Vietnam - News and Regulations

ENERGY EFFICIENCY - Power plans helps save energy

The national programme on electrical energy efficiency and conservation, enacted over the last five years, has recorded a 30 percent higher return than targeted.

Cities and provinces throughout the country have conserved more than 4 billion kWh, said deputy minister of Industry and Trade Hoang Quoc Vuong at a meeting to review the programme's implementation yesterday.

The ministry's programme covered the 2006-10 period following the prime minister's instruction on electric saving in production and consumption. More than 1.18 billion kWh was saved this year alone, equal to 1.4 percent of total consumption.

The energy saving was meaningful, said Vuong, as it has been facing challenges due to prolonged droughts and erratic weather conditions.

The last five years saw a remarkable increase in electric consumption with the demand for power growing by 13.7 percent yearly, double GDP growth. Average electric consumption per person almost doubled in the past five years, with each person consuming more than 980kWh per year.

The ministry has inspected more than 500 key enterprises and audited the accounts of electrical energy in 300 enterprises to develop a standard management system on efficient energy usage.

To achieve the programme's target, almost all provinces and cities issued their own instruction on promoting the implementation of efficient electrical energy usage and set up local steering committees for the project.

The directorate for Standards, Metrology and Quality in the last five years has completed 17 standard categories to be applied for the efficient energy usage.

The promotional work for the programme was through collaboration between the ministry and media throughout the country, according to Vuong.

The deputy minister, however, pointed to shortcomings in the programme's implementation. One of them was that large power consumers in the fields of industry, construction and small � and medium-enterprises are still using backward technology, which used large amounts of energy, as they could not afford to invest in more modern equipment. Moreover, a number of enterprises were not fully aware of the energy saving and that had resulted in an ineffective implementation of the programme in some places.

The programme was not effectively implemented in State-run offices and companies which lacked strict supervision, especially where leaders exhibited little responsibility.

To better save energy, said Vuong, relevant ministries and sectors needed to complete the legal framework for the practice of efficient energy usage during this year, prompting the issuance of documents to instruct the implementation of the Law on Energy Efficiency and Conservation which would be approved by the National Assembly earlier this year.

The deputy minister proposed the relevant ministries and sectors complete their requirement for energy efficiency standards and inform major energy consumers. Major provinces and cities should actively develop plans for energy efficiency and conservation, said Vuong, and insert the programme into their socio-economic development strategy. VNNEWS

POWER - EVN improves power supply capacity

Electricity of Vietnam (EVN) Group stated lately that within this month, the group planned to start operation additional three turbines including the first turbines of Son La Hydropower plant, Song Tranh 2 hydropower plant and Dong Nai 3 hydropower plant, raising the total designed capacity to be put into operation in 2010 to 1,895MW.

The group announced that from the beginning of the year up to now, EVN has already officially operated eight turbines under six power plant projects with total designed capacity of 1,310 MW such as Plei Krong hydropower plant, Se San 4 hydropower plant, Ban Ve hydropower plant, Quang Ninh 1 thermo power plant, Hai Phong 1 thermo power plant and Srepok 3 hydropower plant.

In the first eleven months of this year, EVN also started construction works in four projects with total designed capacity of 3,156MW. There are thermo power plants of Nghi Son 1, Vinh Tan 2 and Duyen Hai 1 as well as Song Bung 4 hydropower plant, as well as finished construction projects of 98 power station with the total length of 1,700 kilometres. VNNEWS

INFRASTRUCTURE/BUILT OPERATE TRANSFER - Seven large projects wait for investment capital
Road Administration Department yesterday announced that there were seven large projects calling for investment capital under the BOT methods. In details, there are three expressway projects including Dau Giay-Lien Khuong expressway with total length of 205 kilometres, and expected investment capital of 37.5 trillion dong; Nha Trang-Phan Thiet expressway of 79 kilometres and 10 trillion dong; and lastly Quang Ngai-Quy Nhon expressway of 150 kilometres and 28 trillion dong. The four projects were ring-road projects around Hanoi and HCM City. The ring-road No 4 around Hanoi will have six lanes with total length of 136 kilometres, linking Hanoi with other provinces of Bac Ninh, Hung Yen and Bac Giang. The project has total investment capoital of 51.874 trillion dong. The ring-road No 5 around Hanoi City, connecting Hanoi with Bac Ninh, Bac Giang, Hung Yen and Vinh Phuc has total investment capital of about 60 trillion dong. The other two projects were the six-lane Ring-road No 3 round HCM City with total investment capital of 43 trillion dong and Ring-road No 4 connecting HCM City with Dong Nai, Binh Duong and Long An with expected capital of 60 trillion dong. These are potential projects with high economic effectiveness, however, due to large investment capital and insufficient information about the project, these projects haven't attracted the investors.SGTD
INSURANCE - Insurance providers required to set up reserve funds
Vietnam's state president has lately approved the new regulations under the adjusted laws of insurance that will officially take effects from July 1, 2011, in which the insurance providers are required to set up reserve funds to ensure its payment capacity. The laws regulated that the insurance providers and brokers have to set up reserve fund for supplementing the companies' chartered capital and ensuring the payment capacity. The reserve fund is required to set up every year under ratio of 5 percent of the total after tax profit. On December 15, the state president office held the press conference to release about issuing new laws such as the law on environment protection tax, adjustments and amendments of laws on Stock and resolution No 55 about tax exemption and reduction in agricultural land use rights. WTO concludes hearings on shrimp dumping A second hearing on US anti-dumping measures against Vietnamese shrimp ended Wednesday after two days of arguments at the headquarters of the World Trade Organisation (WTO) in Geneva, Switzerland. The session marked the end of the litigation phase of the case, with the parties now awaiting the panel's findings and final determination. The panel was slated to submit a final report in April 2011, said Tran Thi Thu Hang, Minister Counselor and Deputy Head of the Viet Nam Mission to the UN, WTO and other international organisations in Geneva. Viet Nam and the US submitted written rebuttals and presented oral arguments at the hearing. For Viet Nam, the central issue was the US method of calculating dumping in periodic reviews under US law, known as "zeroing". Viet Nam argued that zeroing was inconsistent with WTO rules as well as with Viet Nam's protocol of accession to the trade organisation. The case was heard by Mohammad Saeed, Counsellor of the Pakistan Mission to the WTO, Deborah Milstein from Israel's Ministry of Industry, Trade and Labour, and Ian Sandford, special counsel & director of the International Trade Group of Australia. Viet Nam filed the case with the WTO in February 2010. This marks the first time Viet Nam has filed a complaint with the global trade body's dispute settlement system since it formally joined the WTO in January 2007. WTO director general Pascal Lamy appointed the three-member panel on July 26 to rule on the complaint, and the first hearing was held on October 20. Last week, the US Department of Commerce imposed another punitive, five-year anti-dumping tariff on Vietnamese shrimp, following a sunset review of duties imposed in 2005 in which the US expressed concerns that "dumping" would resume if the tariffs ended. For the past five years, the US has levied duties ranging from 2.5 to 25.76 per cent on frozen shrimp imported from Viet Nam. Viet Nam Association of Seafood Exporters and Producers (VASEP) General Secretary Truong Dinh Hoe said last week that Viet Nam hoped the WTO panel would issue a fair decision. In the first 10 months of 2010, Viet Nam exported more than 200,000 tones of shrimp, worth US$1.7 billion. The amount represents a 12.9 per cent growth in volume and 22.5 per cent growth in value year-on-year, according VASEP. The organisation said that shrimp accounted for 41.7 per cent of the country's total seafood exports of $4 billion in the first 10 months of the year.VNNEWS

FINANCING - Banks tighten lending, financial companies benefit

The closer it is to the Lunar New Year, the higher the needs of individuals' consumer lending; meanwhile, banks are tightening lending and boosting capital mobilisation. Tightened lending and unpredictable fluctuations of interest rates have forced borrowers without collateral to get loans from financial companies with very high lending rates.

Demand for consumer lending surges in the end of the year but borrowing is not easy

Not long ago, Techcombank pushed its deposit rate to 17 percent per annum, making some other banks to pull up their deposit rates accordingly, before the State Bank of Vietnam (SBV) and 12 commercial banks in Hanoi agreed to apply the maximum deposit rate of 14 percent per annum.

When banks race to mobilise capital at the end of the year, small customers who have demand for loans would face various difficulties, especially those who do not have collateral.

Ngoc Lan (My Dinh) wants to borrow some money to refurbish her house, of which the red book is still under her parents names, but she has problem in getting unsecured loan since she does not meet the "absolute credit point" for not having resident registration book in Hanoi. A bank staff said even she has good credit point, bank is often having difficulty in disbursing capital for personal unsecured loans in the end of the year.

Contacting some banks that offer unsecured loans such as Tienphongbank, Lan was told that the bank has halted personal loans in the recent two weeks. MB refuses her request since her company does not pay salary through this bank. Lien Viet Bank only offers loans to its employees and employees of some businesses that it has cooperation contracts. Some other banks gave her similar answer as it is very difficult since the fiscal year is about to end.

Many other individuals shared this is the time they want to borrow for personal spending most, and the procedures to apply for unsecured loans seem to be very attractive, but most of them complained they could hardly get the loan.

Be careful with lending rate of unsecured loans

Not mentioning how much the needs for personal loans have increased, D.Son, an employee of a financial company in Hanoi affirmed that December is the peak time customers applying for loans, due to rising consumer spending demand, while banks have applied strict lending terms.

His company offers unsecured loans at 1.3 percent to 1.8 percent per month, depending on borrowing time. This lending rate is based on the amount of loan and each borrowing time. Accordingly, customers have to bear interest rate of 21.6 percent per annum if borrowing at 1.8 percent per month.

The noteworthy point is at present, employees of the financial companies are offering loans with the so-called simple procedures. However, before signing the borrowing contract, customers should carefully look at the details of the contract, because there are many terms and appendices that they might have subjectively skipped. Those are actually the very strict and unfavourable ties if customers do not consider the details carefully.

For terms on the penalty if customer repays full amount of loan ahead of schedule, a customer said, it was stated in the contract she signed with the financial company that if she repays the loan ahead of schedule, penalty would be two percent on the remaining principle balance.

Banks and financial companies currently apply two methods to calculate interest, one is based on the original loan and one is based on the remaining principal of the loan. Effective rate in the first method is stated at much higher level than flat rate in the second method. However, customers actually have to pay less interest.

For example, for a loan of 60 million dong at 13.5 percent per annum, interest paid on original loan, customers would have to pay in total of 8,212,500 dong per annum interest, principle repayment and interest paid monthly until the debt is cleared (every month customers have to pay same amount of interest, although a part of the original loan is also paid on a monthly basis).

For the same amount of loan, at 20 percent per annum, interest paid on the remaining principal balance, customers only have to pay 6,696,844 per annum (since the principal repayment is paid monthly, therefore the remaining principle balance is decreasing, interest is also decreasing though interest rate is kept unchanged).

Additionally, customers should consider the lending rate of each bank before completing the unsecured loan contract. In the two methods to calculate interest, the second one would be favourable for customers who do not settle the contract ahead of schedule.

Currently, SHB, VPBank, Vietcombank, ACB are offering unsecured loans disbursed before the Lunar New Year, depending on the policy of each branch.

December monthly interest rate index on unsecured loans at ACB's branch on 30 Lieu Giai (Cong Vi ward, Ba Dinh district, Hanoi) includes 13.8 percent for loans under 40 million dong; 13.92 percent for loans from 40 to 70 million dong; 12.6 percent for loans above 100 million dong, based on the original debt.

Typically, an application for unsecured loan will be process within two to seven days. However, the credit counsellor of the above bank branch said the applications are strictly processed, since there is no collateral, the risk is very high.

N.D. Minh from BIDV said the annual lending rate for personal loans of many banks is currently 17 percent (business loans), 18 percent to 20 percent (consumer loans), interests for those loans are calculated based on the remaining principal balance.

If calculating based on original debt as applied by some financial companies, interest would be very high since the interest rate is unchanged but principal repayment is not deducted monthly while calculating interest.

Pham Quang Thai (Hai Ba Trung district) said applying for unsecured loans in the end of the year is very difficult; since he does not have collateral, he has to borrow from financial companies. He added that financial companies usually do not give detailed advice on the two methods to calculate interests, thus those who do not have experience in borrowing would be very easily mistaken.

Financial companies provide main services such as lending, investment, finance related services. Thus, when banks tighten lending, they are greatly benefiting because they are able to attract customers seeking for unsecured loans.VTA

SOUVEREIGN DEBT - Bankers upbeat downgraded rating of six Vietnamese banks

Moody’s move in downgrading the rating of six Vietnamese banks does not mean that other members have better finances, the state newspaper Thoi Bao Kinh Te Viet Nam reported on Dec 16.

One day earlier, the credit rating agency Moody’s Investors Service announced it downgraded the Vietnamese sovereign debt rating to B1 from Ba3.

In addition, the New York-based agency also cut the rating of foreign currency deposits from B1 to B2 for six Vietnamese lenders including Asia Commercial Joint Stock Bank (ACB), Bank for Investment and Development (BIDV), Military Bank (MB), Saigon-Hanoi Commercial JS Bank (SHB), Vietnam International Bank (VIB) and Vietnam Technological Commercial JS Bank (Techcombank).

The firm lowered two notches of Baseline Credit Assessments and Bank Financial Strength Ratings for the banks.

Regarding the rating results of Moody’s, the banks’ representatives declined a comment and a feedback and said that it is necessary to be aware of the rating as well as announced results. The announcement of the rating result does not mean that six members named in the downgraded list have a lower credit rating compared to others in the banking system.

Accordingly, the representatives explained that the targeted objectives of Moody’s were selected among prestigious credit institutions, or those institutions invited Moody’s for rating, not all subjected to the agency’s rating.

Where credit institutions invite Moody’s for rating as the global well-known and independent rating agency, they want to re-locate themselves objectively to be more active in outlining administration and operation measures.

In the explanation, a leader of ACB told VnEconomy that not all banks in Vietnam can meet initial requirements to become subjects for Moody’s to rate.

Not giving a comment on rating results, but the representative said, the rating downgrade of banks mainly stemmed from the notch cuts in rating of Vietnamese government bonds related to growing risks of balance of payments, accelerating inflation and debt burden in Vietnam Shipbuilding Industry Group (Vinashin).VIETBID

MONEY MARKET - SBV won’t succeed in regulating interest rates based on banks’ agreements

Experts have pointed out that the State Bank of Vietnam still has not found the proper monetary solution, therefore, interest rates are still escalating. They have also warned that the central bank will not succeed if it regulates interest rates based on banks’ agreements.

In the past, commercial banks sat together many times to discuss the interest rate policies and agreed to apply ceiling interest rates. However, right after leaving the meetings, they broke their promises and raised the deposit interest rates in order to attract more depositors. Meanwhile, banks explain that the agreements reached by commercial banks are not legal enforcements, therefore, they have the right to decide to follow or break the commitments.

On December 8, Techcombank stirred up the public when offering the highest interest rate on the market at 17 percent per annum for a one month term deposit. The move by Techcombank was described as an action to throw the market into chaos. Right after the new interest rate was announced by Techcombank, the monetary market immediately became feverish: Other commercial banks also raised their deposit interest rates, triggering a new interest rate war.

The State Bank of Vietnam then had to urgently intervene in the market by requesting Techcombank to reconsider its interest rate policy and asking commercial banks to sit together to discuss the interest rates.

After the latest meeting, the ceiling interest rate that banks agreed to apply increased from 12 percent to 15 percent. This means that commercial banks have pledged not to offer the deposit interest rates at higher than 15 percent per annum.

However, Le Xuan Nghia, Deputy Chair of the National Finance Supervision Council, commented that the State Bank still has not found the right monetary policy solution, and that interest rates cannot be stabilized simply by banks and administrative measures. That explains why, even after the agreement was reached, many commercial banks have still been quietly applying higher interest rates at 16-16.5 percent per annum.

Duong Thu Huong, Secretary General of the Vietnam Banking Association, admitted that it is impossible to force banks to obey the agreement because the agreement is not a legal document, and the association has no power to punish the banks which break the commitments.

Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM), said that every time when the central bank tightens the monetary policies, small banks regularly face liquidity problems. They always have to borrow money in the interbank market at high interest rates. However, the volume of money they can borrow in the interbank market is modest and must not be higher than 20 percent of the total capital they can mobilize. As the result, the banks have to raise deposit interest rates to attract more capital, triggering interest rate wars in the market. Once the interest rate war begins, no bank can stand outside the race, if they want to retain their depositors.

Nghia related that some days ago, he witnessed the branches of a big commercial bank scrambling for a 900 million deposit from a client. Citing the example, Nghia said that the pressure of mobilizing capital is very hard.

Nghia believes that the central bank has not chosen suitable monetary policies. In order to restrict credit, the central bank should have required higher compulsory reserves ratio. If so, money will be “imprisoned” at the state bank and the bank can use the money to help small banks improve their liquidity. In this case, small banks will not have to raise interest rates because they can get support from the central bank. However, the central bank did not use that solution, and therefore the monetary policies did not bring the desired effects.

Experts also say that the central bank is trying to restrict credit (Banks are allowed to lend 80 percent of their mobilized capital at maximum), therefore, money still rests in commercial banks. As banks cannot trade the money they have, they try to trade foreign currencies and gold.

Nghia emphasizes that for now the urgent solution is that the central bank needs to work with the banks with difficulties in liquidity to discuss solutions. In order to have money to settle the problems, it is necessary to raise the required compulsory reserve ratio. The ratio is now 10 percent in the US, while the figure is only 3 percent in Vietnam.DAUTU

PRIVATE BUSINESS - Private sector pays 29% of budget

Private companies contributed 29 per cent of the State budget in the form of taxes now compared to 18 per cent in 2006, Thoi Bao Tai Chinh Viet Nam (Vietnam Financial Times) newspaper reported.

They also created more jobs than State-owned companies.

Pham Viet Muon, deputy head of the Government Office and deputy head of the Committee for State-owned Enterprises Renewal and Development, said the devel-opment model in advanced countries had proved that the private sector was very important for economic growth.

The Government needed to provide opportunities for the private sector to invest more in infrastructure, education and other key sectors, he added.

Pham Thu Hang, head of the Viet Nam Chamber of Commerce and Industry’s Enterprises Development Foundation, said though the Government had been trying to tweak the legal system to ensure all companies were equal before the law, private companies still remained at a disadvantage when trying to obtain raw materials, markets, capital, and especially land.

Around 90 per cent of State-owned companies are allocated land for their business while 51 per cent of private businesses have to use their owners’ houses and another 31 per cent have to rent their premises, according to the Enterprises Development Foundation.

Phung Anh Tuan, deputy chairman of the HCM City Young Entrepreneurs Assoc-iation, said to create a level playing field for private and State-owned companies, the legal system had to be amended and new regulations issued.VNNEWS

Oliver Massmann

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Vietnam - News and Regulations

PROFIT REMITTANCE FOR FOREIGN INDIVIDUALS AND ORGANIZATIONS – NEW RULES –

On 18 November 2010, the Ministry of Finance issued Circular No. 186/2010/TT-BTC (“Circular 186”) re: providing guidance for profit remittance by foreign individuals and organizations who earn profits from direct investments in Vietnam under the investment laws and regulations. Circular 186 will come into effect on 2 January 2011 and replace Circular 124/2004/TT-BTC dated 23 December 2004 of the Ministry of Finance re: profit repatriation by foreign individuals and organizations who earn profits from direct investments under the law on investment in Vietnam (“Circular 124”).

Please find our key notes on the new circular as follows:

‐ Either Circular 124 or Circular 186 governs profit remittance activities in relation to direct investment under the Law on Investment (not indirect investment activities such as securities over stock exchanges);

‐ Circular 186 provides that all profit that lawfully allocated to or received by the foreign investors from all direct investment activities in Vietnam under the law on investment may be repatriated. However, it is not clear in Circular 186 whether income from capital transfer or tax refund may be remitted (as permitted under Circular 124).

‐ Under Circular 124, subject to certain conditions and requirements, the foreign investors may repatriate lawful profit on an annual basis, quarterly or semi-annual or upon liquidation of its investment projects in Vietnam. However, Circular 186 expressly only allows making repatriation on an annual basis or upon liquidation of the investment projects in Vietnam. Pursuant to Circular 186, the profit must be determined in accordance with the audited financial reports and corporate income tax finalisation reports which already submitted by the foreign invested enterprises to the competent tax authorities. In addition, Circular 186 requires the foreign investors and the relevant foreign invested enterprises must fulfill their financial obligations respectively to the State in relation to the relevant profit before the profit could be remitted;

‐ Circular 186 provides that profit remittance by the foreign investors is restricted if the relevant foreign invested enterprises still suffer any accumulated loss. This requirement was previously provided for in various tax rulings and imposed by many local tax offices. With the issuance of Circular 186 this requirement becomes officially.

‐ Circular 186 requires the foreign investors (directly or authorizing the relevant foreign invested enterprises) submit a pro-forma notice re: profit remittance to the competent tax authority at least 7 business days prior to the proposed date of remittance. Based on the pro-forma form of notice attached to Circular 186, it is noted that such notice does not need to be certified or confirmed by any tax or state authorities (as required in Circular 124). TranTM

CURRENCY - Vietnam dong in ‘extreme trouble,’ Morgan Stanley says

Vietnam’s dong is in “extreme trouble” and is at risk of depreciation, Morgan Stanley said, two days after the International Monetary Fund warned the nation’s reserves were at a “low” level.

A deteriorating balance of payments, a weak economy and trade deficit are “exerting significant downward force” on the dong, Stewart Newnham, Asian currency strategist at Morgan Stanley, told a conference in Ho Chi Minh City.

The dong has slid 17 percent since Newnham said in May 2008 the nation was headed for a “currency crisis” similar to that of Thailand’s baht in 1997. Vietnam’s foreign reserves at the end of September covered 1.8 months of imports, the IMF said on Tuesday, without specifying a level.

The nation’s foreign-exchange market has shown “positive” changes in December after “tense signs” in the previous month, the central bank said in a statement on its website today.

The dong, which has dropped 5.2 percent this year, traded little changed at 19,498 per dollar today, according to data compiled by Bloomberg. A depreciation to 23,000 dong per dollar in 2011 was “extremely plausible”, Newnham said.

“Since 2008 the dong has been caught in that danger zone where the economy is growing below par and still running a trade deficit,” Newnham said.

Trade Deficit

The State Bank of Vietnam weakened the dong’s reference rate by 2 percent to 18,932 per dollar on Aug. 18, the third devaluation since November last year. That move came amid concern an increase in imports would raise the risk that the Southeast Asian nation will fall short of capital needed to fund its trade deficit.

The shortfall widened 16 percent to $1.25 billion in November from a revised $1.08 billion in October, according to preliminary figures released on Nov. 25 by the General Statistics Office. The gap was $10.66 billion in the 11 months through November.

“If the financial flows can’t pay off the import bill, who is left to pay off the shortfall?” Newnham said. “The answer is, the central bank.”BLOOMBERG

OFFICIAL DEVELOPMENT AID - ODA commitments for 2011 reach $7.9b

Ending the Vietnam Consultative Group (CG) Meeting on late Dec 8, donors announced the total official development assistance (ODA) commitments worth of $7.9 billion for Vietnam, slightly down compared with last year’s figure of $8 billion, according to Vo Hong Phuc, Minister of Planning and Investment.

Of which, bilateral aids from 24 donors reach $3.28 billion and aids from five institutional donors hit nearly $4.6 billion,

The ODA is mainly for infrastructure, public transport and climate changes.

Amongst bilateral donors, Japan took the lead with committed ODA of $1.76 billion and then Korea, France, and Germany with $412 million, $221 million and $199 million respectively.

Four donors have not announced ODA commitments at this meeting yet.

As for institutional donors, World Bank (WB) pledged to provide ODA capital of over $2.6 billion for Vietnam while the aid from Asian Development Bank (ADB) was $1.5 billion.

At the Vietnam CG Meeting late last year, the total ODA commitments for Vietnam reached over $8 billion, marking the highest figure so far.

In 2005, total ODA commitments for Vietnam were only $3.7 billion.

With the fact that Vietnam has become a average income country, so loan terms will also become less favourable with shorter terms and higher interest rates. For this reason, ODA this year will be spent on prioritised investment projects for economic development and those that have ability of return on capital, Phuc said.

Phuc added, although this year ODA is lower than last year’s figure, the commitment of $7.9 billion is an impressive figure. At CG meeting in last December, with the total ODA of $8 billion, but nearly $1 billion was supports from donors for Vietnam to overcome the economic and financial crisis.

Last year, WB was Vietnam’s biggest institutional donor with $2.5 billion while Japan is Vietnam’s biggest bilateral donor with $1.64 billion. This year, Japan continues to maintain this position.

With this ODA commitment of $7.9 billion, the total ODA capital for Vietnam so far has reached $64 billion.

Ending the session, minister Phuc gave thanks to donors and said that the mid-term CG meeting this year will be held in the southern province of Ben Tre.vietbiz

FINANCING - Government bond mobilisation is low

The volume of capital disbursement of government bonds in 2010 is very positive, according to Ministry of Finance.

To early December 2010, the State Treasury has disbursed 83.2 percent of the 40.01 trillion dong in the assigned plan for projects on transport and irrigation. Although the disbursement of government bond fund for projects in education area is lower, it has still reached 78.7 percent of the total 6.18 trillion dong.

Therefore, within November, transport, irrigation, health and education sectors additionally received 2.058 trillion dong. Of that, transport and irrigation sectors were disbursed with additional 1.584,5 trillion dong, reaching the total of over 33.275 trillion dong disbursement.

While the disbursement of government bond fund is very positive, the mobilisation is very difficult. According to statistics of Ministry of Finance, in the first 11 months of 2010, the total capital mobilised by the budget (including capital mobilised for government bonds) only reached 69.3 percent of the yearly plan.

The shortage of capital, according to Trinh Thi Nga, member of the National Assembly Economic Committee, has caused many transport and irrigation works, which have been completed and put into use, to lack of capital for timely maintenance.

Even the work listed in the portfolio of the government bond fund is also facing difficulties to achieve progress, due to the lack of capital. According to reports, the transport sector is expected to complete only 127 out of 269 works; agriculture and rural development sector is also expected to complete just 31 out of 96 works. The programmes to solidify schools and classrooms, and programme to build houses for teachers are expected to complete just 54.6 percent and 64.4 percent, respectively.

The difficulties in raising capital from government bonds have caused many important projects, which have been approved for many years, to be unable to arrange capital, such as Highway 20 project, Highway 27 project, and Dong Nai 3 Hydropower Dam project, etc. Even for the projects of Cao Lanh Bridge over Tien river and Vam Cong Bridge over Hau river, despite the master plans have been approved by the prime minister (these two bridges are put in priority for investment in 2007-2010 period), to date, the construction of the two bridges having strategic positions in the socioeconomic development in Mekong Delta area has to wait until 2012 to be implemented. Similarly, the Dau Giay – Da Lat Highway project has not bên able to arrange financial sources.

According to minister of Finance Vu Van Ninh, the demand of the investments into important projects and constructions using government bond fund is currently very high. To carry out the works in the approved portfolio, at least 150 trillion dong of government bonds must be mobilised. This figure does not include the increase of the construction costs due to changes of construction material prices, labour costs, and exchange rate fluctuations, etc. In addition, in the next period, the budget must raise additional capital to carry out other urgent projects and constructions.

Facing the imbalance risk between demand and capacity to mobilise financial sources, to solve this problem, Ninh said the government would review and classify the projects that are in investment policy. The uncompleted projects and constructions that might be suspended due to the short mobilisation of government bond fund might be balanced from the budget to maintain the implementation process. For highly effective projects that could be exploited to recover capital after completion, capital could be raised from various sources, including the government bond fund for investment.DAUTU

BANKING - Banks in Vietnam fighting to obtain market share

Vietnam’s banking market share picture in 2010 is expected to see many changes as commercial joint stock banks are making big efforts to increase market share while state giants keep some functions that are hard to be shared.

There are now 37 joint stock banks, five state commercial lenders, 50 foreign banks, two policy banks, 22 finance companies, and five joint venture banks across the country. Market share structure of the groups is divided into two halves clearly: state banks and joint stock rivals.

In the last 3 years, state banks have concerned as their market share started to be shared. Only the expanding number of members and the blossom of joint stock bank network put a heavier on the state-run lenders.

Statistics of the State Bank of Vietnam’s Monetary Statistics and Forecasting Department showed that the proportion of foreign banks, finance companies, joint venture banks and people’s credit funds remained modest in total systematic structure of deposits and credits, which hovered 15% of credit market share and roughly 10% of total deposits. The dominating proportion was held by a group of state lenders and the notably increasing group of joint stock banks.

Between the end of 2007 and 2010 early, the deposit and credit market shares between two groups saw a remarkable change. In Dec 2007, state lenders including Agribank, Bidv, Vietcombank, Vietinbank, MHB and Vietnam Social Policy Bank) accounted for up to 59.3% of the system’s credit market share, joint stock rivals 27.7% while respective deposit shares were 59.5% and 30.4%. At the end of March 2010, the inter-relative proportions were reported at 54.6% and 31.2%, 48.3% and 42.6%.

In fact, state banks held some advantages such as historical background, big size and wide network in the country. But in the reporting period, the joint stock group admitted extra 13 members converted from rural to urban banks and 3 newly-established others along with more strength in each member.

Such a move in the banking structure forecasts to continue in 2010 as the market enter process for newly-converted and established members has been shortened following the soaring affects of old members. In addition, 2010 will see a new move made by wholly foreign invested banks who have operated more fully and comprehensively.

However, state lenders still are dominating a bulk of market shares in two operations of capital mobilization and lending. A HCM City-based banker said, occupying the group’s market shares is very hard and has to take a long time.

“Many colleagues asked me why my bank has not yet expanded to the north. That’s a demand everyone can see. But the decisive factor is customer base. The shadow of state banks remains huge, in all locations including the northern region. Their base has been reinforced by customers who are state enterprises. It is difficult to share the market”, he stressed.

A big mortgage loan of hundreds of billions dong provided by a state bank to a state corporation or group is normal but with this, whether can joint stock banks accept exposure? “Behind state lenders is the state owners while we have to face pressure by shareholders”, he emphasized.

Le Cong, General Director of Military Commercial JS Bank (MB) said that each member must have a strategy embedded with each specific location in a bid to expand its market share. Typically, MB has confirmed its position in northern provinces but their operating results in the south have not reached as expected. Similarly, an active and efficient branch of a bank in the southern region may generate a profit equaling to a combined earnings of their entire northern network.

MB will focus on boosting operations in the south, enhancing investments in network, human resources and communications in exchange to the pleasure of customers, the general director confirmed.VIETBIZ

VN banks urged to go hi-tech

Viet Nam’s banking sector will have to develop more useful and modern services to meet future challenges, and the application of information technology and security systems will play a more important role in the future, experts said at a conference yesterday.

Speaking at the opening ceremony of Viet Nam 2010 Banking conference and exhibition in HCM City, Nguyen Van Giau, Governor of the State Bank of Viet Nam (SBV), said: “Developing more useful banking services, widening the use of the new Point of Sale (POS) for plastic money, and seeking more idle capital in rural areas are new trends in the banking industry.”

Other experts spoke on ways to push up non-cash payment in Viet Nam, encouraging Vietnamese consumers to adopt the new POS plastic money system for shopping.

In a recent survey carried out by the State Bank of Viet Nam’s HCM City branch, 70 per cent of banks said they needed better technology infrastructure for linking the POS machine with other partners.

“The success of POS would depend mainly on the service owners, especially if they don’t want banks to have records of their sales transactions so as to avoid paying more taxes,” said Bui Quang Tien, director of SBV’s Payment Department.

High POS fees between banks and the cost of promoting the service were also slowing the uptake of transactions using the machines.

“Viet Nam’s high growth rate, deeper financial integration, high ratio of youth population, and improved living standards as well as the high ability to use technology will boost POS use in the near future,” Tien said.

The nation’s banking sector took one major stop towards promoting non-cash payments by connecting the POS system between banks in HCM City yesterday. Ha Noi had established a similar link in September.

Representatives of several banks said they were paying attention to developing other non-cash payment services like mobile banking, internet banking and home banking.

At present, there are 28.6 million ATM cards, 46,000 POS machines and 11,000 ATMs in Viet Nam. The issuance of plastic money, including debit and credit cards grew by 150-200 per cent a year during the 2006-10 period, but the transactional amounts via the POS system was still very low at around 5 per cent.

Experts also spoke on risk management and security in retail banking, which they said was the most significant factor for the industry.

The conference, which ends today, was organised by the State Bank of Viet Nam’s Information Technology Department and the International Data Group. It was attended by international and national banks, finance institutions and IT companies, such as Polaris, EMC, APC, AgriBank, Vietin Bank and BKAV.VNS

Shipbuilding - Vinashin must pay its own debts – Vietnamese Minister

Troubled Vietnamese shipbuilder Vinashin is responsible for re-paying its own debts, including $60 million due later this month to international creditors, a government minister said on Wednesday.

The comments by Minister of Planning and Investment Vo Hong Phuc confirmed that one of the country’s biggest state-owned firms was unlikely to get financial aid from the government to tackle a mountain of debt that brought it close to bankruptcy.

“As we have said, we will make efforts so that Vinashin can operate profitably so that it can re-pay its debts on its own,” Phuc told reporters.

The government announced earlier this year that Vinashin, or the Vietnam Shipbuilding Industry Group, was near collapse under some $4.4 billion in debt it had racked up through rapid expansion and a slump in shipping during the global recession.

It ordered the bloated conglomerate to be reorganised, raising questions about repayment of the debt.

Vinashin’s first test comes on Dec. 20 when $60 million on a $600 million eight-year loan to a consortium of creditors led by Credit Suisse comes due, but it has asked for a delay.

The creditors were expected to be meeting on Wednesday to discuss the proposal.

Phuc, asked specifically if Vinashin’s responsibility for its own debts included the upcoming $60 million payment, replied: “That is correct, they must pay it by themselves”.

What happens to Vinashin will set the tone for Vietnamese borrowing in the near future. Should Vinashin fail to make its debt payments, not only would the cost of capital rise for other state-owned companies, but questions may be asked about the government’s ability to service its debt, analysts say.

Standard & Poor’s on Monday cut its long-term credit rating on Vietnam’s state mining group Vinacomin after signs the government might not help Vinashin with debt payments.reuters

FOOD/PROCESSING - Vinamilk awarded Best Enterprise by Forbes Asia

The Vietnam Dairy Products Joint Stock Co (Vinamilk - coded VNM) has lately been granted the "2010 Best Enterprise" award among Top 200 best enterprises in Asia by Forbes Asia.

It's the first time that a Vietnam-based enterprise to be acknowledged and awarded the title "Best Enterprise" by the professional financial magazine in the region.

According to Forbes Asia's statistics, Vinamilk was reported having revenue of $575 million, to be ranked the 16th position among 200 companies, net profit of $129 million and market value of $1.56 billion.

In the first 11 months of this year, VNM reached accumulative revenue of about 14.7 trillion dong, a year-on-year increase of 49 percent.VNNEWS

US to be Vietnam's biggest seafood buyer in 2010-15 period

Vietnam is now the biggest shrimp supplier to the Japanese market (39,000-43,000 tonnes per year), according to Vietnam Association of Seafood Exporter and Processors (Vasep).

However, currently, Vietnam is facing fierce competition among major shrimp exporting countries in the region such as Thailand, and Indonesia. Especially, the Thailand market has an export growth of nearly 30 percent as of 2009 whereas that of Vietnam decreased nearly 6 percent.

Meanwhile, the US market is under the growing period again and will soon become the leading market. At present, Vietnam is the US's fifth biggest shrimp provider (40-43,000 tonnes per year) and showing signals of reduction as of the end of 2009. Thailand now is the US's leading shrimp provider (180,000-195,000 tonnes per year) and maintains the growth of 5-10 percent/year.

Currently, the importing demand for shrimp items in the EU27 market remains high (465,000-475,000 tonnes per year) and quite stable. Vietnam now ranks at the eighth (21,000-25,000 tonnes) after Ecuador, India, Greenland, China, Thailand, Bangladesh and Argentina.

Oliver Massmann

Rechtsanwalt

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Vietnam - News and Regulations

WTO - Vietnam price controls 'a WTO violation'

Vietnam has violated its World Trade Organization commitments with a new price control law targeting overseas firms, a US business leader said Thursday, adding to foreign opposition to the decree.

The law on prices took effect on October 1 and allows state institutions to impose "stabilisation" measures if, for example, prices rise faster than production costs.

Vietnam, which began opening its economy 24 years ago, has denied that the measures would violate rules of the WTO, which it joined in 2007.

"We believe that price controls do not work and are counterproductive to future growth," Hank Tomlinson, chairman of the American Chamber of Commerce (AmCham), told the Vietnam Business Forum.

"We are also concerned that implementation of the new law has focused primarily on imports from foreign companies -- a clear violation of the letter and spirit of Vietnam's World Trade Organization (WTO) commitments."

In a written brief, AmCham called the decree on price controls "a step back towards central planning that will add substantial costs and uncertainty to the private sector doing business here".

The forum for local and foreign business leaders is held twice a year by the World Bank and Vietnam's Ministry of Planning and Investment.

The European Chamber of Commerce in Vietnam told the gathering that under the price-control decree, producers of coal, formula milk, oil, gasoline, steel and other goods have to declare their suggested retail and other prices, apparently adding to firms' administrative burden.

The Australian Chamber of Commerce also expressed "serious reservations" about measures including price controls.

The government is trying to control inflation, which reached 11.09 percent year-on-year in October, well above a targeted maximum of eight percent this year.

On Tuesday a government decree said price "stabilisation" was among the administration's top priorities for the rest of the year.

AmCham voiced concern that Vietnam lacks an effective inflation policy, and said the investment community had "credibility and confidence issues" with government economic and monetary policy.

"Vietnam's currency system has undermined confidence -- both among local and foreign investors -- and there is no anchoring of expectations on the value of the Vietnam dong," Tomlinson said in his address.

From January 1 the government will impose a 10 percent tax on gold exports -- up from the current rate of zero -- a Ministry of Finance official said.

With the gold market closely linked to foreign exchange trade, the government is likely to temporarily achieve its goal of returning stability to financial and stock markets, Nguyen Hai Ha, chief analyst at Ho Chi Minh City-based MBCapital fund management, told Dow Jones Newswires on Thursday.

In Vietnam many people see dollars and gold as a safe haven against economic uncertainty.

On Wednesday the dong slumped to a record low in the free market, a day after Prime Minister Nguyen Tan Dung urged "strong measures" to stabilise foreign exchange rates and gold prices.AFP

MONEY MARKET - Firms scramble for loans despite higher rates

Banks’ current lending rates are much higher than in October but companies are still struggling to borrow as they have entered the peak manufacturing and trading season.

A bank staff counts Vietnamese banknotes. Banks have hiked lending rates strongly but this has not deterred companies from borrowing - Photo: Le Toan HCMC – Banks’ current lending rates are much higher than in October but companies are still struggling to borrow as they have entered the peak manufacturing and trading season.

Steady rate hikes

After many banks raised interest rates in early November, Asia Commercial Bank, a leading joint-stock bank in the country, followed suit on Monday by hiking deposit rates for all terms to a single rate of 12% per year.

In addition, the bank will pay a bonus equivalent to 0.15% upon maturity for the 378-day savings deposit.

Many joint-stock banks offer rates higher than 13% to attract depositors. Western Commercial Bank has the highest rate, 14.5%, and has issued short-term promissory notes at an interest rate of 13.5% plus a gift equivalent to 1%, bringing the total to 14.5%.

But the deposit rate hikes are not attractive enough to lure customers, a leader of Western Bank said, adding his bank had failed to raise as much money as expected.

Given the rising borrowing cost, banks have increased their lending rates. At this time, the normal rate for Vietnam dong loans for corporate clients ranges from 17% to 19%, while that for individuals is 19% or above.

Some financially strong banks extend lower rates to customers who use many of their banking services such as savings, international payment and money transfer. For example, Military Commercial Bank charges 15.5% interest on loans for its close corporate clients.

High demand for capital

A leader of Western Bank says now is the peak business season, so many enterprises want to take out loans from banks despite higher rates.

For small and medium enterprises, especially family-run businesses, banks’ interest rates are still lower than those on the underground credit market. The owner of a family-owned business says the lending rate outside the banking system is up to 3% per month, or 36% per year, or even 4% per month, or 48% per year.

Many banks have reported slower credit growth in November but they expect capital demand to stay high in the final month of the year.

Given the rising lending rates, a branch director of Tien Phong Bank says, his branch has seen credit growth slowing. “Enterprises may put on hold some of their projects but they are willing to pay more for much-needed cash to keep their manufacturing and trading activity running.”

Nguyen Hoang Minh, deputy general director of the central bank’s HCMC branch, says November credit growth at the city’s banks was slower than in previous months due to liquidity problems and high lending rates.

However, when liquidity improves in December, outstanding loans will pick up again given more manufacturing and trading activity at the end of year, he says.

Meanwhile, according to a number of banks, the slow November credit growth is partly ascribable to the fact that banks already saw their credit growth beating the plan submitted to the central bank early this year.

Military Bank’s outstanding loans grew 5% in November and by late November, its credit had grown over 50% from late last year. A representative of the bank says the slow credit growth has resulted from credit restrictions in the last months of the year.

According to estimates by the central bank’s HCMC branch, outstanding loans at the city’s banks in 2010 would amount to VND699.81 trillion, up 25% year-on-year, and total deposits would reach VND766.25 trillion, up 27%.SGTD

DOLLAR HIKE - How to ease the “dollar fever”?

State management agencies blame speculation for the dollar price fever. People rush to purchase dollars, while businesses refuse to sell dollars to banks. why do people and businesses try to hoard dollars?

Uncertainties encourage speculation

Thanh Minh, 38, who lives in Hanoi, has to check the dollar price every day, because he wants to purchase dollars to pay his debts. Minh bought a car earlier this year on the installment plan. Since the car’s price was in dollars, it has become more expensive because of the steady dollar increase. Minh has decided to pay debts right now, or else he will not be able to pay debts if the increase continues.

on the morning of December 1, Minh bought dollars on the black market at 21,570 dong per dollar. The dollar price has increased by 2000 dong per dollar just over the past two months. The price has exceeded the record threshold of 21,500 dong per dollar and it is coming closer to 21,600 dong.

“Several months ago, when the dollar price began increasing, I decided not to buy dollars at this moment, because I hoped the dollar price would go down again. The central bank promised to stabilize the dollar price,” Minh said.

Minh is not alone. Many other people have the same problem. The debts they incur have increased by tens to hundreds of millions dong over the past few months just because of the dollar increase. Fearing further increases, people rush to buy dollars on the black market,.

Thanh Phuong, whom VIetNamNet’s reporter met on Ha Trung street foreign currency market on December 1, related that she has bought $200,000. Phuong believes that she made a right decision. She got the money from selling an apartment in Thanh Xuan District and she initially intended to reinvest it in the real estate market. However, she later realized that the real estate market is too quiet, while the gold and dollar prices keep increasing. “Keeping dollars proves to be the best way to keep your assets at this moment,” Phuong said.

Meanwhile, Huy Nam in Dinh Cong new urban area, who has a saving of one billion dong which he intends to use to build a new house, has also decided to purchase dollars. “I feel anxious about the dollar increases, therefore, I have to keep my money in dollars,” Nam explained.

The strange thing is that the more the dollar price increases, the more people rush to purchase dollars. The owners of the exchange shops on Ha Trung street also said the demand for dollars will increase further, because people believe the dollar will continue to rise.

Tran Du Lich, Head of the HCM City Economics Institute, commented that people feel anxious when the inflation rate is increasing. The Ministry of Industry and Trade has admitted that keeping the inflation rate at one-digit level would be an impossible mission. People would not rush to buy dollars if the dong/dollar exchange rate is stable, but they will rush to collect dollars if they see uncertainties. It is clear that uncertainties encourage speculation.

The real demands

It is estimated that in 2010, the total foreign currency purchase turnover would be $58.5 billion, a decrease of 12 percent over 2009, while the total sale turnover would reach $59.92 billion, down by 4.3 percent. The dong mobilized capital is estimated to reach 579,430 billion dong (+ 30.8 percent), and foreign currency mobilized capital 195,820 billion dong (+ 17 percent). The dong outstanding loans would reach 501,650 billion dong by the end of the year, while the outstanding loans in foreign currencies 198,160 billion dong.

The figures show that the dollar outstanding loans would be relatively high. Meanwhile, the demand for dollars is increasing because people always try to pay debts at the end of the year. In fact, the high demand for dollars towards the end of the year has been anticipated.

In November 2010, the import turnover reached $1.3 billion, the highest level in the last nine months, which has raised the trade deficit to $10.7 billion. It is estimated that the total trade deficit may reach $12 billion for the whole year 2010.

The Prime Minister has instructed the State Bank to follow a flexible monetary policy which to control the volume of cash in circulation. He also requested the State Bank to apply necessary measures to control the foreign currency exchange rates more tightly and ease the speculation. VNNEWS

MINING - Strategic Mining Corp. (SMNG) Acquires Nat Son Gold Mine in Northern Vietnam

Strategic Mining Corporation (PINK SHEETS:SMNG) today announced it has acquired 51 percent of the Nat Son gold property in northern Vietnam from its joint venture partner Ba Dinh Minerals JSC, a Vietnamese mining company.

Under the terms of the agreement, Strategic Mining has the option to increase its ownership to as much as 90 percent, the maximum foreign ownership level allowed under Vietnamese law. The company intends to move ahead immediately with exploration and development.

"We're thrilled to have completed the acquisition of Nat Son, which we believe represents a great opportunity for our shareholders," said Strategic Mining President Todd Sterck. "This property was extensively explored by French miners, who initiated small-scale gold mining before being expelled from the country in the mid-1950s. It has lain dormant ever since, and now we have the opportunity to resume mining operations with the advantages of modern mechanization and advanced ore-processing methods."

Nat Son is located in Hoa Binh province, about 50 kilometers south west of Hanoi in the center of the gold-rich Kim Boi deposit.

Prior to completing the acquisition, Strategic Mining commissioned a detailed geological report of the Nat Son property by consulting geologist Bob Marvin. Four zones of gold mineralization were identified, and 140 rock-chip samples were collected and tested over a strike length of four kilometres. Based on the positive results of the field study, the geologist recommended a drill program for 13 core holes to help determine the gold potential of the property.

Additionally, the company has received assay reports from three independent labs, a geochemical survey and a NI 43-101 report that indicated Nat Son was a "Property of Merit."

About Strategic Mining Corporation

Strategic Mining Corporation (PINK SHEETS:SMNG) is engaged in the exploration and development of gold properties in Viet Nam, the U.S. and Africa. The company holds the only gold mining license in northern Vietnam. Strategic Mining intends to expand by acquiring mineral rights to key properties and initiating strategic joint ventures. As previously stated in a company press release, Strategic Mining has filed to move to the OTCBB.

Safe Harbor

No assurance can be given that past or similar results of precious metal mining will be indicative of future results. This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The "Act"). In particular, when used in the preceding of discussion, the words "pleased," "plan," "confident that," "believe," "expect," or "intent to" and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act and are subject to the safe harbor created by the Act. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward-looking statements. Such risks and uncertainties include, but are not limited to, market conditions, general acceptance of the company's products and technologies, competitive factors, the ability to successfully complete additional financings and other risks in the

company's SEC reports and filings.INTELLASIA

TRADE BALANCE - Overseas remittance to Vietnam may reach $7.3b in 2010

Inward remittance to Vietnam may touch $7.3 billion this year, up 14.1 percent compared to $6.4 billion in 2009, according to the State Bank of Vietnam (SBV)'s governor, Nguyen Van Giau, at the press conference in Hanoi on November 2.

Giau said the foreign currency situation has been improved during past two weeks.

This year's trade deficit may be up to $12 billion, according to Giau.

This year's payment balance deficit would fall to $4 billion from $8.8 billion in 2009.

The central bank also worked with Ministry of Industry and Trade to control the production and reserve of oil and gas for domestic market.SGTD

E-commerce in HCM City: 92pct of enterprises have Internet facility

At a forum on E-commerce in Vietnam 2010 held by Department of Information, Technology and Electronic Commerce under the Ministry of Industry and Trade (MoIT) on December 1 in HCM City, representative from MoIT said that indicators on E-commerce application into enterprises have been improved considerably.

Accordingly, 92 percent of companies have made Internet connection, 71 percent of firms making E-commercial transactions and 32 percent of enterprise having their own websites.

However, enterprises have not believed in electronic contracts yet. Moreover, they find it hard to make electronic payments, especially payments for huge value.

HCM City Department of Industry and Trade also said that E-commerce transactions between businesses to customers (B2C) still face obstacles because of business practices, and weak awareness of electronic commerce.SGP

TRANSPORTATION/INFRASTRUCTURE - Japan to help Vietnam build urban railway

The Osaka Chamber of Commerce and Industry (OCCI) and local businesses were making research to help Vietnam in building the urban railway routes in order to reduce the traffic jam in large cities.

Dr Vu Tien Loc, chair of Vietnam Chamber of Commerce and Industry (VCCI) revealed that at present, preventing traffic jam in large cities, such as Hanoi and HCM City, has become one of the burning issues in Vietnam. The government would like to construct short urban railway routes to connect the economic centres.

Representative of Japanese enterprises, Ahigetaka Sato, chair of Keihan Railway Group cum chair of Osaka Chamber of Commerce and Industry said that the Japanese government and some enterprises were considering the most suitable railway routes for Vietnam, before applying for ODA fund to realise the projects.

Apart from cooperating with Vietnam in constructing the urban railway routes in Hanoi and HCM City, Ahigetaka Sato also would like to strengthen the Vietnam-Japan economic cooperation relationship.

ADB helps Vietnam, Laos upgrade road system

The Asian Development Bank (ADB) will provide $95 million to help Lao and Vietnam upgrade their road systems in the northeastern transport corridor which will benefit trade and reduce poverty in the two countries and the Mekong region.

The ADB Board of directors has approved the provision of loans for the second project to upgrade the northern transport network of the Greater Mekong Subregion (GMS).

Under the project, 340 km of road belonging to a section of the northeastern transport corridor which starts in Vietnam's Thanh Hoa province and runs through to Bangkok, Thailand will be upgraded.

Apart from improving material facilities, the project will help deal with issues including overloaded vehicles, road transport safety and bomb and landmine clearance, and raise public awareness of human trafficking and the prevention and control of HIV/Aids.

The ADB will provide Vietnam with $75 million sourced from the Asian Development Fund's preferential loans, and it will grant Laos $20 million in non-refundable aid.

The loan has a period of 32 years with a grace period of 8 years and an interest rate of 1 percent/year during the grace period and 1.5 percent after that.

Meanwhile, the Vietnamese and Laos governments will provide a total capital investment of $32.7 million. The OPEC Fund for International Development (OFID) will consider lending Laos $12 million in March next year. If it is approved, the ADB will manage OFID's capital inflow and the project will cost a total of $139.7 million.

The project is scheduled for completion in June 2016.

The ADB operates its mission of poverty reduction in the Asia-Pacific region through comprehensive sustainable growth, and regional integration.

Established in 1966, the ADB now has 67 members including 48 regional members. In 2009, it approved a total of $16.1 billion to provide loans and non-refundable aid and conduct programmes on guaranty, financial and trade promotion, capital investment and technical assistance. It also mobilised $3.2 billion in co-sponsorship funding.

Oliver Massmann

Rechtsanwalt

This e-mail is from Duane Morris Vietnam LLC (a law firm). We can provide a list of our partners upon request. If this e-mail has been sent to you by mistake, please let us know, and then delete this message.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Please note that the above articles, comments etc have been extracted or reproduced and forwarded electronically from the sources credited above and have not been authored by the sender and do not necessarily represent the views of the sender. The sender takes no responsibility for the accuracy or legitimacy of the above or changes that may be made to the above by subsequent forwarders or recipients.

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