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Oliver Massmann
Rechtsanwalt
General Director – Duane Morris Vietnam LLC
Hanoi Office: 13th Floor, Suite 1307/08 Pacific Place, 83B Ly Thuong Kiet, Hoan Kiem District
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RESOURCES - PPP train slowly gathers steam
VNEconomyNews.com
Vietnam is calling foreign investors to get involved in public-private partnership (PPP) projects, expected to improve the country’s infrastructure network. But more work should be done to ensure PPP’s success, KPMG Vietnam’s Tax Partner and head of infrastructure Do Thi Thu Ha tells VIR.
Many Asian countries consider PPP as one of the best ways to develop their infrastructure and Vietnam is no exception. But unlike other countries such as Singapore, Malaysia and the Philippines, Vietnam is in the very first stage of PPP development. What are the key factors to ensure the success of PPP development here?
Given KPMG’s experience in advising on the implementation of PPPs for jurisdictions as diverse as Australia, Thailand and Singapore, in our view, for PPP to be successfully implemented in a nascent jurisdiction such as Vietnam, the following factors are essential. There needs to be strong will and support for the implementation of PPPs across all levels of government. Furthermore, there needs to be institutional support in the form of a PPP unit that has the responsibility for setting consistent and tested policies and to ensure that procurement processes are adhered to. It is vital that there be sufficient investment in capacity development for relevant line agencies and ministries to ensure that there is sufficient knowledge of PPP amongst procurement officials so that PPPs can be successfully implemented. It is important that there be sufficient due diligence conducted in the selection of pilot projects which should be supported by detailed feasibility studies. A commitment to ensuring that there is a robust pipeline of projects suitable for PPP to encourage the participation of the private sector and clear and consistent procurement processes preferably enshrined in a robust legislative framework.
The Vietnamese government recently issued regulations for piloting PPP projects. Is it the right way to push PPP ahead?
The much anticipated legal framework for PPP, namely Decision 71/2010/Qd-TTg which regulates the conduct of pilot PPP projects certainly indicates the government’s intention in pursuing PPP as a procurement model for national infrastructure. While there are still some issues that will be fleshed out, this represents a very good start. As stated above, we need to stress that the pilot projects must be selected carefully as these will lay the foundation for Vietnam’s PPP policies. It is important that in a nascent PPP environment that there be a degree of flexibility to ensure that relevant laws and regulations are periodically reviewed and refined so that lessons learnt from the pilot projects can be incorporated. We note that this has been addressed in Article 52 of the regulations issued with Decision 71/2010/Qd-TTg. We note that the decision will need to be supplemented by further regulations to clarify issues such as the level of equity contribution and the nature of government guarantees.
To implement a PPP project, the government has to be a stakeholder. Can the Vietnamese government be a stakeholder in a wide range of PPP projects at the same time given the limited state budget?
Under Decision 71/2010/Qd-TTg, this is not explicitly required on the part of the government. However, the decision does contemplate some form of state contribution. The definition thereof in Article 2 specifically prohibits it being contributed as equity.
The decision states that the state contribution is capped at 30 per cent of the total project investment and is to be determined on a case-by-case basis by the prime minister on the advice of the Ministry of Planning and Investment. The injection of state contribution is essentially used to assist in the feasibility of a project. Ultimately, PPP is merely one of a handful of procurement models that can be employed to deliver public infrastructure. It is not a panacea that can be used to implement projects that are not otherwise affordable to the government. In the feasibility study that should underpin any prospective PPP project, the government must ensure that over the long term, a PPP delivery model for a project provides the requisite level of value for money and is affordable.
As KPMG has provided PPP training for Vietnamese government officials, will there be more?
One of the critical factors that will ensure a conducive environment for the implementation of PPPs is ensuring that there is adequate investment in capacity development. KPMG as a firm has been very proud to be afforded the opportunity to share the firm’s experience with the Vietnamese authorities, including the Ministry of Transport, via recent training workshops and seminars. Given KPMG’s international experience in advising various governments in the implementation of PPP policies and the implementation of PPP projects, we are able to share from our experiences and learning from jurisdictions as diverse as the United Kingdom, Australia, South Africa, Singapore and Thailand.
We thus anticipate that our co-operation with the Vietnamese authorities would be on the ongoing basis and we are very keen to support the government in relation to PPP initiatives.
Petrolimex looking to buy 61,000 tonnes of oil for June delivery
Vietbiz24
Petrolimex, or Vietnam National Petroleum Corp has recently said that it is looking to buy 61,000 tones of gasoil containing 0.05 percent sulfur for June delivery, shipped by Petrolimex 11 and Petrolimex 04 tankers through harbors of Singapore, Thailand, Taiwan or China.
Specific deliveries:
Shipment 1: 35,000 tonnes delivered from June 1-5.
Shipment 2: 26,000 tonnes delivered from June 10-14.
Suppliers can register from 12:00 am May 18 to 5:00 pm May 19, 2011.
PetroVietnam Oil Corp (PV Oil) is proposing to sell four million barrels of Bach Ho crude oil for July delivery.
The buyers can register to buy from 13:30 May 19 to May 24. Shipments will have a tonnage of 200,000 to 600,000 barrels.
BUSINESS - Wilbur-Ellis company obtains license to operate as a specialty chemicals and ingredients distributor in Vietnam
ACN Newswire
Effective today, Connell Brothers (Vietnam) Company ("CBC Vietnam"), a subsidiary of Wilbur-Ellis Company, will operate as a fully licensed distributor of specialty industrial chemicals and ingredients in the Vietnam market, allowing the company to expand and simplify its distribution operations for its customers and suppliers. CBC Vietnam services local, regional and multinational customers and suppliers in the following core industries: coatings and inks; plastics and rubber; personal and household care; ingredients for the food processing and beverage industries; construction; ceramics; textiles; water treatment; adhesives; lube oils; animal feed and other industry segments.
CBC Vietnam was granted approval from the Vietnam government to conduct business as a fully licensed distributor, transitioning from a representative office, a status Wilbur-Ellis's Connell Brothers Company Division ("CBC") has held since 1994. CBC was the first United States-based industrial specialty chemicals and ingredients distribution company to re-establish a presence in Vietnam after the U.S. trade embargo was lifted in 1993.
"For several years, we've been committed to servicing customers and suppliers in Vietnam, providing superior specialty chemicals and ingredients sourced from a broad base of suppliers for a wide range of industries," said Ted Eliot, president of CBC. "By investing in Vietnam, we are well-positioned to participate in the tremendous potential of this rapidly growing market by providing a high-standard of services to our customers and suppliers."
As a fully-licensed distributor, CBC Vietnam will provide a high-standard of distribution services for customers and suppliers in the Vietnam market. The license will allow CBC Vietnam to operate its normal, full-service distribution business on a competitive basis throughout Vietnam through its offices in Hanoi and Ho Chi Minh City. Additionally, CBC Vietnam will have full control of product storage and handling to assure customers and suppliers of our high-standards in this service.
About Connell Brothers Company
Connell Brothers Company, based in San Francisco, is a division of Wilbur-Ellis Company and is among the largest international marketers and distributors of specialty chemicals and ingredients in the Pacific Rim. With over 100 years in Asia and a keen focus on technical service, customer support and quality control, CBC provides complete supply chain management from transportation, documentation, warehousing, and sales and distribution through its 36 offices located throughout Asia. For more information, please visit our website at www.connellbrothers.com.
Vinashin casts a shadow
online.wsj.com
Shipbuilder's Failure to Repay Debt Threatens Vietnam's Effort to Attract Investment
Frustration over Vietnamese state-run shipbuilder Vinashin's failure to repay loans it defaulted on last year is intensifying among creditors, potentially jeopardising Vietnam's plans to draw more investment to improve its infrastructure and reduce the bottlenecks that threaten its growth.
The problems at Vinashin point to the risks of investing in what, on the face of it, is one of the world's most attractive emerging markets. Vietnam's Communist-run government built up the firm, formally known as Vietnam Shipbuilding Industry Group, to be a major player in the global shipbuilding market. The entire $750 million proceeds of the country's first sovereign bond were channeled to Vinashin in 2005.
In 2007, the government provided a letter of support for the company to enable it to secure an additional $600 million syndicated loan to make the most of a rapid economic boom in the country.
But when Vinashin defaulted on that debt last December, the government refused to help pay off the debt, which, in an indication of the boom in emerging markets, had been bought by investors around the world. Dozens of financial institutions invested in the loan, including, among others, Standard Chartered PLC, Credit Suisse AG, Depfa Bank PLC and hedge fund Elliott Advisers Ltd
Some of Vinashin's lenders now complain that they have been deceived. For many, the government's letter of support was the only reason they felt sufficiently secure to lend to the company. This month, a group comprising just over half the lenders' group sent a letter to Vietnam's government demanding payment on the first $60 million, which was due in December.
"This was always a government-supported loan as far as the lenders are concerned," one person familiar with the situation told The Wall Street Journal. "Going forward, capital won't go to places where it isn't treated fairly."
Officials with Vinashin and the Vietnamese government didn't respond to requests for comment.
The standoff could pose a significant threat to Vietnam's prospects. The government already is struggling to come to grips with worsening inflation. The increase in Vietnam's consumer price index hit 17.5 percent in April and could reach further peaks in the months to come, complicating the immediate economic outlook for the country.
At the same time, analysts say Vietnam needs to attract more foreign investments to build up overburdened road and rail networks and to build power plants. deputy prime minister Hoang Trung Hai said earlier this month at the annual Asian Development Bank meeting in Hanoi that the country hopes to attract as much as $300 billion in investment and aid to fund an infrastructure effort that he said is needed to push the country onto a more robust growth path.
Some economists say the government is trying to get its macroeconomic policy in order to help revive confidence, setting to one side its customary pro-growth policies to better combat the loss of confidence which inflation can bring.
Vietnam last week scaled back its growth target for the year to 6.5 percent from 7 percent to 7.5 percent in an effort to focus more tightly on restraining credit growth to better contain the inflation rate.
The authorities also are trying to restore faith in their beleaguered currency, the dong, after a series of devaluations wiped off a fifth of the Vietnamese unit's value since mid-2008.
To encourage people to cooperate, black-market trade in US dollars and gold, once tolerated and widespread, has been curtailed in recent months to force people to save and invest in dong instead.
The Vinashin crisis, though, is an ongoing drag on Vietnam's prospects, damaging both its reputation among international lenders and potentially slowing the inflow of foreign investments that have helped drive the country's economy.
Prime minister Nguyen Tan Dung's goal was to turn Vinashin into a powerhouse that would keep the shipbuilding industry in state hands, but the project fell apart when the global economic crisis hit in 2008, leaving Vinashin with around $4.4 billion in debts. The company's order book was slashed, crippling its cash flow. Last summer, police investigators arrested several top officials, including former Chief Executive Pham Thanh Binh, and accused them of falsifying financial statements to mask the true extent of the company's problems.
Moody's Investors Service, Standard & Poor's and Fitch Ratings have all downgraded Vietnam's credit ratings in recent months, in large part because of the problems at Vinashin.
Investors involved in the $600 million syndicated loan say they have been surprised by the unresponsiveness of the Vietnamese government to their concerns. Among other things, the government has transferred some Vinashin units to other state-run enterprises without seeking the approval of the company's creditors.
The government, though, has repeatedly said that Vinashin's debts aren't the state's responsibility, leaving Vinashin's lenders unclear on how to get their money back.
Airis' airport plan gets its wings clipped
VIR
United States-based Airis Holdings LLC' Noi Bai international airport investment proposal has been rejected.
According to the Ministry of Transport (MoT), the project to build a passenger terminal at the airport was handled by Northern Airports Corporation. Construction of the $804 million project will be kicked-off in the third quarter of 2011 and be completed in early 2014.
The project on upgrading the runway was developed by the Civil Aviation Administration of Vietnam (CAAV) which is currently in progress and will be completed in the fourth quarter of 2011.
The project on building a parking area connected to the terminal was also given to CAAV with construction beginning in the fourth quarter of 2011.
These projects will see Noi Bai international airport meet growing development requirements in the next decade.
The Noi Bai redevelopment project was introduced to promote private-public investment (PPP) model in Vietnam's airport infrastructure development in late April 2011.
Accordingly, the airport will cover 3,500 hectares with investment expected to hit $5-6 billion.
The project looks at creating a big airport with a handling capacity of 22 million passengers per year.
The project is designed to be implemented under PPP form with the participation of some domestic and foreign investors as Airis International Holdings LLC, Zurich Airport, HSH Nordbank, German bank KFW, ADB and Vietnam Bank for Investment and Development-BIDV.
New decision may force a lot of car dealers to shut down business
VnExpress
The Ministry of Industry and Trade (MOIT) has unexpectedly released a new decision, requesting car importers to show additional documents for customs procedures. Meanwhile, the documents are believed to be unattainable for many car dealers.
Reasoning the protection of consumers and the road traffic safety, on May 12, MOIT unexpectedly set up new requirements on the import of the cars with less than nine seats. From June 26, the importers of these kinds of cars will have to show the proxies issued by importers or genuine distributors, or the agency contracts issued by manufacturers. All these kinds of products must be legalised by Vietnamese diplomatic agencies in foreign countries. If the documents are copies, they must be stamped and certified.
Besides this, enterprises must show the certificates showing that warranty and maintenance workshops can meet the requirements granted by the Ministry of Transport, to be able to put cars into circulation.
The decision on the required additional procedures was issued several days after the ministry set up similar requirements on alcohol, cosmetics and mobile phone imports.
Car dealers have expressed their worries that the new decision will deal a blow on the import car market and make it more difficult to import cars to Vietnam.
A customs official commented that the decision is a kind of barrier that MOIT has set up in order to restrict the imports of cars, considered a kind of luxurious products which Vietnam does not encourage to import.
"The new regulations do not break WTO commitments, but they will make unauthorised car dealers meet difficulties, because they will not be able to satisfy the requirements on necessary documents," the official said
Director Pham Huu Tam, of Tradoco-a big car import company, noted that the MOIT's decision would force a series of import car companies to shut down business, because they will never get such documents.
According to Tam, to date, companies have been importing cars to Vietnam under the mode of normal procurement contracts. This means that when importing, they do not have to show genuine proxies or agency contracts, because they simply act as the goods buyers. Enterprises themselves do not know where they should contact to get the proxy for distribution. Even if enterprises can get the documents, it will take them a lot of time and money.
Under the current regulations, importers only need to show normal procurement contracts and certificates on registration and imports' quality will be able to put the imports into circulation.
"I believe that only the authorised agencies of the 11 operational automobile joint ventures in Vietnam can have the genuine proxies, or agency contracts, while small car dealers will not have the required documents", he said.
He went on to say that with the new regulations, if enterprises want to import Toyota cars from the US, enterprises must get the agency contracts from Toyota Vietnam. If so, all car import companies will have to become the agents of domestic automobile joint ventures, if they want to maintain their operation.
"With the new decision, the car market will fall into the hands of the members of the Vietnam Automobile Manufacturers' Association VAMA," he said.
Meanwhile, foreign made cars will have to be imported into Vietnam through a narrow door, while many car dealers will have to stop business due to the strict regulations.
"The MOIT's new decision has closed all the doors to car dealers," the owner of a big import car in HCM City commented.
Prior to that, MOIT announced that from June 1, mobile phones can be imported to Vietnam through three seaports, including Hai Phong, Da Nang and HCM City.
Chinese market also 'hungry for Vietnamese goods'
Vietnamnet
China exports big volumes of products to Vietnam every year, but it is also a vast consumption market. Vietnamese enterprises have been urged to find out the ways to boost exports to China.
China needs Vietnam's rubber, cassava and coffee
According to the Ministry of Industry and Trade, there are at least five categories of products China needs to import from Vietnam, including farm produce, high grade wooden furniture, seafood, processed food and consumer goods.
Vietnamese rubber has become famous in China in the last 20 years, despite a lot of ups and downs due to the unstable trade policies of China.
Deputy director of Asia Pacific Market Department under the Ministry of Industry and Trade, Dao Ngoc Chuong said that China has become Vietnam's rubber biggest export market which consumes one billion dollars worth of rubber products a year.
The high demand from China has pushed up the development of Vietnam's rubber processing industry, from the east of the southern region to the northern border provinces. Vietnam's rubber has been not only grown in Vietnam, but also in Laos, Cambodia and Malaysia.
However, according to Chuong, one billion dollars worth of rubber imports from China just can meet 40 percent of China's demand. Rubber is the main input material of the automobile industry and the consumer goods production. Meanwhile, due to the climate and environment disadvantages, China cannot develop growing the rubber itself.
Especially, China now buys tires made in Vietnam instead of importing rubber to make tires domestically. This should be seen as a big opportunity for Vietnam to boost exports to the market.
The second product that the official from China mentions when talking about the trade with China, is sliced cassava. "Vietnam's cassava exports to China have been skyrocketing over the last few years," Chuong said. Vietnam's cassava export turnover was 500 million dollars in 2008-2009, while the figure is expected to reach 700-800 million dollars in 2011.
The energy crisis has forced China to diversify the fuel they use. Besides coal and petroleum, China has to use ethanol petrol which is made of cassava. Therefore, Vietnam believes that the demand for cassava from China is very stably high. The ethanol factories in China, which need 1.5-2 million tonnes of cassava a day, will not develop if they lack cassava.
The Chinese market is also thirsty for tropical fruits from Vietnam. In fact, Vietnam-sourced fruits can be seen only in the southern provinces of China, while they are now available in the central and northern regions.
"Our exports to China still cannot meet the huge demand of Chinese," Chuong said.
Vietnam-made pepper, cashew nuts, and coffee are now much in vogue among Chinese young people, who have changed their habits. When shopping for Tet, people go to supermarkets purchasing dried jackfruit products of Vinamit, cakes made of ground green lentils. Especially, Chinese travellers to Vietnam always purchase coffee to give their relatives as a gift.
Vietnam trying to narrow trade gap with China
Many experts have expressed their worries that when Vietnam would be able to narrow the trade gap with China, if Vietnam has just been relying on farm produce and seafood, which only have small export turnover.
Currently, the exports of these products just can bring 15 percent of total export turnover of Vietnam to China, while the other 55 percent has been relying on material goods and industrial products.
However, of the three groups of products, farm produce remain the group where Vietnam has biggest advantages. The successful export of all products, including the small ones, can also help reduce the trade gap and popularise Vietnamese brands in foreign countries.
A 'Mini China' in the making and how you can profit
internationalliving
Thanks to its low wage costs, an export-driven economic model and a growing middle class - Vietnam is a "mini China" in the making.
Stand on a street corner in Hanoi and sooner or later a Mercedes-Benz, a Porsche or Lexus will glide past. Twenty years ago, this place was all bicycles. Now, it's all scooters and imported cars.
I visited Vietnam in January to get a better handle of the big growth story unfolding there. I stopped by HCM City in the south (still called Saigon by the locals). Then I moved onto the country's capital Hanoi in the north. Signs of growth were everywhere.
There's an infectious energy about Vietnam that you feel as soon as you arrive at the airport. Sure, you have to get past the surly passport officials first; this is still a Communist nation after all. But whatever is left of Ho Chi Minh's vision of a Communist nation has been blended with the relentless hustle of market capitalism.
In downtown Saigon near my hotel, workers were laying the foundation for a $125 million high-rise development. When finished it will include a 231-room, five-star hotel, 120 luxury apartments and a convention centre.
Just behind it stands the 60-story Bitexco Financial Tower, complete with helipad and 16 high-speed elevators. This gleaming glass tower will provide over one million square feet of office space for the rapidly expanding city.
Walk down any street by day in HCM City or Hanoi, and locals will try to sell you something. And after the sun goes down, there are night markets where you can pick up the latest Gucci handbag and Hollywood movies (all copies, of course) at knockdown prices.
The real emerging market superstars are the "pre-emerging markets" - smaller overseas growth markets like Vietnam that remain under most investors' radars and yet are some of the best performers in terms of stock market gains.
Thanks to its low wage costs, an export-driven economic model and a growing middle class - Vietnam is a "mini China" in the making.
Vietnam's economy has grown at an average rate of 7 percent over the last 20 years. To put that in perspective, that's double America's projected growth for this year. The key to Vietnam's success has been a programme of economic reforms known as doi moi (literally "renovation") put in place by the government in 1986.
These ended the attempts to collectivise industrial and agricultural production and allowed private companies a role in the economy.
Since that process, Vietnamese entrepreneurs have created nearly half a million new companies and tens of millions of new jobs. But more reform is now needed for the next phase in Vietnamese economic growth to take root.
Just like its big brother, China, Vietnam needs to move away from its export-led growth model and start to foster greater domestic demand. The problem with the current model is that it relies a great deal on exports of raw materials such as crude oil, rice, coffee and agricultural products. This leaves the economy open to dips in commodities prices.
More emphasis on education levels and human resource training will allow Vietnam to process its raw materials and add extra value to its exports. It will also put more money in the hands of Vietnamese workers and create a healthier domestic economy.
Much of the world is focused on China. But China is a crowded trade right now. And signs of strain are starting to show. China has undertaken a number of measures recently to try to curb inflation, including raising interest rates and cutting back on bank lending. If China continues to struggle, investors will start to look elsewhere for profits. And one of their first ports of call will be Vietnam.
Vietnam's stock market was mostly stagnant in 2010. But it's started off this year with a strong performance, boosted in part by the appointment of a broadly market-friendly trio of leaders at the top of the Communist Party of Vietnam.
Vietnam faces headwinds in the form of increasing inflation rates, downward pressure on the local currency, the dong, and an ongoing debt crisis at large state-owned shipbuilder Vinashin. And in December ratings agency Moody's downgraded Vietnam's sovereign debt rating one notch as a result. But despite the downgrade Vietnam's stock market index has rallied - a strong bullish signal.
The only other two Southeast Asian nations that offer comparable growth prospects to Vietnam are Cambodia and Laos. I visited Cambodia on this recent trip as well and was impressed by the progress this once war torn country has made. But Cambodia doesn't have a stock market yet. And Laos's stock market only has one stock listing.
Vietnam offers one of the strongest growth opportunities in the region.
In the current issue of International Living magazine, I share the easiest way to play Vietnam's growth. It gives you easy exposure to Vietnam at a low cost - and as the Vietnamese economy catches up to its bigger, more sophisticated rivals in the region, the potential is huge.
FINANCE - Central bank successfully purchases $1b: Official
Thoi Bao Kinh Te Saigon
The State Bank of Vietnam (SBV) purchased $1 billion by the end of last week and would continue to buy more dollars this week as well as next week, the local newspaper Thoi Bao Kinh Te Saigon newspaper quoted a SBV official as saying.
According to this official, along with spending a large amount of dong cash to buy the foreign currency, some measures will likely be taken to fight inflation, which is expected by the monetary market.
The State Bank has chosen the time of the lowest exchange rate in the past 3 months to buy US dollars. Last week, sometimes the purchase price of US dollar of credit institutions dropped to below 20,500 dong/US dollar, while the selling price was close to 20,610 dong per dollar.
The selling price of the SBV Transaction Centre remained at the ceiling, but the purchase price had fallen to 20,600 dong per US dollar, lower than the 20,700 dong/US dollar that had been maintained for several weeks before.
The SBV official said that in a bid to neutralise the same amount of money pumped out to buy US dollars, the State Bank may increase the reserve requirement or will issue bonds with the coupon rate of 18-20 percent per year.
SBV may cap the lending rate at 18-19pct: Experts
VnEvonomy
Currently, rumours are rife that the State Bank of Vietnam is preparing two plans on interest rates to submit to the government, according to state-run online newswire VnEconomy.
Plan A is that the State Bank will raise the cap on deposit rate up to about 15.5 - 16.5 percent per year while the lending rates will be fixed at about 18-19 percent per year.
Plan B is abolishing the deposit interest rate ceiling, and fixing the dong interest rates about 18 - 19 percent per year, with credit for production under the direction of the government to save businesses.
Most experts believed that in the present situation, the central bank has no choice, but applies administrative measures to fight inflation.
However, according a female banker, the State Bank should choose the second option, but this plan should be combined with other solutions. Accordingly, it should increase the refinancing rate and rediscount rate higher than its targeted interest rate. For example, if the objectives of the State Bank is to raise interest rates on the market 1 to 16 percent per year, the refinancing rate and rediscount should be pushed up to 18 percent - 19 percent per year.
According to this expert, what commercial banks themselves need to do is have to raise capital in a market 1 and balance the status of capital. So, while not ensuring two above factors and have to apply for refinancing, they must accept the prices that "last sellers" offer, especially in the context of high inflation as presently. And these are barriers to credit institutions pumping this source of capital to the market.
Also, for those banks that are going to "out of breath" because of liquidity problems, the central bank should base on the reality of each bank to refinance them, but should not finance them exceeding 50 percent of their legal capital.
The refinancing must be associated with the legal capital in order to prevent the possibility that commercial banks go bankrupt; then, there is still their legal capital in the State Bank's stock to offset losses due to refinancing risks.
Dutch bank okayed to open representative office in Vietnam
Vietbiz24
The State Bank of Vietnam, the country's central bank on Wednesday released Document No 106/GP-NHNN approving Netherlands' ING Bank N.V, headquartered at Bijlmerplein 888, 1102 MG Amsterdam, to open a representative office in Vietnam.
The office is named ING Bank N.V. - Hanoi Representative Office with the operation time of 5 years.
It has functions as a contact office, marketing research, promoting investment projects of ING Bank N.V. in Vietnam, strengthening and watching implementation of contracts and agreements signed between its parent bank and Vietnamese companies.
The representative office is not allowed to do business and profitable services in Vietnam under any form.
Within 12 months as from being licensed, the office of ING Bank N.V. in Vietnam must finalise all necessary procedures and inaugurate operation. After the deadline without operation, the license will expire.
Vietnam should impose dong lending rate cap
StoxPlus.com
The State Bank of Vietnam should put caps on both dong-denominated lending and deposit interest rates, an analyst with the Lao Dong newspaper said, suggesting that the gap between the two caps should range from 3.5 percent to 5 percent.
The suggestion came after the fact that local lenders still rushed to boost up effective dong deposit interest rates, resulting in high lending interest rates and in turn burdening local enterprises.
Therefore, the lending interest rate cap will help to resolve the race of boosting up interest rates among local lenders, create a better environment for both enterprises and banks and avoid market turmoil.
In order to ensure transaction transparency and increase effectiveness of the lending interest rate cap, the central bank should consistently take 3 measures, he suggested.
Firstly, improving volume and period of discount, refinance loans on Open Market Operations, cap non-term deposit interest rate caps at 3 percent p.a. to improve the banking system's liquidity, resolve the interest rate negotiation between customers and banks, and capital flows around the system.
The SBV should strictly control the credit growth to achieve the inflation-battling goal, while should be available to support liquidity of banks to some extent, let say, 50 percent of their charter capital.
Secondly, enhancing the market's discipline.
The SBV should seriously screen out lenders with weak management capability while still ensure benefits for depositors by applying insurance deposit policies.
Thirdly, implementing suggestions of Construction Ministry about solutions to regulate local property market, avoid speculation and market price manipulation. It's necessary to raise the tax on transferring ownership of property to 5 percent from current 2 percent of total selling value in case purchase/investing price can't be determined.
Effective deposit interest rates have broke the cap to up to 21 percent p.a. when lending interest rates reached 25-27 percent p.a.
Strong cash inflows into Vietnam banking system?
StoxPlus.com
Strong cash flows might have flown into local banking system reflected in the plunge of inter-bank interest rates despite the fact that the State Bank of Vietnam (SBV) net withdrew liquidity on open market operation.
Strong cash flows might have flown into local banking system reflected in the plunge of inter-bank interest rates despite the fact that the State Bank of Vietnam (SBV) net withdrew liquidity on open market operation, according to Thang Long Securities (TLS).
TLS thinks of two main reasons for the cash inflows into local banks:
Firstly, the central bank might have taken advantage of high supply to buy dollars which helped to increase the dong s liquidity from the banking system.
TLS quoted Asian Development Bank's statistics that by the end of 2010, Vietnam's forex reserves were estimated at $12.4billion, or 1.9 months of import, adding that the SBV should buy $6.6 billion worth of dollars (VND135 trillion) to reach a safe level of forex reserves of 12 weeks of import,
TLS noted that "the SBV will gradually buy dollars to ensure the dollar exchange rate to remain stable and withdraw cash on OMO at the same time to prevent too much dong liquidity".
Secondly, inter-bank interest rates were previously higher than actual deposit interest rates, forcing many local lenders to withdraw deposits at their subsidiaries which boosted up cash amount at these banks.
This may also explain why deposits of organisations plunged in April, causing deposit growth of the whole banking system was negative, TLS said.
Massive deposit withdrawals helped to raise dong deposits at withdrawing banks yet caused withdrawn lenders to fall short of liquidity and will likely boost up dong deposit interest rates further.
In turn, when inter-bank interest rates are much lower than deposit interest rates in the money market, many banks will deposit money to others via their subsidiaries and result in higher inter-bank interest rates. This regime helped to ensure a reasonable gap between the two interest rates.
"We expect low inter-bank interest rates will remain for a short run and the SBV will continue to withdraw on OMO. The central bank's move to raise refinance rate to 15 percent from 14 percent was in line with the tightening monetary policy", TLS report read.
Last week, the central bank net withdrew VND 2.458trillion on open market operations for the second straight week. Meanwhile, inter-bank interest rates plunged in which overnight interest rates fell to 14 percent p.a. from 20 percent p.a.
Bidv increases US dollar buying price by 130 dong May 19
Vietbiz24
Vietnam Commercial Joint Stock Bank for Foreign Trade (Vietcombank-VCB) today Thursday (May 19) also adjusted the US dollar price up 50 dong in both buying-selling prices. The interbank forex rate remained unchanged for the third consecutive day.
Particularly, the interbank average forex rate today announced by the State Bank of Vietnam (SBV) was unchanged from yesterday at 20,673 dong/US dollar. This is the third straight day in week the interbank forex rate has remained unchanged.
The forex rate ceiling-floor today continued to be maintained at 20,880-20,466 dong/US dollar.
Vietcombank today adjusted the US dollar price up 50 dong in both buying and selling price from yesterday to 20,700-20,800 dong/US dollar. The difference with the forex rate ceiling was narrowed to 30 dong.
Bank for Investment and Development of Vietnam (Bidv) also raised the US dollar buying price by 130 dong and US dollar selling price by 50 dong to list at 20,710-20,850 dong.
Vietnam Export Import Commercial Joint Stock Bank (Eximbank-EIB) kept the US dollar buying price unchanged whereas reduced the US dollar selling price by 20 dong to list at 20,650-20,800 dong/US dollar. The difference with the forex rate ceiling is at 80 dong.
Meanwhile, Vietnam Commercial Joint Stock Bank for Industry and Trade (VietinBank-CTG) increased the US dollar buying price by 20 dong and kept the US dollar selling price unchanged to list at 20,620-20,800 dong/US dollar.
ECONOMY - Vietnam 'strikes rising' as inflation soars
AFP
The number of strikes in Vietnam is soaring, official media said Wednesday, as workers in the communist nation struggle to cope with one of the world's highest rates of inflation.
In the first three months of this year there were 220 work stoppages, compared with 216 for all of 2010, Vietnam News quoted a senior labour leader as saying.
Mai Duc Chinh, the deputy director of the state-controlled Vietnam general Confederation of Labour, said workers' wages had not kept pace with rising prices.
"They therefore require a pay rise and more allowances, such as help with their lunch and travelling costs," Chinh was quoted as saying.
In principle, workers need permission before going on strike in Vietnam, where all unions are state-controlled (AFP/File, Ian Timberlake)
In principle, workers need permission 20 days ahead of time before going on strike in Vietnam, where all unions are state-controlled.
According to government figures late last year the average monthly income in Vietnam was 1,365,000 dong ($65).
Official estimates put April's inflation figure at 17.51 percent compared with the same month a year earlier.
Vietnam "has one of the top five inflation rates in the world," the outgoing United Nations chief in Vietnam, John Hendra, said last week.
"It will increase the poverty rate. Whether it's one or two percent or more, we'll have to see."
The communist government, which said fighting inflation is its top priority, has tightened monetary policy and set a series of targets to help stabilise an economy facing challenges including a struggling currency and a trade deficit.
Hendra said the government is clearly focused in its inflation-fighting efforts, a commitment that must be maintained and implemented rigorously.
Hanoi's May CPI soars 1.76pct m-o-m
NDHMoney
Hanoi's CPI (consumer price index) in May soared 1.76 percent from the previous month, Hanoi Statistical Office (HSO) reported officially.
Therefore, the capital city's CPI in May surged 19.08 percent over the same period last year and rose 11.59 percent from last December.
Thus, after accelerating 3 percent in April, the capital city's general price increase has slowed down. This is also the lowest CPI rise in four recent months.
Looking at overall goods groups, the 1.76 percent rise in May was the resonance from the increase in price of 10 out of 11 key items in the commodities basket to calculate the CPI, only the group of post and telecommunication saw a fall to 1.73 percent in month.
The strongest rise was seen in the group of restaurant and catering services, housing, building materials and transport.
The adjustment on gas retail price of petro dealers on May 1 and 11 with a rise of 32,000-34,000 dong per 12kg cylinder was the main factor causing the rise of 2.99 percent for the group of housing and building materials.
Restaurant and catering services soared 2.25 percent driven by the rice price.
In May, the group of food also surged 2.2 percent.
The increasing price of food and foodstuff was still the main reason causing the surge of 2.81 percent for the restaurant group.
The next group of restaurant and catering services and transportation saw the second highest rise at 2.23 percent from the previous month. This increase was explained by the impacts from the surge in gasoline prices last month.
Especially in the month, the state adjustment on minimum salary from May 1, 2011 also made a significant increase for health insurance group, contributing to the rise of 2.01 percent of the groups of other goods and services.
Apart from the main groups with the strongest surges, the price of other commodities still remaining stable at high levels has made the city's general price level in May increase quite high compared to May of recent years.
In May, the gold price in Hanoi saw a rise of 1.62 percent month on month while the US dollar price has declined 0.75 percent m-o-m.
Time to go long Vietnam with VNM?
seekingalpha
Vietnam briefly slipped into the headlines this week with yet another interest rate increase, bringing its refinancing rate to 15.00 percent (up 100bps).
Vietnam briefly slipped into the headlines this week with yet another interest rate increase, bringing its refinancing rate to 15.00 percent (up 100bps). The move follows a series of 100 basis point increases in interest rates and is driven by a surge in prices, with annual inflation reaching 17.5 percent in April.
These events rightfully bring into focus the merits of investing in this emerging (or frontier?) market, at least in the short term, but also in view of the longer term prospects. Thus, this article provides a review of the macro-economic conditions in Vietnam, as well as a brief overview of Vietnam investments.
Perhaps the most important graph is this first one, with interest rates spiking as inflation threatens to spiral out of control. This is the part where you quickly come to the conclusion that investing in Vietnam in the short term may not be ideal due to the overheating risks. As inflation climbs to such high levels, there is a risk that the price spike hurts economic growth by breaking business models that are sensitive to a rise in prices; at the margin, there are geopolitical risks from consumer dissatisfaction with rising prices. Then of course there are the policy risks: When you drive up interest rates too high, you're basically operating on the premise of forcing a recession in order to pull price pressures back.
Yet GDP growth has remained relatively robust over the years. The 2008 commodity bull market spurred a similar course of events, but even with the global recession, annual GDP growth didn't take too much of a hit. The green line represents IMF forecasts; over the long term, Vietnam's economy probably will chug along at a pace of around 5-7 percent, which is not bad.
The key in the short term is for the State Bank of Vietnam to actually go ahead and make the tough calls to get inflation under control. I don't need to reiterate the damage that high rates of inflation can do, but it is worth highlighting Vietnam's history when it was hit with a nasty bout of hyperinflation during the '80s. Even during the commodities bubble in 2008, inflation got above 20 percent. Inflation and/or overheating is something to watch in the short-term, and will be dependent on the Bank's actions as well as the extent to which commodities prices globally begin to moderate.
In terms of GDP per capita, Vietnam has been on a consistent upward parabolic trend. This is a good thing, as higher GDP per capita tends to make countries targets for global companies and can increase the pace of development through bringing in investment and creating jobs.
This highlights an area where Vietnam is frequently mentioned: Cheap labour. Looking at the chart below, Vietnam is consistently adding a million or so people a year to its population, which is good for cheap labour as a competitive advantage line. But the unemployment rate (as a portion of total population) has tracked down somewhat over time, which, paired with rising inflation, may erode the often short-term opportunity of being a low cost producer. That's not to say it can't be done, but you need to be aware that there are risks to that strategy.
Part of the challenge to Vietnam being a low cost producer is its steadily depreciating currency (the dong). While making exports competitive in terms of price, it also has the effect of making imported inputs to production more expensive. It has also in part contributed to an almost constant current account deficit, which may be a source of risk or vulnerability for the economy.
Geographically, Vietnam is well placed to be a potential supplier of low cost production to the star of low cost production, China. Indeed, Vietnam shares many similarities with China, i.e. transitioning from a central-planning, SOE-centric model to a more growth oriented and market economy.
Overall, it seems that Vietnam has the conditions that give it strong long-term growth potential. But it has a long way to go in terms of "catch-up" (e.g., income and wealth levels) and with infrastructure demands. Vietnam has the opportunity to capitalise on its large population base and low-valued currency to carve out some global trade market share, much like the China model of economic expansion and transformation. But there are execution risks to this strategy, and there are also short-term risks like the current surge in inflation. So in summary, I would say that Vietnam is certainly worth a look, but it requires a decent risk premium.
In terms of gaining investment exposure to Vietnam, the primary mode is through the ETF Market Vectors Vietnam (VNM). VNM aims "to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Vietnam Index." It has a slight mid-cap value bias in terms of holdings.
Aside from that, there is a handful of companies trading on the pinksheets, but as noted, Vietnam still has a large proportion of state-owned enterprises. Other alternatives would be to look at non-listed investments such as mutual funds or even specialist private equity funds, if such vehicles are appropriate for your portfolio.
Speculators, bureaucracy add to real estate market malaise
VNS
Vietnam Real Estate Association general secretary Nguyen Van Minh spoke about problems in the administration of real estate trading services.
Do you agree that real estate trading regulations still have many limitations?
The real estate sector is regulated by many laws including the Civil Code, laws on Land, Construction, Investment, Bidding, Housing, the Environment plus regulations relating to taxes and finance. The laws have created a relatively systematic framework on managing real estate trade and investment.
However, the management of real estate trading services is still limited as, so far, it is solely regulated by the law on real estate business. Real estate trading floors operate inconsistently, leading to a lack of transparency and difficulties for customers to access market information. There is also a lack of control over real estate brokers. Any broker or brokerage can impose brokering or consultation fees.
Although the ministries of Construction and Justice issued contract forms for housing and land transactions, a majority of investors compile their own contracts with contents favourable to them and their clients usually suffer losses in cases where conflict occurs. This not only makes the issuing of such documents a waste of time, labour and money but also affects the healthiness of market.
What is the biggest difficulty that the real estate businesses currently face?
The biggest issue is how to determine land prices. In fact, procedures for land price determination are overly complicated. This means investors have to hire independent qualified agencies to assess the value of land. Thanks to these assessments, a provincial council responsible for assessing land prices will decide what price to impose, and this can be relatively close to the market price. However, the councils in many provinces use the assessment for reference only. So, the independent assessment is not used effectively, while investors are forced to pay the value determined, no matter how unrealistic. Moreover, it usually takes authorities between one to three months to decide land prices after receiving an independent assessment. This leaves investors waiting and inflates project input costs.
Planning is always the first steps in any property development project. However, do you think it has yet to receive enough attention?
At present, almost all the provinces and cities have their master development plans approved, but the number of approved detailed plans remain modest. So, when investing in any project, the businesses have to undergo that very first stage of planning, which is exactly the same process as undertaken for unplanned areas. Additionally, bidding and auctions for land use rights are not really transparent, plus each locality requires different procedures, causing difficulties to businesses.
Many people are concerned about the fact that although housing prices and housing demand in urban areas are both on the rise, many houses remain unused. In your opinion, what is the cause of this situation?
As the mass media has reported, people buy houses not for residential purposes but for speculation. In addition, the shortcomings in legal procedures have also contributed to the situation. Although functional authorities pass regulations on management to every new urban area and housing project, few investors hand over the projects for localities to manage.
Moreover, the regulations do not mention a due date for the hand-over, nor outline fines for late completion. As the results, there are a large number of unused houses in new urban areas including those that have remained empty for 5-7 years.
Can you suggest some solutions for the current real estate market?
To solve the problem, it is necessary to take measures such as mapping out a national strategy on urban planning and development to 2030 and publicise the planning scheme so that localities complete detailed planning for particular sectors. In addition, relevant policies such as administrative reform, and the issuance of property-use rights certificates would help, combined with the construction of a real estate database that facilitates land price assessments and makes the information public.
Realty conference spotlights recreation investment
Vietnamplus
The Vietnam International Real Estate Connection Conference and Exhibition 2011, the sixth of its kind, will open in HCM City on May 19.
General director Nguyen Xuan Tra Mi of G4B company, a participant at VIREC 2011 said the conference will discuss the world's recreation investment models, key factors for the success of entertainment investments and recreation investment forms in Vietnam.
General director of the Vietnam National Administration of Tourism said that VIREC 2011 entitled "Modern entertainment investment inspires the next development" is in line with the orientation of the national tourism development strategy for 2020 and vision 2030.
He highlighted the significance of VIREC 2011 event, saying that it aims to assist and provide consultancy to the country's entertainment industry along with helping raise the society and investors' awareness in the field.
City realty conference puts spotlight on entertainment projects
SGGP
The 2011 Vietnam International Real Estate Connection workshop, set for May 20 in HCM City, will focus on investment into entertainment, the organisers said.
The full-day conference will take place at the Rex Hotel with theme "Modern Entertainment Investment Inspires the Next Development," said Nguyen Xuan Tra Mi, general director of Great For Business Co.
The HCM City-based company and the Vietnam Real Estate Association co-organise the event, expected to see foreign guest speakers from international realty developers such as Forrec from Canada, Polin Waterparks & Pool Systems from Turkey, Singapore's Sanderson Group, Leisure Entertainment Company Worldwide from the US, and India's Premierworld Technology, according to the organisers.
Mi said that Vietnam's Ministry of Construction, Ministry of Planning and Investment, Ministry of Culture, Sports and Tourism, and the National Administration of Tourism considered the conference a major event in providing "practical support and consultancy for the entertainment industry."
What are seen as highly potential projects in Vietnam will be introduced during the conference.
Among the participants will be Nguyen Tran Nam, vice minister of Construction, Nguyen Van Tuan, chief of the Vietnam National Administration of Tourism, and Nguyen The Hung, deputy director of the Foreign Investment Office for the South (Ministry of Planning and Investment).
A welcome dinner will be held at Hotel Liberty 6 in District 1 as the first connection between international experts and Vietnamese stakeholders, Mi added.
INFRASTRUCTURE - HCM City cuts construction investment projects
Vietbiz24
HCM City municipal government has controlled closely its budgetary spending for basic construction investment and focused capital on transitional projects, major works for targeted completion within 2011 under the government's Resolution No 11/NQ-CP.
In first phase, the city checked the usage and withdrawal of advanced capital of ground clearance compensation units with total advanced and transferred capital of 308 billion dong. 212 billion dong planned for spending on purchasing new cars and assets was suspended, according to Thai Van Re, director of HCM City Department of Planning and Investment.
The city also proposed to cut capital of 453.2 billion dong in 95 projects, including suspending 15 projects with cut amount of 37.9 billion dong, extending progress of 80 projects.
The department also is checking the progress of projects to consider capital transfer for transitional projects that could be finished in 2011. Projects using foreign aids and other urgent projects are needed to be added with 1.944 trillion dong in the location.
Investors propose to kick off 115 new projects with extra capital of 1.123 trillion dong, 59 others to be conducted with proposed amount of 315 billion dong, 562 projects under investment preparation with 216 billion dong proposed to be supplemented.
In order to provide resettlement area for major projects, the city ordered to invest and build Vinh Loc B area with total area of 30.9 hectares; 45 apartment blocks, 1,939 flats and 531 associated apartments. The project has finished in first phase with 940 flats and 290 associated apartments.
Hanoi to spend nearly 630b dong on building three overpasses
Vietbiz24
These flyovers will be built at three traffic intersections of Lang Ha-Thai Ha, Le Van Luong-Lang Street, and Chua Boc-Tay Son.
Hanoi People's Committee has written terms approved a layout plan to invest in three urgent transportation projects invested by the Hanoi Department of Transportation.
The project to build overpass at Le Van Luong-Lang Street with a total length of 281 meters has total investment of nearly 228 billion dong.
The second one to build Lang Ha-Thai Ha with 800 meters length has a total capital of 222 billion dong.
The last one with total length of 227 meters will cost over 179 billion dong.
PROPERTY - City realty conference puts spotlight on entertainment projects
SGGP
The 2011 Vietnam International Real Estate Connection workshop, set for May 20 in HCM City, will focus on investment into entertainment, the organisers said.
The full-day conference will take place at the Rex Hotel with theme "Modern Entertainment Investment Inspires the Next Development," said Nguyen Xuan Tra Mi, general director of Great For Business Co.
The HCM City-based company and the Vietnam Real Estate Association co-organise the event, expected to see foreign guest speakers from international realty developers such as Forrec from Canada, Polin Waterparks & Pool Systems from Turkey, Singapore's Sanderson Group, Leisure Entertainment Company Worldwide from the US, and India's Premierworld Technology, according to the organisers.
Mi said that Vietnam's Ministry of Construction, Ministry of Planning and Investment, Ministry of Culture, Sports and Tourism, and the National Administration of Tourism considered the conference a major event in providing "practical support and consultancy for the entertainment industry."
What are seen as highly potential projects in Vietnam will be introduced during the conference.
Among the participants will be Nguyen Tran Nam, vice minister of Construction, Nguyen Van Tuan, chief of the Vietnam National Administration of Tourism, and Nguyen The Hung, deputy director of the Foreign Investment Office for the South (Ministry of Planning and Investment).
A welcome dinner will be held at Hotel Liberty 6 in District 1 as the first connection between international experts and Vietnamese stakeholders, Mi added.
Plan to sell government guest house raises concern
Tuoitre News
The Ministry of Finance's decision to allow the Ministry of Foreign Affairs to auction off the government Guest House in HCM City to raise funds for other projects is making local residents and architects worry.
Under the plan, the HCM City People's Committee will soon decide a starting price for investors to bid for the right to use the 3.5-ha guest house, located at No. 1 on Ly Thai To Street in District 10 or what is considered a "golden spot" in HCM City.
Despite the monetary benefit of selling the old French-style villa, many are worried lest it should be turned to trade centers or modern apartments and thus lose its historical and architectural values.
Architect Le Quang Ninh for instance said for whatever economic purpose it should serve, this villa, and several others like it throughout Saigon, reflects a great architectural style typical of pre-1975 Saigon and should thus be preserved.
Researcher Nguyen Dinh Dau agreed.
Dau said this villa lies within a group of green and low-rise landscapes including the Saigon Zoo, Le Duan Street, Reunification Palace, and the area from Nguyen Thi Minh Khai Street to Ly Thai To Street that were built by the French to attract winds from the eastern seas to cool down the Sai Gon - Cho Lon residential areas.
Ninh suggests the best way to use this villa should be to turn it into a five-star restaurant for tourists.
By doing so, both monetary and architectural interests can be served, he said.
Nguyen Thanh Quy, a senior resident in Ward 1, District 10, said the government should not destroy old villas to build modern apartments.
"The old trees in these villas are like the city's lungs," Quy said. "If they are destroyed, billions of dongs can't buy them back."
Capitaland invests in $70m apartment project in HCM City
CafeF
CapitaValue Homes, a member of CapitaLand, has recently signed a joint venture agreement with Khang Dien Co to invest in 974 apartment project worth $70 million in HCM City.
The project is built on an area of 29,000 square metres in district 2, HCM City, near HCM City-Long Thanh highway in Binh Trung Dong ward.
This is also the sixth housing development project of CapitaLand in Vietnam.
Totally, with six projects, CapitaLand has provided over 5,500 apartments for housing market in Hanoi and HCM City.
First low-cost housing project to be commenced in Hung Yen
Vietbiz24
P.H Investment Group Investment Joint Stock Co is projecting to build 856 apartments for nearly 3,500 low-income earners in Bac Hung Yen urban area, Hung Yen province, the local newswire VnExpress reported on May 14.
Total construction area is projected on 30,000 square meters including seven 9-storey blocks. In which, first 2 stories are designed for garage and public spaces such as service shops, mini supermarkets and flats.
Housing area, from the third floor, is 19,000 sqm.
This is the first low-cost housing project in Hung Yen. It is expected to be kicked off on May 18 and handed over after 36 months of construction.
ENERGY - Over $6.62m to promote energy efficiency
Vietbiz24
Deputy minister of Industry and Trade, Hoang Quoc Vuong, and Patrick J. Gilabert, chief representative from United Nations Industrial Development Organisation (UNIDO) in Vietnam, on May 18 in Hanoi, signed a cooperation agreement to carry out a project "Promoting energy efficiency in industry through energy system optimisation and management standards in Vietnam" funded by the Global Environment Facility (GEF).
The project has been started since May 2011 with a duration of three and a half years and the coordination of the Ministry of Industry and Trade's Office of Energy Efficiency. The total cost of the project is $6.625 million.
According to deputy minister Hoang Quoc Vuong, the project's purpose is to promote energy efficiency in industry through accessing the energy system optimisation and management standards ISO 50001.
In the National Target Programme on Energy Saving in Vietnam in 2011-2015 period, the country has set out energy saving target of 5-8 percent.
Patrick J. Gilabert said Vietnam has the relative high coefficient of energy use compared to other developing countries. However, industrial businesses have not known much about energy saving system optimisation, so efficiency saving is not high. According to Patrick J. Gilabert, depending on each optimisation system, the energy savings can be up to 25 percent.
Initially, participants will include producers, suppliers and distributors of equipments, the energy service providers and consultants and policymakers.
The industries receive supports from this project are food processing, textiles, rubber, paper and pulp. In addition, the project will train 10 national experts on energy management and delivery capabilities for businesses with the introduction of ISO 50001 standard and supply of the necessary incentives for enterprises to improve energy use efficiency.
Electricity prices floated on market base from July 1
Vietbiz24
The competitive electricity market will be run in two phases: trial and official operation.
In which, the pilot operation phase will start from July 1, 2011 and the latter will be conducted from 2012 to the end of 2014, the VnExpress reported on May 18, citing the announcement of Ministry of Industry and Trade.
For the first phase, the electricity sector will spend first 2 months to pilot virtual market where will run according to the market regime under book entry. Following 4-5 months will be spent on overall pilot according to input costs.
The average electricity price currently is 5.9 cent per kWh lower than the real cost so that the government has to offset losses, which hampered investors' interest in electricity generation.
So, when the electricity price is floated on market base, four basic stages such as generation, transmission, surcharge and distribution will be separated. In line with the method of progressive electricity price at this time, first 50 kWh is supported with an amount of equaling to 30,000 dong per month applied on poor households.
Talking to the press meeting on May 18, Chair of Electricity of Vietnam (EVN), Dao Van Hung said that the firm would pilot the competitive prices within June in the sector only. And then the trial will be launched in three regions: North, Central and South.
According to the competitive electricity market roadmap as approved by the government, the gap between two price adjustments is maximum 3 months. Monthly EVN will give a watchdog on the change in input costs to build electricity selling price.
When the basic price decreases 5 percent against current prices, EVN is allowed to adjust a respective reduction and then report to joint ministries of finance, industry and trade. And vice versa, if input costs surge 5 percent, EVN can propose a respective increase.
Water supply project in central to cost 2tr dong
Vietbiz24
The nearly 24 hectare project is expected to start construction in Q4 2011.
People's Committee of Quang Ngai province has recently granted investment license for Tra Bong water supply project capitalised at over 1.96 trillion dong invested by Anh Phat Construction Joint Stock Co.
The nearly 24 hectare project is expected to begin construction in Q4 this year in three communities of Binh Hiep, Binh Long and Binh Chuong, Binh Son district in the central province of Quang Ngai.
This public water supply has a total capacity of 100,000 cubic meters per day and night, meeting the demand on clean water for the region.
GOVERNANCE - Vietnamese general visits Indonesia
VNS
Vietnamese Defence minister general Phung Quang Thanh started an official friendship visit to Indonesia Monday at the invitation of his Indonesian counterpart, Purnomo Yusgiantoro.
General Thanh is accompanied by a number of high ranking officers in the visit, which is to close on May 18.
Following the Indonesia visit, the Vietnamese military officers will attend the Asean Defence ministers' Meeting.
LEGAL NEWS - Vietnam restricts car imports with new paperwork
Thanh Nien
The Ministry of Industry and Trade, in an unexpected move, has announced a new rule requiring car importers to show proof that they are authorised dealers of the foreign carmakers they buy from.
News website VnExpress reported Monday that the rule, coming into effect on June 26, applies to new cars of less than nine seats.
Importers must submit to the authorities documents showing that they have been authorised by foreign auto companies to sell the cars in Vietnam. The documents have to be verified by Vietnamese diplomatic representatives.
In addition, importers need to have qualified customer service facilities in Vietnam before being allowed to bring foreign cars into the country, according to the new rule.
VnExpress cited a customs officer as saying that the regulation was a trade barrier that aimed to help reduce Vietnam's trade deficit. "Unauthorised car dealers will find it difficult providing the required documents," he said.
Pham Huu Tam, director of car trader Tradoco, said there are 11 auto joint-ventures in Vietnam, and they are the only ones that have the required authorisation documents. Small importers will have to shut down their business unless they become sales agents for the joint-ventures, he said.
An unnamed car dealer said the new rule is a tricky one for importers because it means the entire car market is being handed over to members of the Vietnam Automobile Manufacturers' Association (VAMA).
Vietnam imported 10,956 cars worth nearly $190 million between January and April this year. Of these, cars of less than nine seats accounted for 7,000 units.
During the same period, 37,305 cars assembled by VAMA members were sold nationwide.
Ministry tightens procedures for auto imports
VNS
The Ministry of Industry and Trade has introduced new regulations for imported cars with under nine seats in a move one official says is to reduce trade deficits.
Under the new regulations, traders must now prove they are authorised sales agents by showing a letter of authority.
These papers must be legally certified by a diplomatic mission of Vietnam abroad.
In addition, car dealers must show certificates of car maintenance from eligible car repair shops granted by the Ministry of Transport to be allowed to put cars on the market.
The regulation will come into effect on June 26.
Domestic car dealers are worried that the new regulations will have a negative impact on the imported car market.
One custom official said the regulations were being imposed as a technical barrier to unauthorised car trading to curb the nation's trade deficit without violating WTO commitments.
Nguyen Trong Hung, from Auto-GP car dealership in Hanoi said the regulation would make it difficult for car traders and many would close down.
Pham Huu Tam, of Tradoco car importers, said many dealers would find it difficult to get the required papers.
Tam said that until now cars had been imported on regular sales contracts without letters of authority, which would cost time and money.
Vietnam had 11 joint-venture automobile companies, Tam said
Only genuine sales agents among these companies, whose parent companies are also owners of major brands that importers are seeking, would have letters of authority or authorised sales agents certificates. Other car dealers might not have access to the papers as the joint ventures will act to protect their interest.
An owner of a car import company in HCM City said the new regulations would close the door on imported cars.
To minimise the imports of new vehicles, the general Department of Customs has asked importers to show proof of quality control, technical safety and environmental protection issued by Vietnam Register Administration.
GOVERNANCE - Vietnamese general visits Indonesia
VNS
Vietnamese Defence minister general Phung Quang Thanh started an official friendship visit to Indonesia Monday at the invitation of his Indonesian counterpart, Purnomo Yusgiantoro.
General Thanh is accompanied by a number of high ranking officers in the visit, which is to close on May 18.
Following the Indonesia visit, the Vietnamese military officers will attend the Asean Defence ministers' Meeting.
LEGAL NEWS - Vietnam restricts car imports with new paperwork
Thanh Nien
The Ministry of Industry and Trade, in an unexpected move, has announced a new rule requiring car importers to show proof that they are authorised dealers of the foreign carmakers they buy from.
News website VnExpress reported Monday that the rule, coming into effect on June 26, applies to new cars of less than nine seats.
Importers must submit to the authorities documents showing that they have been authorised by foreign auto companies to sell the cars in Vietnam. The documents have to be verified by Vietnamese diplomatic representatives.
In addition, importers need to have qualified customer service facilities in Vietnam before being allowed to bring foreign cars into the country, according to the new rule.
VnExpress cited a customs officer as saying that the regulation was a trade barrier that aimed to help reduce Vietnam's trade deficit. "Unauthorised car dealers will find it difficult providing the required documents," he said.
Pham Huu Tam, director of car trader Tradoco, said there are 11 auto joint-ventures in Vietnam, and they are the only ones that have the required authorisation documents. Small importers will have to shut down their business unless they become sales agents for the joint-ventures, he said.
An unnamed car dealer said the new rule is a tricky one for importers because it means the entire car market is being handed over to members of the Vietnam Automobile Manufacturers' Association (VAMA).
Vietnam imported 10,956 cars worth nearly $190 million between January and April this year. Of these, cars of less than nine seats accounted for 7,000 units.
During the same period, 37,305 cars assembled by VAMA members were sold nationwide.
Ministry tightens procedures for auto imports
VNS
The Ministry of Industry and Trade has introduced new regulations for imported cars with under nine seats in a move one official says is to reduce trade deficits.
Under the new regulations, traders must now prove they are authorised sales agents by showing a letter of authority.
These papers must be legally certified by a diplomatic mission of Vietnam abroad.
In addition, car dealers must show certificates of car maintenance from eligible car repair shops granted by the Ministry of Transport to be allowed to put cars on the market.
The regulation will come into effect on June 26.
Domestic car dealers are worried that the new regulations will have a negative impact on the imported car market.
One custom official said the regulations were being imposed as a technical barrier to unauthorised car trading to curb the nation's trade deficit without violating WTO commitments.
Nguyen Trong Hung, from Auto-GP car dealership in Hanoi said the regulation would make it difficult for car traders and many would close down.
Pham Huu Tam, of Tradoco car importers, said many dealers would find it difficult to get the required papers.
Tam said that until now cars had been imported on regular sales contracts without letters of authority, which would cost time and money.
Vietnam had 11 joint-venture automobile companies, Tam said
Only genuine sales agents among these companies, whose parent companies are also owners of major brands that importers are seeking, would have letters of authority or authorised sales agents certificates. Other car dealers might not have access to the papers as the joint ventures will act to protect their interest.
An owner of a car import company in HCM City said the new regulations would close the door on imported cars.
To minimise the imports of new vehicles, the general Department of Customs has asked importers to show proof of quality control, technical safety and environmental protection issued by Vietnam Register Administration.
Vietnam tightens control over cell phone, wine imports
Thanh Nien
The Ministry of Industry and Trade has announced a new rule requiring all cell phone, wine and beauty product imports to go through one of three major seaports in Hai Phong, Da Nang and HCM City.
The new regulation, effective June 1, means importers are no longer allowed to bring these products into Vietnam by air or land. The ministry said the move is part of efforts to fight trade fraud and protect local consumers from counterfeits.
News website VnExpress Thursday cited importers as saying that most of the products are now imported by air because it's more convenient, compared to sea shipments. They said the new rule will be a major barrier, making it difficult to import the goods.
An unnamed importer said it would take 30-45 days for a container ship to arrive while transporting goods by air takes no more than a week. Besides, it would be a waste of money if importers cannot fill up a whole container on a ship, he added.
Cell phones, wines and beauty products, along with tobacco and cars, are placed on a restricted list. Imports of this group alone, between January and April, surged 17.4 percent from a year ago to $2.03 billion, according to the Ministry of Industry and Trade.
Draft Circular: Insiders cannot register to buy and sell shares at same time
StoxPlus
A draft circular on information disclosure regulated that insiders are not allowed to register to buy and sell shares in the same period of time.
The Ministry of Finance has released a draft circular on information disclosure to take opinions from stock market members. The new circular added clause 5, article 30 governing that insiders are not allowed registering to buy and sell shares in the same period of time and can only register for next plan when they have reported the completion of previous transaction, the state-run online newspaper VnEconomy reported May 11.
The new circular came out after a series of major shareholders, insiders, and even institutional investors registered to buy and sell big volume of shares in the same period of time, and the final results of one-way trade (buy or sell only) or very small volume transactions with unclear reasons such as "unwanted market prices" or no reasons at all.
Insiders registering to trade shares are popular, here are few examples: Pham Anh Duong, chair & CEO of Anphat Plastic and Green Environment JSC (AAA) registered to sell 450,000 shares and to buy 500,000 shares from March 17 to May 16 with the final result of selling 450,000 shares out of his holding of 1,113,900 units and he continued to register to buy 300,000 shares and to sell 210,150 units from May 9 to July 5.
Another example is Market Vectors ETF Trust - Market Vectors - Vietnam ERF, a major shareholder of Vietnam Construction Import-Export Joint Stock Corporation (VCG) has registered to buy 16.5 million shares and to sell 1 million shares from April 27 to June 26.
The current effective regulation allows such trading activities but it raises concerns on transparency and puts outsiders in disadvantage position.
First, insiders are first people to access corporate news and they can take advantage of the imbalance of information in their trades.
Second, the current effective regulation does not force insiders to fully buying or selling registered shares, one way trades or limited trades are popular with unclear reasons.
Third, it is suspected that insiders allow others to borrow their stocks to trade.
Under the Securities Law, clause 6, article 34, insiders are: members of BOD, BOS, executives, chief accountant, information disclosure official, and persons related to those people.
Rules for foreign traders without commercial presence
VNS
The general Department of Customs issued Official Letter No 1858/TCHQ-GSQL on April 28, guiding customs procedures for cargo exported to bonded warehouses and then re-imported, as well as import/export rights of foreign traders without a commercial presence in Vietnam.
Customs procedures for cargo which is reimported from a bonded warehouse are similar to those for cargo imported from a bonded warehouse in accordance with Article 5, Section 4, of Ministry of Finance Circular No 194/2010/TT-BTC of December 2010.
The letter also provides that foreign traders without a commercial presence in Vietnam, while transporting cargo to or from a bonded warehouse, are not required to obtain a registration certificate of import/export/rights pursuant to government Decree No 90/2007/ND-CP of May 2007.
Customs issues rules on suspended container freight stations
The general Department of Customs issued Official Letter No 1857/TCHQ-GSQL on April 28, replying to Official Letter No 966/HQBD-GSQL of April 18 from the Department of Customs of Binh Duong Province, with respect to suspension of container freight stations (CFS). Accordingly, pursuant to Circular No 194/2010/TT-BTC of December 2010, the Ministry of Finance has not promulgated procedures for suspension of CFS. In the event an enterprise no longer has need for a CFS facility, the provincial customs department shall inspect and make a written report to the general Department of Customs for decision on revoking the CFS licence. Enterprises wishing to suspend CFS operations can give notice in writing to the Department of Customs to be inspected, considered and receive a decision on licence revocation.
Confirming foreign experts on ODA-funded projects
The general Department of Taxation issued Official Letter No 1165/TCT-KK on April 6, replying to Official Letter No 608/CT-TNCN of March 17 of the Department of Taxation of Quang Ngai Province, with respect to procedures for confirmation of foreign experts working for official development assistance (ODA) programmes in Quang Ngai Province. Pursuant to the new letter, the authority competent to confirm foreign experts with consultancy contracts in effect before November 20, 2009 is the Ministry of Planning and Investment. Otherwise, it is the authority in charge of the project. The Department of Taxation will exempt the personal income tax after foreign experts are confirmed by the authorised authority, in accordance with Vietnamese law.
Tax exemptions for dividends, capital gains on shares
The general Department of Taxation issued Official Letter No 1136/TCT-TNCN on April 5, replying to Official Letter No 53/CT-TTHT of January 5 from the HCM City Department of Taxation, with respect to personal income tax exemptions under the Law on Domestic Investment Promotion for individual investors who have been paid dividends or made capital gains on shares. Accordingly, dividends paid in or before 2009 on shares acquired before July 1, 2010, are not subject to personal income tax. Capital gains on shares transferred after January 1, 2010, are subject to tax if the stocks are not subject to tax, but dividends remain subject.
Saturday 20 August 2011
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