Vietnam - News and Regulations

GOVERNMENT/LEGAL – New rules on transfer of profits abroad

The Ministry of Finance issued Decree No 186/2010/TT-BTC on November 18, providing guidelines on a foreign investor's transfer of profits abroad. The new decree takes effect in 45 days from the date it was promulgated and replaces Circular No 124/2004/TT-BTC of December 2004.

The new decree distinguishes between annual transfers and transfers made upon the completion of investment and business operations in Vietnam.

Annually transferred profits are net profits earned from direct investment in a fiscal year according to either audited financial statements or corporate income tax declarations of the enterprise, less profits that have been re-invested into Vietnam. Profits to be transferred upon completion of investment are total net profits earned from the investment, less any already transferred abroad.

Foreign investors are strictly prohibited from transferring profits abroad where there have been accumulated losses under audited financial statements after losses have been carried forward from the previous year, in accordance with the Law on Corporate Income Tax.

Foreign investors must give notice in accordance with the law to tax management authorities before commencing any transfer of profits abroad. Vnnet

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POWER - Vietnam's 16 hydropower projects licensed in Laos

Vietnamese Embassy in Laos in collaboration with Ministry of Energy and Mines of Laos on late November 23 in Vientiane held a seminar on "Vietnam-Laos cooperation on hydropower: status and prospects".

The seminar considered hydropower sector strength of Lao economy. At the same time, it is very important cooperation sector between Vietnam and Laos, attracting a huge investment from Vietnam into Laos.

Till date, Vietnam's 16 hydropower investment projects have been licensed in Laos with a total capacity of over 4,000 MW.

The conference exchanged, petitioned and sought solutions to overcome difficulties as well as promote cooperation in hydropower sector between the two countries.VNEWS

INTERNATIONAL COOPERATION - UAE wants to enter into strategic cooperation ties with Vietnam

"UAE highly appreciates potentials as well as important role of Vietnam in Southeast Asia and wants to develop investments in Vietnam in coming time", United Arab Emirates (UAE) minister of Economy, Sultan Bin Saeed Al Mansouri, emphasized in the interview with the Vietnam News Agency on the occasion of his on-going visit to Vietnam to attend the first meeting of the joint commission for bilateral cooperation between the two governments held on November 24 in Hanoi.

Sharing about the purpose of his visit to Vietnam, UAE minister said that the two partners will discus further bilateral cooperation relations on economy, trade and investment between the two countries, promoting investments in potential fields such as seaport, aviation, agriculture, oil and gas, infrastructure and tourism.

State President Nguyen Minh Triet also affirmed Vietnam highly valued the UAE's role in the world and plans to expand cooperation with other countries, including the UAE which possess great financial potential.

"Vietnam is becoming an increasingly attractive market for foreign investors," he says. "Over the past 10 years, UAE and Vietnam have reached important achievements regarding economic cooperation. Many bilateral agreements have been signed including the three signed in 2009 on investment protection, aviation and double taxation. Trade between Vietnam and UAE grew to some $600 million last year."

He also stressed that agriculture will be one of the most potential markets for UAE investors. "Together with industrialisation, Vietnam should not forget that they are an agricultural country and agriculture is now one of the country's strongest fields," he said. "UAE investors will invest more on food processing and help promote agricultural products in Vietnam."

Minister Mansouri added that the UAE is willing to offer scholarships to Vietnamese students.

Currently, the total foreign investments into UAE have reached $67 billion. Additionally, UAE is a favourable transit point for goods and is the gateway for trade in the Middle East-Africa. Thus, enterprises of UAE and Vietnam will be able to cooperate in many sectors. At present, Vietnam has sent about 10,000 labourers to work in UAE.VNPLUS

COMPETITIVENESS/VIETNAM - Vietnam publishes report on competitiveness for the first time

Research group from the Central Institute for Economic Management (CIEM) and the Singapore-based Asia Competitive Institute (ACI) has released information about the workshop on the Vietnam Competitiveness Report 2010 in Hanoi on November 30.

This report has been compiled by the group of experts from CIEM and ACI, under the instruction of Prof Michael Potter, a world expert in competitiveness.

This is the first national-level report which gives comprehensive assessment on competitiveness in various fields and proposes specific solutions to improve Vietnam's competitiveness, said Do Hong Hanh, Vietnam Country Representative of ACI.

Highlights of the report, according to experts from CIEM and ACI, are the comprehensive assessment on the macroeconomic issues, which affect the components of productivity and efficiency of the economy, the factors that determine the prosperity of the people in general.

The study looks at the macroeconomic balances such as budget, balance of payments, savings-investment, etc, and finds the causes of macroeconomic imbalances, said CIEM deputy director Nguyen Dinh Cung.

From the findings, Hanh gives the message: "In medium term, Vietnam is facing the risk of "getting stuck", because the growth is based on the existing values. If there is no new competitiveness, Vietnam could hardly have an efficient growth".

Regarding the specific recommendations, the study only focuses on policy and institutional reforms. For reforms of policies, the research mentions five areas that Vietnam should focus on improving, including education and training, human resource development, FDI, policies for industries, and State management.

For institutional reforms, there are three main issues mentioned in the report, notably the recommendations on the reform of public governance's process and capacity; and decentralisation, etc.

Cung said "we are in the consultation phase for development policies in the next five to 10 years, which is very important. Hopefully the report would be a useful source of information, which is reliable for strategic documents, plans and especially later, for the implementations of them".

The workshop is expected to be co-chair by deputy prime minister Hoang Trung Hai and Prof Michael Potter. At the workshop, participants would have the opportunity to join a roundtable discussion with policy makers, business leaders and leading experts of Vietnam and the world on the solutions to improve the national competitiveness.

This report is expected to be done every two years.TBKT

SHIPBUILDING - Vietnam may release report on Vinashin next month

Vietnam plans to release a report by mid-December on the role of senior government officials in the near-collapse of state-run Vietnam Shipbuilding Industry Group, the Thoi Bao Kinh Te Vietnam newspaper said.

The next Central Committee meeting of the ruling Communist Party will begin December 13, the newspaper reported, without saying where it got the information. The findings will be presented before that meeting starts, prime minister Nguyen Tan Dung told lawmakers yesterday in a speech.

National Assembly members have called for officials to be held accountable for deteriorating finances at Vinashin, which accumulated total debts of 86 trillion dong ($4.4 billion). Such public questioning of the Communist Party reflects a push to make Parliament more autonomous.

In yesterday's address Dung said he "takes responsibility for the shortcomings and weaknesses as head of the government."

Vietnamese authorities have arrested at least five people, including the group's former chair, after the shipyard expanded into industries ranging from securities to tourism. The company was "facing the risk of bankruptcy" in June, according to an August 4 government statement.

The government has approved a restructuring plan for Vinashin that includes transferring units to other state-owned companies and reducing its debt by 38 percent.BLOOMBERG

FOREIGN DIRECT INVESTMENT - Spain ready to invest more in VN

Vietnam expects to attract further investment from Spain in energy sector as well as in infrastructure projects that require a large amount of capital, according to an official from the Ministry of Planning and Investment.

Nguyen Thi Bich Van, deputy head of the ministry's Foreign Investment Agency, said investment capital for infrastructure and energy development in Vietnam accounted for one-third of its GDP.

Speaking at the Vietnam-Spain Investment and Business Cooperation Forum held on Tuesday in HCM City, Van noted that capital for those sectors in the next five years would be around $250 billion, with infrastructure accounting for $25billion.

Vietnam and Spain have signed several bilateral agreements that will advance trade and investment, specifically the co-financing of the Metro Line No 5 in Vietnam.

Hi-tech, support industries, infrastructure and human resource development are other areas where the two countries will work together.

Agricultural processing, the industry with a large export ratio, and the environmental and social security sectors are included as well.

Under Decree No 108 issued last year, the government encourages investment in the forms of BOT, BTO and BT which applies to all investors.

Incentives, support and secure investments are offered to investors, such as tax exemptions and reductions in corporate income tax, land rental and imported equipment that is part of fixed assets.

"Vietnam is one of the 15 most attractive countries for foreign investors because of several factors, including speed of market development, integration into regional markets, cheap labour and investment incentives," Van said.

Bilateral trade turnover between the two countries was $1.1 billion last year, and Spain is the seventh largest exporter of Vietnam.

As of October, Spain ranked 58th out of 93 foreign investors in Vietnam, with 17 projects totalling a registered capital of more than $21 million.

The Spanish Ambassador to Vietnam, Fernando Curcio, said that with a high GDP growth rate of more than 6 percent during the economic crisis, Vietnam was one of the countries that had attracted Spanish investors' attention and trust.

Tu Minh Thien, director of the HCM City Investment and Trade Promotion Centre (ITPC), said the export turnover had increased by 30 percent annually.

Of the EU countries, Spain is the main import market for Vietnamese catfish and is a major market for wood and handicraft products.

Vietnamese exports to Spain include seafood, coffee, textiles, shoes, electronic products, cashew, rubber and porcelain products, while it imports machines, chemicals, steel and medicine.

In the near future, the ITPC will focus on providing more information on trade, investment and tourism through organising seminars and cultural weeks in HCM City, Barcelona and Seville.

Business delegations will be organised frequently to survey the two countries' markets and exchange experiences on technology and seek partners.

Fernando Salazar, deputy chair of the Spanish Institute for Foreign Trade, said that HCM City was among the most dynamic cities in Asia.

"Vietnam is quickly becoming a key player in the region; and HCM City and the country will not cease in their efforts to become a highly industrialised, prosperous and modern economy."

Asean-member countries, of which Vietnam is one, are also signing more trade agreements, which will further enhance investment activity.

According to the Organisation for Economic Cooperation and Development, Vietnam is expected to post the highest average growth rate, 7.1 percent, among the six largest Asean economies in the 2011-15 period.

Spain is one of the world's three largest producers of wind energy, together with Germany and the US.

It is also the world's main transportation developer, with six Spanish companies among the top 10 in the world. Their projects include the subway systems of Washington DC and Mexico City, as well as the Sydney, Stockholm and Orlando airports.

"Vietnamese and Spanish companies need to take advantage of the current opportunities that offer our markets and to profit from all the agreements and support mechanisms set up by both governments," Salazar said.

Twenty-six Spanish companies and 150 Vietnamese companies participated in the forum.VNEWS

LOGISTICS/ EUROPE - More opportunities for Vietnamese goods to enter Europe

Vietnamese goods are becoming more competitive as a number of foreign ship liners have recently opened direct cargo transportation routes from Vietnam to Europe.

Following the Israel-based ZIM firm, four other ship liners namely Cosco, K'line, Yangming and Hanjin have added Cai Mep deepwater port in the southern province of Ba Ria-Vung Tau into the list of cargo transshipment terminals in their voyages from Asia to Europe.

Meanwhile, The New, World Alliance and CMA-CGM also plan to select Cai Mep port as an transshipment port for their vessels of between 6,000- 9,000 TEUs.

According to ZIM general director in Asia and the Far East Dan Hoffman, the selection of Cai Mep port instead of a Chinese port as before will help shorten the shipping time from 23 days to 19 days and cut transportation costs by 200-300 USD per container.

At present, several container feeders are speeding up the opening of their transaction offices in Bangkok and use transshipment ports in Vietnam to transport their cargo to Europe and America.VOV

RENEWABLE ENERGIES - Construction on Phu Quy wind power plant officially started

PetroVietnam Power Corp cooperated with EPC contractors in holding the ground-breaking ceremony for Phu Quy wind power plant project in Phu Quy Dist, Binh Thuan province today November 26, 2010.

The new wind power plant with designed capacity of 6MW was sited in two communes of Long Hai and Ngu Phung, Phu Quy Dist, Binh Thuan Province. PetroVietnam Power Corp was the main investor for this project and EPC contractors of Vietnam Electronics and Informatics Corp (VEIC), Viettronics Construction JSC (VIETCT) and Amec Technologies Joint Stock Co.

After being put into operation, the wind power was expected to produce annual power output of 25.391 million KWh, making contribution to the economic development progress in the region. TBKT

INFRASTRUCTURE - Dung Quat Oil Refinery – the lesson for other key projects

The Dung Quat Oil Refinery has operated for six months so it is difficult to appraise its effectiveness right now but according to the government, its shortcomings provide lessons for other national projects.

Minister of Industry and Trade Vu Huy Hoang on November 4 presented a report on the Dung Quat Oil Refinery project before the National Assembly.

The report said that though the construction was nine years behinds schedule and there are some technical errors but it is still a success. Its Shortcomings need to be considered as useful experience for them implementation of other key projects.

This refinery began operating on May 30 2010. At this moment, it is running at full capacity, producing quality products.

By the end of September 2010, the plant processed 5.5 million tonnes of petrol from 6.4 million tonnes of crude oil. It sold around 5.3 million tonnes of petrol to the market, earning over 25 trillion dong ($1.31 billion), paying 3 trillion dong to the state budget.

The evaluation report of the National Assembly's Committee for Science, Technology and Environment also said that after 13 years of construction, the biggest success of this project is that it is running at 100 percent of capacity and makes products that meet the standards of Vietnam and the world.

The plant currently meets around 30 percent of the domestic market's need for petrol, the report says.

However, the plant has been operating for only six months so it is impossible to assess its economic effectiveness accurately. Briefly speaking, the project has brought positive impacts on the Dung Quat Economic Zone in the central province of Quang Ngai.

The project was nine years behind schedule because the government didn't instruct relevant bodies to carry out the project urgently? And due to financial difficulties.

The plant is running at its full capacity but some minor technical errors are not yet fixed. Site clearance, resettlement and compensation must continue.

The assessment report also emphasizes that these matters provide lessons for Vietnam to better carry out other key projects.

The Dung Quat Oil Refinery project was ratified by the National Assembly in December 1997. The plant released the first products on September 22, 2009. The project was checked and taken over on May 29, 2010. Contractor Technip handed over the plant to the investor on May 30 2010.

The total investment capital of this project was estimated at $1.5 billion in 1997. By June 2005, the government raised the capital to $2.501 billion. After that, the investor – the Vietnam Oil and Gas Group – proposed to raise the capital to $3.053 billion. The exact number will be announced in December 2010.VNNET

Oliver Massmann

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