Business Confidence Index (BCI) recovered strongly in Q3, up 35 points over Q2 to 123 after decreasing in the previous three consecutive quarters.

This is a good sign showing that business confidence is beginning to rebound thanks to positive evolution of the economy.

Viet Nam's BCI was shown to rise in Q3 after a survey was conducted of 200 local enterprises in 11 key sectors by WVB Viet Nam Financial Intelligence Service Company Limited (WVB FISL) and PVFC Invest.

Survey results showed more optimism among businesses after a period of caution and concerns, especially among small and medium enterprises, amid economic conditions including the deceleration of the consumer price index (CPI) in September and the psychological impact of State Bank of Viet Nam (SBV) policies designed to stabilise the exchange rate between the US dollar and Vietnamese dong.

About 47 per cent of survey respondents said Viet Nam's economy was better now and 70 per cent believed that the economy would be better next year.

Compared with Q2 results, the number of companies who were optimistic about the current economic situation had increased by 9.2 per cent and the number of companies that were cautious about the economy decreased by 2.4 per cent.

Meanwhile, the number of optimistic companies increased by 17.24 per cent while enterprises that remained cautious and pessimistic fell by 14.51 per cent and 2.74 per cent, respectively.

With belief in a strong rebound, about 47 per cent of enterprises said they had plans to hire more workers. Some 48 per cent of enterprises had set investment plans and 72.5 per cent were optimistic about revenue growth in the next 12 months.

Many surveyed companies also expressed caution about unpredictable changes in the economy. More than 41 per cent of enterprises said they would not hire new employees and 11 per cent would reduce their workforce in the next 12 months.

About 60 per cent of surveyed enterprises said their volume of stockpiled goods was increasing their production costs.

The surveyed companies said their key challenges next year were the country's economic circumstances, strong competition, lack of highly-qualified manpower and investment.

State-owned business restructuring

There must be a strong mechanism to accelerate the restructuring of State-owned enterprises and improve their operational efficiency.

Pham Duc Trung, Vice Head of the Enterprise Committee under the Central Institute for Economic Management (CIEM), says business efficiency is not low, as shown in statistics related to capital growth, sales revenue, profit, and contribution to the State budget.

However, he says, it is crucial to speed up business restructuring because their operations fail to pay off as expected.

According to the General Statistics Office, State-owned enterprises have a total capitalization of VND3.2 trillion, making up 37 percent of Vietnam’s total capital. The top ten biggest businesses voted by Vietnamreport are all State-owned. 80 percent of the State-owned businesses are considered big and medium in terms of capital and 60 percent of them are big and medium in terms of labour. And the profit-to-sales ratio of State-owned enterprises is 1.35 times higher than that of the entire business network.

Trung argues that it is not easy to assess the efficiency of State-owned enterprises because there are not clear criteria to make a comparison between conducting business operations and implementing social responsibilities like stabilizing prices.

However, the performance of State-owned businesses is not as effective as expected as far as the profitability ratio is concerned.

State-owned businesses hold major resources but they have not invested very effectively. Not to mention some have suffered heavy losses and running up huge debts.

Generally speaking, the quality of their products and services remains to low, Trung says.

He proposes integrating business restructuring into the overall economic restructuring. In his view, restructuring should be done not only in every business but also in the whole state-run sector to reduce the number of loss-making enterprises.

Before 2003, only businesses with 100 percent of state capital were recognized State-owned. Now many joint stock companies such as the Joint Stock Commercial Bank for Foreign Trade of Vietnam and the Vietnam Joint Stock Commercial Bank for Industry and Trade are also considered State-owned.

So to speak, restructuring should be focused on businesses with 50 – 100 percent of State capital.

In fact, business restructuring has taken shape since 1991 through reorganization and equitization of State-owned enterprises. However, there remain certain snags in the introduction and implementation of policies.

To achieve the goal of business restructuring, it is necessary to focus on the completion of mechanisms and policies,” Trung quotes Deputy Prime Minister Vu Van Ninh as saying.

He says many ministries still function as the business owner’s representatives, management agencies, and policy makers and this makes them uncomfortable to assume less power over businesses or stop granting them privileges.

CIEM Deputy Director Nguyen Dinh Cung emphasizes the importance of building an institution in which there are same regulations for all kinds of businesses and no privileges for State-owned enterprises.

Market-based principles should also be applied to State-owned enterprises, he says, adding that they should be forced into file for bankruptcy if they suffer losses instead of being rescued by the State.

In addition, management regulations should be brought in line with international practices, he says.

He also proposes providing transparent information to improve the effectiveness of supervision.

PetroVietnam gets loan for rig project

The Vietnam National Oil and Gas Group (PetroVietnam) has signed a US$37 million loan agreement with Standard Chartered Bank for its semi-submersible tender-assist drilling rig (TAD) project.

The project has a total investment of US$230.5 million under a business cooperation contract (BCC) in which PetroVietnam will contribute 23 percent, equivalent to US$53 million.

It also includes US$16 million of equity and US$37 million of lending secured by PetroVietnam’s interest in the BCC.

Other partners are PetroVietnam Drilling, Ocean bank and Military Bank (MB).

The rig is scheduled to be handed over to Vietnam by Contractor – Singapore’s Keppel Fels Co. Ltd – and investors.

It will be mainly used for oil and gas exploration and exploitation in Vietnam.

VAFI proposes lowering deposit rates to 10pct

The Vietnam Association of Financial Investors (VAFI) on October 17 proposed that the State Bank of Vietnam lower the average interest rates for VND deposit of above one month by economic organizations from 14 percent to 10 percent per year.

VAFI said that VND deposits by economic organizations accounts for 40 percent of the total deposit amount. Lowering deposit rates will enable banks to reduce loan rates and increase liquidity of the bond market.

VAFI also proposed reducing VND inter-bank interest rates to below 16 percent per year to help small banks which are running short of capital.

The State Bank was asked to apply foreign currency and gold deposit rates of zero percent per year to protect and raise the value of VND.

October 17, short-term rates, either overnight or one-week, rose dramatically to 16 percent per year and 18 percent, respectively.


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Post by Gmansaid Wed Oct 26, 2011 9:47 pm

Thanks, Lexie!

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Post by 1alaskan Wed Oct 26, 2011 10:03 pm

Once again,

Lexie is our VND expert, Thanks

Last edited by 1alaskan on Fri Oct 28, 2011 4:05 pm; edited 1 time in total (Reason for editing : Cause it needed to be)

Being defeated is often a temporary condition. Giving up is what makes it permanent.
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Yesterday would have been better, but today is a good day

Remember as always, JMHO
Rantings from just north of sixty

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