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Vietnam – News and Regulations
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INVESTMENT – Planners accept new FDI levels and strategies
Vietnamplus
Foreign direct investment (FDI) dropped by half year-on-year to less than 4.4 billion USD in the first six months, according to the Foreign Investment Agency under the Ministry of Planning and Investment.
The reduction, however, has not upset responsible officials, who explained that the trend has shifted from quantity to quality.
Dr Nguyen Thi Tue Anh from the Central Institute of Economic Management (CIEM) said local administrations are strictly following the government's position of "not luring foreign investment at any cost" in the licensing process.
They have withheld licences from projects which fell behind schedule in construction or capital disbursement, failed to meet local development master plans, or caused pollution to the environment, even if they were major projects, she said.
Another senior expert, FDI Investors' Association President Nguyen Mai shared the view. "The efficiency of foreign investment is not based on the amount of registered capital but on whether it flows into areas which will practically benefit the national economy, such as high technology, agriculture, forestry and fisheries," he said.
Operational projects revealed an increasing registration of additional investment which amounted to almost 1.27 billion USD, representing a year-on-year increase of 5.3 percent.
Investment registered in, processing and mechanical manufacturing projects, which were encouraged by the government in the new stage of development, accounted for almost 58.8 percent of the half-year FDI total.
FDI disbursement reached 5.3 billion USD, almost equal to total FDI registration in the same period last year.
Mai expected FDI disbursement this year to hit the 11 billion USD mark, similar to the level achieved in the past three years, including the heyday of FDI in 2008.
Dr Tue Anh, however, warned that "not luring FDI at any cost" did not mean ignoring investors.
"We should clearly define strategic investments in an effort to work out suitable investment promotion schemes," she said.
The senior economist recommended a stimulus system based on economic goals as an instrument to stabilise the influxes of this important source of investment./.
Vietnam’s retail market attractive to foreign businesses
Vietnamplus
E-Mart, a leading retailer in the Republic of Korea (RoK), has officially set foot in the Vietnamese market with a joint venture contract with the Binh Duong-based U&I Group to set up a supermarket chain with a total investment of over 1 billion USD.
The event shows that the Vietnamese retail market is still attractive to foreign investors although the country’s ranking in the attraction of the retail market by A.T. Kearney Consultancy Group dropped nine places compared to last year.
According to Mai Huu Tin, Chairman of the U&I Group, the E-Mart Vietnam supermarket chain has an initial investment of 80 million USD with 80 percent coming from E-Mart.
The joint venture will kick off its first project in 2012 and its chain of 52 supermarkets and shops in big urban areas is expected to be completed in 2020, providing fresh food and agro-seafood products for the Vietnamese market.a
Earlier, the Phu Thai Group and Japanese retailer Family Mart joined hands to open a Family Mart Vietnam chain. Meanwhile, the UK ’s largest retail group – Tesco is considering the possibility of investment in Vietnam in an effort to expand its presence to 15 countries worldwide.
Many foreign retailers operating in Vietnam also announced their expansion plans.
France ’s Casino Group – the owner of the Big C supermarket system set a target of opening 15 more supermarkets between now and 2013, raising the number of Big C supermarkets in Vietnam to 29. Big C expects to recruit 1,300 managers to serve this plan.
According to Dinh Thi My Loan, Vice President and General Secretary of the Vietnam Retailers’ Association, foreign retailers have seen good developments in Vietnam and this trend will continue in the coming time, especially for EU retailers when the Free Trade Agreement between Vietnam and the EU is signed.
WB finances $710m for three projects
VOVNews
The World Bank (WB) will provide $710 million for Vietnam to carry out three projects on public investment reform, irrigation and urban water supply.
To this effect, the State Bank of Vietnam and the WB signed loan agreements and legal documents in Hanoi on July 13, relating to the second Public Investment Reform Programme (PIR2) Development Policy, the water resource management project serving the development of the Mekong Delta and the urban water supply and sewage project.
According to WB Country director in Vietnam Victoria Kwakwa, the funding for the three projects aims to strengthen the efficiency of public investment, provide clean water for residents in the project areas and improve their adaptability to climate change.
The Urban Water Supply and Sewage Project-Phase 1 will use the WB loan of $200 million to improve water supply systems in seven provinces, namely Quang Ninh, Ninh Binh, Quang Nam, Kien Giang, Lam Dong, Binh Duong and Binh Phuoc.
It also aims to improve wastewater treatment in seven localities, including Ninh Binh, Nghe An, Thanh Hoa, Quang Tri, Quang Nam, Lam Dong and Binh Phuoc.
The $350 million PIR 2 will focus on checking the environment for infrastructure investment projects using public capital sources, project supervision and assessment, and public finance management.
The remaining $160 million will be granted to the water resource management project serving the rural development of the Mekong Delta. The project aims to raise the efficiency of using water resources in the region, increase agricultural productivity and improve clean water supply for rural households.
Seminar held to assess ODA-funded projects in Vietnam
VOV
The Ministry of Planning and Investment (MPI), in coordination with the Japan International Cooperation Agency (JICA), organized a seminar on July 14 to strengthen capacity of assessing ODA-funded projects in order to promote the country’s economic development.
The seminar aimed to evaluate the efficiency of some projects, especially ODA-funded projects in 2010 in Vietnam.
Representatives from MPI and JICA also shared experiences in providing training courses to improve the capacity of assessing ODA-funded projects in Vietnam.
At the seminar, experts analysed the socio-economic efficiency of the project to build a new terminal at Tan Son Nhat airport.
Both sides also highlighted the efficiency of the project to build Dai Ninh Hydroelectric Power Plant in the southern province of Binh Thuan.
Cooperative programmes between the MPI and JICA have been implemented for four years with important projects such as Hai Van Tunnel, Hanoi drainage project and Ham Thuan-Da Mi Hydroelectric Power Plant project.
Hanoi: more than 8,600 new enterprises granted registration despite sluggish economy
VnEconomy
Many Hanoi economic sectors have managed to make remarkable accomplishments inspite of high inflation and sluggish economy. Seventy nine new investment projects totalling 30,745 billion dong with the overall land area of 136.4 hectares have been licensed in the first six months of the year, revealed the Hanoi People's Committee's report. Business registration certificates have been granted to approximately 8,630 enterprises, up 1 percent year-on-year with the total registered capital of 47.9 trillion dong, equivalent to 69 percent over the same period last year.
In respect of the city's economic landscape, the report suggests that the GDP has plummeted 9.3pct year-on-year, of which services, industry and construction, agro-fishery and forestry sector that have climbed by 8.7 percent, 10.4pct, 5.1pct have made up 3.9 percent, 5.1pct and 0.3pct respectively. Such relatively positive figures indicate the remarkable efforts of businesses as well as the local authorities despite soaring inflation and high interest rates.
However, GDP in Q2 this year is staying at 9.4 percent which is higher than that in the previous quarter (9.2pct), yet lower than that in Q1 last year (11.6pct). Also, GDP in the first half of the year has grown at lower rate than the same period last year (10.1pct). The city's industrial production value rose 12.8pct year-on-year (13.9 percent in 2010) and added value of the construction sector grew at 10.1 percent (11.4 percent in 2010).
The services sector has seen relatively slow growth compared to the year earlier. Four lines of businesses that have grown more rapidly than the overall rate are logistics and postal sector (10.7pct, accounting for 9.8pct of GDP), trade sector (11.3pct, representing 9.7pct of GDP), finance and banking (10.9pct, making up 3.4pct of GDP) and hotel and restaurant sector (11.5pct making up 3.3pct of GDP). These sectors accounting for 26.3pct of GDP are the main driver of added value growth in the services sector and greatly attributable to maintain the city's GDP growth.
Hanoi welcomed 3.7 million arrivals in the first six months, up 3.9 percent year-on-year. June saw a 16.5 percent fall in foreign tourists against May but the accumulative figure of six months plummeted to 615.3 arrivals, up 11.4pct against the same period last year.
Import volume over the first half of the year has steadily rose, yet recent months have seen less rapid growth than the very first months. Also, import surplus is on the rise. Import turnover is estimated to gain US $4,259 billion, a year-on-year increase of 17.2pct which exceeds the target of 14pct. It tends to stall in the recent times with the figure in Q2 growing at 11.8pct, much lower than that in Q1 (28.1pct).
FDI in Hanoi has continued to make a recovery with 162 projects of investment capital totalling US $891.8 million, up 6.8 fold against the same period last year (US $130.1 million). Among such projects, some 125 were newly licensed with the total registered capital of US $420.1 million, some 37 projects with the total capital increase of US $471.7 million. The implemented capital is estimated at US $370 million, up 46pct year-on-year.
ODA disbursement is estimated to reach 1,100 billion dong, up 1.5 fold against the year target which was set at 570 billion dong.
RESOURCES - Update 1-PetroVietnam insurance says in stake sale talks
Reuters
PetroVietnam Insurance Co, the insurance arm of Vietnam's state oil and gas group PetroVietnam, said on Wednesday it was in talks to sell a stake to a strategic investor, but did not name the investor.
Oman Investment Fund owns 12.6 percent in the Hanoi-based firm, which holds a monopoly on Vietnam's energy insurance market. PVI Chair Nguyen Anh Tuan disclosed the talks at a news conference to announce its half-year results.
Vietnam allows foreign investors to hold a maximum 49 percent in a domestic company.
The company said six-month gross profit rose 13 percent to 220 billion dong ($10.7 million) and accounted for 52.3 percent of the annual target set for 2011.
The profit was made as revenues jumped 18.6 percent from a year ago to 3 trillion dong, PVI deputy Chief Executive Officer Pham Khac Dung told reporters.
The company now has a 25 percent share of Vietnam's non-life insurance market, providing risk coverage and insurance for property in the energy and maritime sectors, he said.
Chief Executive Bui Van Thuan said PVI planned to insure Vietnamese fishermen against risks in the South China Sea if their vessels and equipment are damaged by disasters or by foreign ships.
"We are going to launch this product in the next month or two," Thuan said.
PVI said its insurance coverage for offshore oil and gas projects, including those in overlapping waters, make "important contributions to ensuring the national energy security and sovereignty at sea."
Vietnam and China have had territorial disputes since late May over resource-rich areas in the South China Sea, which covers the world's busiest sea lanes and provides rich fishing.
PVI shares closed 2.0 percent up at 15,200 dong ($0.9) each on Wednesday.
In June 2010 PVI signed a $3 billion contract to provide insurance to the $2.2 billion 130,500-barrel-per-day Dung Quat oil refinery, Vietnam's sole facility invested and run by PetroVietnam.
Are there too many oil refineries in Vietnam?
Vietnamnet
Vietnam has been warned that if it cannot well calculate pluses and minuses, it may face risk when developing oil refineries, especially when the crude oil price is on the rise, while the investment rates on oil refineries become big.
According to the Ministry of Industry and Trade, about 10 petrochemical refinery projects with the total design capacity of 60 million tons a year have been developed, or have been waiting for investment licenses.
Of these, the Vietnam National Oil and Gas Group (PetroVietnam) is the investor of three big projects, including Dung Quat in Quang Ngai, Nghi Son in Thanh Hoa and Long Son in Ba Ria-Vung Tau. The conglomerate is considering building the fourth oil refinery in Quang Ninh. If counting on the fourth project, the total capacity of PetroVietnam invested projects would be 40 million tons a year in total.
Meanwhile, other investors are moving ahead with four other projects in other localities with the total designed capacity of over 20 million tons.
Worries persisting
To date, only the Dung Quat oil refinery has become operational with the capacity of 6.5 million tons a year, which is expected to increase to 10 million tons a year after the scheduled expansion. Meanwhile, other projects remain on paper.
The Nghi Son project, a joint venture among PetroVietnam and Idemitsu (IKC), Mitsui (MCI) and KPI, capitalized at seven billion dollars, is now under the capital arrangement. The project is expected to be completed by 2015 which would have the capacity of 10 million tons a year. Especially, the Kuwait partner KPI has committed to provide crude oil to the oil refinery for its whole life.
As for the Long Son project, Vietnamese PetroVietnam is seeking partners for the joint venture. It is estimated that the total investment capital of the oil refinery is 10 billion dollars, while the refinery would run with the oil sourced from Venezuela.
Meanwhile, many questions remain unanswered at other oil refinery projects. The Can Tho 2 million ton project, developed by Vietnamese Vien Dong Trade and Investment Corporation and the US Semtech Limited B.V.I, is an example. The join venture got the nod from the Prime Minister in 2008 and got the investment license in the same year.
However, the investors have later changed the project’s scale, reasoning that they have chosen a new technology for the refinery. The land area of the project has reduced from 250 hectares to 50 hectares, while the estimated investment capital decreased from 538 million dollars to 350 million dollars. Especially, the foreign partner has withdrawn from the joint venture.
The Can Tho City People’s Committee has many times extended the project. However, to date, there has been no information about how the project will be implemented.
The Vung Ro oil refinery project in Phu Yen province has not been kicked off, though it was licensed three years ago. Meanwhile, sources have said that the investors – the British Technostar Management Limited and Russian Tell Oil Group – have asked for the permission to raise the investment capital to 2.5 billion dollars from the previous level of 1.7 billion dollars.
The Nam Van Phong petrochemical refinery complex, capitalized at two billion dollars, registered by Petrolimex and other partners, has also not been started yet, though the project has been expected to become operational since late 2013.
Experts have warned about the difficulties investors would have to face when developing oil refinery projects. The crude oil prices keep rising on the world market, while the profits from oil filtration are not high, just about 20 dollars per ton. Meanwhile, non-PetroVietnam investors will not get investment incentives from the State.
Oil refinery capacity redundant?
Opinions still vary about how many oil refineries Vietnam should have. Some believe that the total capacity of 60 million tons a year would much exceed the domestic demand. It is expected that the total demand for petroleum products would be 15-20 million tons in 2011-2015 and 27 million tons a year by 2025, which means that the supply would be double the demand.
However, according to Tran Ngoc Toan, former Head of the Oil and Gas Institute, the forecast demand of 27 million tons is too low, if comparing with the demand in other countries, including China and Thailand.
With the announced oil reserves, Vietnam is listed among the countries which are poor in oil natural resources. In general the countries choose to develop downstream industries, using the profits from oil refineries and distribution services to settle the problem of energy security.
Fuel price to operate under market rules
VNS
The domestic market price of petrol and gas is set to operate under market mechanisms from the fourth quarter of this year, according to Bui Ngoc Bao, chairman and CEO of the Viet Nam National Petroleum Corporation (Petrolimex).
As part of Resolution 11, the Prime Minister had confirmed that the price of coal, petrol and oil would develop under market mechanisms, Bao confirmed.
“Seeing that petrol and oil are sensitive goods, both related to energy security, the Government has not yet opened the fuel market completely, remaining in control of the market in necessary cases,” he said.
Bao added that the management of retail prices for petrol and oil on the domestic market fell under Decree 84, which has allowed petrol dealers to start earning profits from trading activities.
Nguyen Cam Tu, deputy minister of Industry and Trade, said that the Goverment had led the development of petrol and oil prices via market mechanisms and direct management.
Such form of management was aimed at ensuring the interests of the State in stabilising tax collection, of the people buying fuel at reasonable prices and of traders accumulating capital for investment development, he said.
Therefore, as part of Decree 84, if world oil prices were to increase or decrease by 0-7 per cent, enterprises would be left to decide the retail price of petrol and oil on the domestic market. If world prices changed by 7-12 per cent and beyond, the Government would co-operate with enterprises in setting suitable petrol and oil prices.
In some special cases, the Goverment would have the right to adjust fuel prices in order to stabilise the economy, Tu said.
Last Friday, the Ministry of Finance decided not to raise import duties on petroleum products in the face of “complicated” fluctuations in the global market. The decision was expected to maintain the sales prices of petrol, diesel oil and kerosene.
During the last 30 days, although world oil prices fell, domestic prices remained unchanged, Tu said.
When world oil prices increased, the Government kept traders from raising local prices in order to compensate them for their losses from the State budget, he added. When world oil prices decreased, the Goverment increased import taxes in order to refund its budget, collecting money for the petrol price stabilisation fund.
According to Tu, if world oil prices continued declining, the Governemnt would consider permitting dealers to cut retail prices.
Regarding calculation measures for local prices, Bao said that Petrolimex had the most transparent calculation methods for petrol and oil retail prices on the domestic market.
Bao said that, every year, Petrolimex invited independent auditing firms to audit its parent corporation and subsidiaries, adding that the auditing of petrol and oil prices was easy.
Domestic retail prices have been transparently calculated using data based on world prices, import tax rates and the rate of collecting money for the price stabilisation fund in a market report on the Petrolimex website. The current price for petrol is VND21,300 (US$1.01) and VND21,000 for diesel oil.
ENERGY – Enterprises sell electricity to China, Government purchases electricity from China
Vietnambusiness.asia
A paradox has existed: while power plants have capacity in excess and they have to sell electricity to China, the Electricity of Vietnam (EVN) still plans to purchase electricity from China in the upcoming years.
Power plants which have the total investment capital of up to tens of trillions of dong have been left idle. Meanwhile, the government is still calling for more investment in power projects, while EVN has been insisting on raising the sale prices.
They problem lies in the mechanism?
In fact, the electricity sale to China has been existing for years; however, no proper solution has been found to stop the problem.
There are now two 110KV electricity networks in Lao Cai province, including one in Lao Cai City and the other in Tang Loong, while the big additional charge gathers in Tang Loong. Therefore, when the 110KV transmission line linking Lao Cai and Tang Loong broke down, the Lao Cai province lost 80 percent of the load capacity (100MW). Meanwhile, most of big hydropower plants, including Muong Hum and Nam Khoa 3 all use the line As a result, electricity has been transmitted to China.
The lack of a 220KV station in Lao Cai has made the situation more serious. In fact, Cong an nhan dan has quoted its sources as saying that the station has been built, but it has not been put into operation, since there has been no electric wire due to the tardiness in site clearance.
The Northern Power Corporation is in charge of purchasing electricity, while it is the National Power Transmission Corporation which takes responsibility for building transmission networks, while the provincial authorities need to take responsibility for site clearance.
A comprehensive measure needed
The Northern Power Corporation has announced that a new network will be put into operation which will consume a big proportion of generation of the plants. However, the problem still has not been settled yet. An officer of the corporation said that even if the network is put into operation, it would be able to handle 100MW at maximum.
“The power plants would be able to run at 80 percent of the capacity only. I am afraid that in July and August, when it rains, power plants will have excessive water to generate power, the electricity will have to go to China,” he said.
According to the Lao Cai provincial Department for Industry and Trade, by the end of 2011, the total electricity capacity of local power plants would reach 400MW, which is triple the current capacity. The figure would be 750 MW by the end of 2013.
Meanwhile, the electricity consumption in the area is forecast to be much smaller than the supply, and if there is no transmission line, the current situation will not be improved–power plants have electricity in excess, but they cannot sell electricity, while other areas are seriously lacking electricity.
“We have tried to contact the National Power Transmission Corporation to learn about the building of the transmission lines, but we have been told to keep waiting,” an official said.
According to the Lao Cai provincial Department for Industry and Trade, under the power network development plan, the Lao Cai 2 110 kV – 40 MVA transformer station will be invested by EVN. However, as EVN has not had investment plan yet, the investors of power plants have decided to contribute capital and empowered the Northern Power Corporation to build the station. However, too many problems have arisen in the implementation of the project
Besides this, the construction of the 110KV Tang Long – Van Ban – Than Uyen backbone line, the 220KV Bao Thang transformer station and the 220KV Bao Thang-Yen Bai line has also been going very slowly.
Purchasing power lowest, inventory highest than ever
Vietnamnet
Most of industries have reported the high level of inventory, saying that the big stocks are the consequence of the high inflation. Experts have also warned that this is the first manifestation of the economic stagnation which needs to be settled as soon as possible.
Goods unsalable
Pham Chi Cuong, Chair of the Vietnam Steel Association (VSA), said that the sales of steel products plummeted in the first six months of the year, because many construction projects have been delayed in the plan to cut down public investments.
The steel sales have been decreasing continuously since March 2011, with the sold steel volume down by 11.4 percent in May and 24.6 percent in June. To date, the stocks have reached 430,000 tons, an increase of 6.9 percent over May, which is reportedly the highest inventory level so far. Meanwhile, every month, enterprises have to pay 300,000-400,000 dong in loan interests for every ton of unsold steel.
Meanwhile, steel manufacturers have been dealt another blow when the Ministry of Finance has submitted to the government the plan to impose 1.5-3 percent tax on steel exports, reasoning that the steel industry consumes too much electricity. Commenting about the proposal, Cuong said that the taxation, if implemented, would block the way out of steel manufacturers, especially when they cannot sell steel products on the domestic.
He went on to say that the electricity price just accounts for 1-1.2 percent of the production cost of laminated steel, while accounting for six percent of the production cost of ingot steel. VSA has proposed not to impose export tax at this difficult moment.
Pham Duc Binh, Deputy Chair of the Vietnam Animal Feed Association, has also complained that the inventory level has been high, since the demand has dropped by 30-40 percent. Even the well known producers, who always have high sales, have also reported the inventory level of 10-20 percent.
Meanwhile, wooden furniture producers have complained that the consumption level has dropped by 30-50 percent due to the low demand, partially caused by the sale price increases of 15-30 percent.
According to Tran Quoc Manh, Deputy Chair of the HCM City Fine Arts and Wood Processing Association, there are two scenarios for wooden furniture manufacturers. In the first scenario, they will incur loss because of the increasing input material prices. Meanwhile, if they do not deliver goods to the partners as contracted, because they do not want to incur loss due to the input material price increases, they will have big stocks.
According to Vu Vinh Phu, Chair of the Hanoi Supermarket Association, the total retailed goods and services in the first six months of 2011 still increased by 22.6 percent over the same period of the last year. However, if not counting on the price increases, the actual growth rate would be 5.7 percent only.
This is really a worrying increase if noting that in 2010, the actual growth rate was higher at 11.2 percent.
The sales have been going very slowly because the purchasing power has been decreasing considerably. Phu said that in 2010, on average, a consumer paid 700,000 dong for his bill, while the figure has dropped to 500,000 dong
Inventory level highest so far
According to Do Thuc, General Director of the General Statistics Office (GSO), the stock index in industrial production in the first five months of 2011 was much higher than that of the previous years. The stock indexes of manufacturing and processing industries increased by 15.9 percent.
The industries which have high inventory levels include brewery production (increased by 94.3 percent), wooden furniture (71.7 percent), non-alcoholic drinks (39.9 percent), animal feed (37.6 percent), fibre (35.4 percent), car and motorbike (30 percent).
“The high stock indexes should be seen as a worrying problem, which shows that the production has been increasing, but the inventory level has been increasing even more sharply,” Thuc said.
“Enterprises cannot sell products to take back capital, while they still have to pay bank loan interests,” he added.
GE gained first wind power turbine contract in Vietnam.
VIR
General Electric has gained a contract with domestic partner for providing its first wind turbines in Vietnam, setting a milestone for the firm to penetrate into renewable power industry in this Southeast Asian country.
Under the contract, General Electric (GE) will provide ten turbines and operations and maintenance services to Cong Ly Company Ltd for the phase one of the Bac Lieu wind power farm, totaling 16 megawatts of power generation capacity.
This is the first contract for providing wind turbine in Vietnam since GE started manufacturing wind turbine in northern Haiphong port city factory in May last year.
The Bac Lieu wind project further expands GE’s role in Vietnam, where the company has been active since the 1960s, providing technological support for a variety of power generation projects throughout the country. With an installed base of more than 2,000 megawatts, GE equipment today supplies approximately 18 per cent of the country’s power generation capacity.
“The Bac Lieu project illustrates our commitment to offer our customers the best technology to meet their specific project requirements,” said Nguyen Xuan Thang, country executive for GE Energy in Vietnam.
“We are focused on helping Cong Ly achieve success with this project, which is a significant milestone for the Bac Lieu province,” he added.
The GE wind turbines chosen for this project feature an 82.5 meter rotor for class III wind conditions, making it a good match for the Bac Lieu site. The 1.6-82.5 builds on the success and the global experience of GE’s 1.5MW wind turbine, the industry’s most widely deployed megawatt-class machine with more than 16,000 installed worldwide.
“This will be the first large-scale industrial and energy project in Bac Lieu province, which has huge potential in wind energy, along with agriculture and seafood farming,” said To Hoai Dan, chairman of Cong Ly Company Ltd.
In the second phase, Cong Ly Company Ltd plans add up to 120 megawatts of power to help resolve the country’s chronic power shortages.
“We expect that the project will help to improve the social and economic conditions of the province by creating new jobs requiring technical and industrial skills, while producing much-needed power. We also hope this first large-scale wind farm project will help to attract more investments into the Bac Lieu province in the future,” said Dan.
CONSTRUCTION - Coteccons selected as contractor for body part of Mandarin Garden project
Dau Tu Chung Khoan
Hoa Phat Group (HPG) has selected Cotec Construction Joint Stock Co (Coteccons - coded CTD) as the main contractor for the third bidding package of constructing the body part in Mandarin Garden project.
The construction on Mandarin Garden project was officially started in July 2010. At present, the construction on foundation part of the project has been completed. From July 15, 2011, Coteccons will start carrying out the body part. The apartments in Mandarin Garden are supposed to be handed over in Q4 of 2013.
Tran Tuan Duong, Hoa Phat Group's general director has confirmed that they have arranged sufficient capital for carrying out the prject.
Located in Hoang Minh Giam St, Hanoi, Mandarin Garden is a complex with about 1,000 high-class apartments to be situated on 25,886 square metre land plot in Southeast Tran Duy Hung urban area, Cau Giay Dist, Hanoi.
Plan to shut old factories making building-materials
Vietnambusiness.asia
Ho Chi Minh City ‘s Department of Construction has targeted eliminating ineffective building-materials production establishments by 2020.
This is one of the main objectives of the city’s VND1.67 trillion building-materials development plan for the 2011-20 period.
To realise this goal, the city will close all establishments that produce clay bricks and roofing tiles with rudimentary methods.
The closure of building-material production establishments that use outdated technology, cause environmental pollution and have low economic efficiency is expected to be completed in 2015.
Another objective is to relocate all cement production factories to areas that have proper planning.
Other building-materials production establishments that are now outside industrial parks will also be relocated to city industrial parks or to localities that have proper planning.
Also under the scheme, the city will become the country’s large-scale centre specialising in transactions and exhibition of construction materials and products.
FINANCE - Vietnam bonds rise as lower bank deposit rates may fuel demand
Bloomberg
Vietnam's bonds gained on speculation decreases in deposit rates at banks may bolster the amount of cash available to buy government debt.
Deposit rates are showing signs of falling and there is surplus cash in the market, the central bank said on July 8.
"Bond yields will probably slide with the drop in deposit rates" as banks have more cash to invest in government securities, said Nguyen Tuan Phong, the Hanoi-based fixed-income manager at Bao Viet Fund Management Co., a unit of Vietnam's biggest insurer.
The yield on the benchmark five-year note declined five basis points, or 0.05 percentage point, to 12.44 percent, according to a daily fixing from banks compiled by Bloomberg. The dong was unchanged at 20,575 per dollar as of 5:31 p.m. in Hanoi, according to data compiled by Bloomberg.
The central bank fixed the reference rate at 20,608 today, the same as the previous two days, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.
Overseas remittance via Vietnam banks heats up
StoxPlus
Overseas remittance via Vietnam banks have heated up, the online newspaper Dau Tu reported July 13.
Overseas remittance via Sacomrex, Sacombank's subsidiary, was estimated at $800 million in the first six months of the year, up 30 percent on year, said Tran Xuan Huy, the lender's CEO, adding that Sacomrex targeted to achieve 10 billion dong profit from overseas remittance in 2011 compared to 3-4 billion dong in the previous years.
Meanwhile, Jan-Jun overseas remittance via Western Union under Asian Commercial Bank edged up 8 percent on year compared to growth target of 10 percent in 2011.
"It is likely that overseas remittance to Vietnam will be more abundant in the remaining months on end of the year peak season", said Tran Cong Binh, Western Union's manager, adding that the company targeted to boost up overseas remittance revenue by 20 percent from last year.
Local lenders started to launch many facilities in payment to attract overseas remittance, local media reported, citing that Ficombank joined with the Australia-based Remit2Vietnam company in transferring remittances to Vietnam from overseas.
Nguyen Van Giau, the State Bank of Vietnam (SBV)'s Governor said that Vietnam currently has about 55,000 workers overseas with annual revenue of $1.8-2 billion, helping to generate overseas remittance of about $6.5 billion each year.
Overseas remittance plays an important part in narrowing the current account deficit and supplying foreign currencies to the country, local media reported, adding that it also helps reducing risks of attracting capital and dependence on capital flows.
From now to August 31, Saigon commercial bank also announced to give gifts and offer to buy foreign currencies at above ceiling prices for those who receive overseas remittance via Western Union and the bank.
Foreign institutions worried about EVN’s $400m debts
Vietnambusiness.asia
The banks and foreign institutions who fund PetroVietnam’s projects expressed their worries about the big debts of $400 million which the Electricity of Vietnam (EVN) owes the national oil and gas group.
In a document sent to the government, ministries of finance, industry and trade, PetroVietnam said EVN owed $400 million debts to the group’s members, equaling to nearly 8.2 trillion dong including 7.682 trillion dong of electricity costs and 422 billion dong of arising interests due to payment delays.
Additionally, EVN owed PetroVietnam 895 billion dong in unpaid costs of Ca Mau 1 and 2 thermo power plants which were prolonged from 2007 to 2009.
PetroVietnam for many times has requested EVN to pay off the above debts. But, the electricity producing group has still delayed payment deadline for which PetroVietnam’s affiliates are being affected negatively. This also caused domino effects to providers of fuel, maintenance and repairing services, banks, credit institutions funding the projects of Nhon Trach 1, Ca Mau 1 and 2.
EVN’s $400 million debts, according to credit institutions, may impact to PetroVietnam’s payment capacity in borrowing contracts.
This was not the first time PetroVietnam sent similar documents to authorities about EVN’s lateness in debt payment. Earlier, other creditors such as Vinacomin, Hiep Phuoc Electricity Co (who sold electricity to EVN) also complained about EVN’s payment delays. Even, Hiep Phuoc producer announced it would cut power if EVN does not pay a $36 million (756 billion dong) debt.
ECONOMY - State budget collection estimated at 327.82tr dong in H1
VnEconomy
Statistics from the Ministry of Finance (MoF) shows that from April 2011, domestic collection tended to decrease gradually and the average revenue in Q2 fell by 7 percent compared to the average revenue in Q1, 2011.
However, the state budget collection in the first six months of this year was estimated to reach 327.82 trillion dong, or 55.1 percent of the year's estimate thanks mainly to the collection from land use tax of 21.8 trillion dong.
In addition, the surging prices of goods and services made the taxable revenue increase, leading the increase in state budget revenue.
Many groups of import goods and commodities that are subject to high duties posted satisfactory turnover, contributing to the overall result such as the iron and steel turnover increased by 31 percent, making up some 1.6 trillion dong to the state budget, the increase of 27 percent in electronic components group made up 1.08 trillion dong, and the 25.4 percent rise of machineries, equipments and spare parts contributed 1.5 trillion dong to the state budget.
Regarding budget expenditures, the total spending in H1 was estimated at 355.6 trillion dong, or 49 percent of the year's estimate, of which, notably the spending on repayment for foreign debts and aids reached 45.9 trillion dong (over $2.2 billion), or 53.4 percent of the year's estimate.
MoF said that it cut down and adjusted the capital for urgent projects some 8.333 trillion dong, including 5.556 trillion dong from the state budget and 2.777 trillion dong from government bonds.
In addition, state-owned corporations and groups also reviewed and reduced some 39.21 trillion dong public investment.
For frequent expenditures, in H2, some 10 percent or nearly 3.858 trillion dong of frequent spending estimate is expected to be saved from central and local ministries and departments, including 900 billion dong from central agencies and nearly 2.958 trillion dong from localities.
The state budget deficit in H1 was estimated at 27.78 trillion dong, or 23 percent of the year's estimate, lower than the estimated figure of some 30 trillion dong given by the General Statistical Office (GSO) previously.
This is the lowest state budget deficit against the same period of recent years (it was 25 percent in 2010 and 32 percent in 2009).
FOOD PROCESSING AND BEVERAGE - Vietnam shrimp import duty may be dropped
blog.al.com
Four months after the US International Trade Commission voted to continue import duties for five more years on shrimp from Vietnam, a World Trade Organisation panel ruled today that those tariffs break international trade rules.
Gulf of Mexico shrimpers and processors, who won the February ruling as their industry struggled with the impact of last year's BP oil spill, said Monday that the ruling is clearly bad news for them.
The federal government dropped tariffs in 2007 against Ecuador in response to a similar WTO ruling.
"We certainly view this as a setback for American commerce," said David Veal, executive director of the Biloxi-based American Shrimp Processors Association.
In its report today, the three-member WTO panel found that duties the United States imposed in February 2005 because of alleged price dumping by Vietnamese exporters were inflated because of Washington D.C.'s use of "zeroing" to calculate whether the shrimp were being sold at below-cost price.
Under zeroing, commerce economists ignore - or "zero" - import prices above market levels and consider only those below when calculating what duties should be.
According to previous WTO decisions, zeroing leads to inflated margins of dumping, and thus higher duties.
Argentina, Brazil, Canada, Ecuador, the EU, Japan, Mexico, South Korea and Thailand have won zeroing cases at the WTO. In January, the United States promised its trading partners that it would change the method.
Three months later, however, the ITC voted to continue import duties for five more years on shrimp from Thailand, China, Vietnam, Brazil and India. That ruling was the result of a five-year "sunset" review of the antidumping tariffs won in 2005 by a coalition of seafood industry leaders.
Veal was among 11 business owners from Mississippi and Louisiana who testified before the commission that lifting the tariffs would lead to material injury to the domestic shrimp industry.
Veal said Monday that the WTO appears to be slowly undoing the work that he and many others have done for the past several years. The federal government "unfortunately hasn't shown much intestinal fortitude so far in standing up" against its rulings, he said.
Efforts to contact lawyers for Vietnam in the WTO case were unsuccessful today.
Viet Nam forced to import coal
VNS
The nation is becoming a coal importer due to high demand and dwindling domestic supplies. Last month, the State-owned mining giant Vinacomin Group accepted the country’s first-ever batch of imported coal for domestic use.
The shipment of 9,570 tonnes imported from Indonesia arrived at Cat Lai Port in the southern province of Dong Nai and would be used as fuel for thermal power plants in the central and southern regions.
Viet Nam has been a coal exporter for decades, relying on its large coal deposits, but the imports have become necessary as buying imported coal has become cheaper than extracting domestic coal, according to Vinacomin.
Importing low-energy bituminous coal for use in power generators became preferable to using domestic coal, a high-energy anthracite mainly used in chemicals and metallurgy, said Vinacomin’s acting deputy director Vu Manh Hung.
“We should sell our high-quality coal and import cheaper coal,” Hung said. “Power plants have been advised not to waste anthracite to generate electricity.”
Earlier projections had said coal imports would become necessary in 2015, but heavy exports of domestic coal and inadequate policies for stockpiling supplies have pushed that date forward, said Vinacomin general director Le Minh Chuan.
It was also a purely economic decision, Chuan said. The price of coal imports from Indonesia were US$100.60 per tonne while the cost of domestic coal transported from the north to the south had reached $122 per tonne.
“The imports from Indonesia were done on a trial basis to test the strategy of importing larger volume in the future,” Chuan said. “Finding supplies is also not easy. Previously, Vinacomin spent a lot of time negotiating with Australian and Russian partners, to no avail. Recently, however, we were able to win the agreement with Indonesia.”
Viet Nam was also competing for supplies with more established buyers like Japan, South Korea, India and China, Hung said. “These importers have eaten up most of the available coal from mines in Indonesia and Australia. Viet Nam would be hard-pressed to obtain a large volume of coal from those countries.”
“The important thing is to have a strategy and familiar import markets,” Chuan added.
To ensure overseas supplies in the future, enterprises would need to buy rights to exploit or to the production of particular mines.
“Local enterprises need good financial conditions to invest in coal mining abroad,” said the director of Vinacomin’s Red River Energy Co, Nguyen Thanh Son.
China has invested $5.6 billion in Australia for the rights to exploit 30 million tonnes of coal per year, Son said.
“To ensure coal imports to meet domestic demand, Vinacomin and some other groups were working out financing arrangements for importing coal from abroad,” Hung said.
Meanwhile, the group was exploring a new mine with a capacity of 1.5-3.5 million tonnes per year, Hung said.
The group also expected the Government to approve the plan on exploring and exploiting the coal basin in the Red River delta. Meanwhile, Vinacomin was co-operating with Hung Yen and Thai Binh provinces in the delta to conduct trial exploitation on small scale, with the target of obtaining coal and providing local jobs.
Deputy Minister of Industry and Trade Nguyen Thanh Bien said the ministry would build a reasonable strategy on coal imports and exports to ensure energy security.
Vinacomin would need $1 billion annually to increase coal production to 48 million tonnes in 2015 – 8 million tonnes higher than the current output – and to 55-70 million tonnes in 2020. Demand was estimated to reach 54 million tonnes in 2015 and 150 million tonnes in 2020.
The group expects to import 10 million tonnes of coal annually this year and next, mostly low-energy bituminous coal for use in power generation. The figure was estimated to reach 100 million tonnes by 2020 to meet the urgent demand for electricity as well as demand of other industries such as steel and cement.
LEGAL NEWS - Vietnamese ex-official in corruption case involving Japan loans gets another 7-
Imports to Vietnam must have certificates of origin
VOV
Starting on July 1, fruits and vegetables imported to Vietnam need certificates of origin (COs), announced deputy minister of Agriculture and Rural Development, Diep Kinh Tan, at a press briefing on June 30.
Deputy minister Tan said that the requirement of COs for imports to Vietnam goes in line with the country's commitments to the World Trade Organisation (WTO), showing equal treatment among WTO members.
Vietnamese exports must also follow strict regulations before entering foreign markets, he added.
According to Nguyen Nhu Tiep, deputy Head of the Seafood, Farm and Forestry Produce
Quality Control Department, it is important to require COs from all products imported to Vietnam to ensure food hygiene and safety.
By June 30, four countries namely the US, Canada, Australia and Thailand had registered to follow COs regulations of Vietnam.
GOVERNANCE - NA considers government proposal on tax policies
StoxPlus
The 12th National Assembly Standing Committee opened its 42nd session in Hanoi on July 13 to review the government's proposal on tax exemptions, reductions and extensions in 2011.
The report on the supplementary promulgation of solutions on tax presented by Finance minister Vu Van Ninh said the government provided an extension on tax payment for small and medium-sized enterprises and continued to expand groups of subjects eligible to enjoy tax payment extension for labour-intensive enterprises in forestry and seafood processing, garment, footwear, electronic accessories production, socio-economic infrastructure projects, and some important trading services.
Tax exemption is applied to dividends for investment in securities and shares in enterprises, for securities transfer operations and from salary, pay and business incomes.
However, Chair of the NA Committee for Finance and Budget Phung Quoc Hien said that many opinions from his committee stressed the need to cautiously consider and review the application of tax exemptions and reductions.
Chair of the NA Economic Committee Ha Van Hien said that although the banking sector currently has high interest rates, many businesses still need loans to maintain production. In the first six months of this year, they faced more difficulties.
At present, they are awaiting tax policies to ease their difficulties, because it is not easy to promptly reduce the banking interest rates, he explained, saying that it is necessary to promulgate policies on tax exemption to give a positive sign to the market.
The NA permanent committee agreed with the government's submission to the first session of the 13th National Assembly for further consideration.
Also at the meeting, the NA permanent committee gave opinions to the draft resolution on promulgation of tariffs on environmental protection.
The draft resolution is expected to be approved on July 14 by the NA permanent committee.
cid:image001.jpg@01CC42F1.B62855B0
UPDATES
JULY 1 to 15, 2011
Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com
in case you have questions on the content.
* Press Watch $
2012 – New year, new changes to Labour Code.
There has been so many proposed amendments to the current Labour Code since the original draft amendment, and it is finally scheduled for review by the National Assembly this year and adoption by 2012. As it is now, the Labour code fails to make the distinction between industrial workers and white collar employees. As it is never a case of “one size fits all”, greater flexibility would always be a welcome means to moderate impacts. Proposed changes are in relation to retrenchment rights, Labour contracts, salary scale, overtime, collective labour agreements, - with a new item added : ‘Industry collective labour agreements’; trade unions, rights and protection of trade union officers at the enterprises, unilateral termination of labour contracts with trade union officers, female workers, labour discipline, resolution of labour disputes and strikes.
VIR. July 11
Vietnam wins deals in shrimp dispute
The U.S. was found by a WTO judge panel to have ‘acted inconsistently with the Anti Dumping Agreement’ after Vietnam filed early last year against the US’s anti-dumping measures on Vietnam’s frozen warm water shrimps. This was the first time Vietnam has taken such an action since the country joined the WTO early 2007.
Saigon Times . July 13
Export Processing Zones and Industrial Zones in HCM City
Accumulated export turnover from the EPZ and IZ has amounted to USD 23.2 billion, accounting for 12.5% of the city’s total export turnover and 40% of the city’s industrial export turnover. The HCM City Authority for Export Processing and Industrial Zones (HEPZA) targets to reach USD 6 billion of export earnings per year by 2015 with an annual export turnover growth of 15%.
JICA – Help in Infrastructure improvement
Japan shall transfer its latest road maintenance technology to Vietnam in a project with a total budget of JPY 345 Million. The project shall introduce new information technologies to the management and monitoring of the road system rather than conventional forms of road maintenance. The Japan International Cooperation Agency (JICA) has also signed a minute of meeting for a project to enhance HCMC’s flood management capacity, by developing the city’s sewerage and waste water treatment system.
Poverty reduction in Vietnam
Disbursement of 17 Million Euros (around 24.6 Million USD) was made in account of the clear progress in policy reform made by Vietnamese authorities in key areas, among others, internal audit legislation to improve public financial management; establishment of national standards and a framework on consumer protection. Another 12 Million Euros were for raising the living standards of ethnic minorities in Vietnam. The EU delegation plans an additional 150 million Euros (USD 212 million) of support grant for poverty reduction and the health sector – however, such budget support shall only be possible if public financial management modernization is steadily pursued and a stable macroeconomic environment maintained.
Vietnam News. July 2
French investors keen on Public Private Partnerships
Energy, transportation, water treatment and supply are prioritized areas that French company wish to invest into via PPP. The Ministry of Transport made estimates that the State Budget, Government Bond sale and ODA loans would only meet about 55% of the huge investment capital needed for transportation projects in 2011-2015, and the rest had to be raised from other sources. An international airport in Dong Nai Province is one of the projects that have their components planned for PPP. Saigon Times. July 6
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Vietnam – News and Regulations
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INVESTMENT – Planners accept new FDI levels and strategies
Vietnamplus
Foreign direct investment (FDI) dropped by half year-on-year to less than 4.4 billion USD in the first six months, according to the Foreign Investment Agency under the Ministry of Planning and Investment.
The reduction, however, has not upset responsible officials, who explained that the trend has shifted from quantity to quality.
Dr Nguyen Thi Tue Anh from the Central Institute of Economic Management (CIEM) said local administrations are strictly following the government's position of "not luring foreign investment at any cost" in the licensing process.
They have withheld licences from projects which fell behind schedule in construction or capital disbursement, failed to meet local development master plans, or caused pollution to the environment, even if they were major projects, she said.
Another senior expert, FDI Investors' Association President Nguyen Mai shared the view. "The efficiency of foreign investment is not based on the amount of registered capital but on whether it flows into areas which will practically benefit the national economy, such as high technology, agriculture, forestry and fisheries," he said.
Operational projects revealed an increasing registration of additional investment which amounted to almost 1.27 billion USD, representing a year-on-year increase of 5.3 percent.
Investment registered in, processing and mechanical manufacturing projects, which were encouraged by the government in the new stage of development, accounted for almost 58.8 percent of the half-year FDI total.
FDI disbursement reached 5.3 billion USD, almost equal to total FDI registration in the same period last year.
Mai expected FDI disbursement this year to hit the 11 billion USD mark, similar to the level achieved in the past three years, including the heyday of FDI in 2008.
Dr Tue Anh, however, warned that "not luring FDI at any cost" did not mean ignoring investors.
"We should clearly define strategic investments in an effort to work out suitable investment promotion schemes," she said.
The senior economist recommended a stimulus system based on economic goals as an instrument to stabilise the influxes of this important source of investment./.
Vietnam’s retail market attractive to foreign businesses
Vietnamplus
E-Mart, a leading retailer in the Republic of Korea (RoK), has officially set foot in the Vietnamese market with a joint venture contract with the Binh Duong-based U&I Group to set up a supermarket chain with a total investment of over 1 billion USD.
The event shows that the Vietnamese retail market is still attractive to foreign investors although the country’s ranking in the attraction of the retail market by A.T. Kearney Consultancy Group dropped nine places compared to last year.
According to Mai Huu Tin, Chairman of the U&I Group, the E-Mart Vietnam supermarket chain has an initial investment of 80 million USD with 80 percent coming from E-Mart.
The joint venture will kick off its first project in 2012 and its chain of 52 supermarkets and shops in big urban areas is expected to be completed in 2020, providing fresh food and agro-seafood products for the Vietnamese market.a
Earlier, the Phu Thai Group and Japanese retailer Family Mart joined hands to open a Family Mart Vietnam chain. Meanwhile, the UK ’s largest retail group – Tesco is considering the possibility of investment in Vietnam in an effort to expand its presence to 15 countries worldwide.
Many foreign retailers operating in Vietnam also announced their expansion plans.
France ’s Casino Group – the owner of the Big C supermarket system set a target of opening 15 more supermarkets between now and 2013, raising the number of Big C supermarkets in Vietnam to 29. Big C expects to recruit 1,300 managers to serve this plan.
According to Dinh Thi My Loan, Vice President and General Secretary of the Vietnam Retailers’ Association, foreign retailers have seen good developments in Vietnam and this trend will continue in the coming time, especially for EU retailers when the Free Trade Agreement between Vietnam and the EU is signed.
WB finances $710m for three projects
VOVNews
The World Bank (WB) will provide $710 million for Vietnam to carry out three projects on public investment reform, irrigation and urban water supply.
To this effect, the State Bank of Vietnam and the WB signed loan agreements and legal documents in Hanoi on July 13, relating to the second Public Investment Reform Programme (PIR2) Development Policy, the water resource management project serving the development of the Mekong Delta and the urban water supply and sewage project.
According to WB Country director in Vietnam Victoria Kwakwa, the funding for the three projects aims to strengthen the efficiency of public investment, provide clean water for residents in the project areas and improve their adaptability to climate change.
The Urban Water Supply and Sewage Project-Phase 1 will use the WB loan of $200 million to improve water supply systems in seven provinces, namely Quang Ninh, Ninh Binh, Quang Nam, Kien Giang, Lam Dong, Binh Duong and Binh Phuoc.
It also aims to improve wastewater treatment in seven localities, including Ninh Binh, Nghe An, Thanh Hoa, Quang Tri, Quang Nam, Lam Dong and Binh Phuoc.
The $350 million PIR 2 will focus on checking the environment for infrastructure investment projects using public capital sources, project supervision and assessment, and public finance management.
The remaining $160 million will be granted to the water resource management project serving the rural development of the Mekong Delta. The project aims to raise the efficiency of using water resources in the region, increase agricultural productivity and improve clean water supply for rural households.
Seminar held to assess ODA-funded projects in Vietnam
VOV
The Ministry of Planning and Investment (MPI), in coordination with the Japan International Cooperation Agency (JICA), organized a seminar on July 14 to strengthen capacity of assessing ODA-funded projects in order to promote the country’s economic development.
The seminar aimed to evaluate the efficiency of some projects, especially ODA-funded projects in 2010 in Vietnam.
Representatives from MPI and JICA also shared experiences in providing training courses to improve the capacity of assessing ODA-funded projects in Vietnam.
At the seminar, experts analysed the socio-economic efficiency of the project to build a new terminal at Tan Son Nhat airport.
Both sides also highlighted the efficiency of the project to build Dai Ninh Hydroelectric Power Plant in the southern province of Binh Thuan.
Cooperative programmes between the MPI and JICA have been implemented for four years with important projects such as Hai Van Tunnel, Hanoi drainage project and Ham Thuan-Da Mi Hydroelectric Power Plant project.
Hanoi: more than 8,600 new enterprises granted registration despite sluggish economy
VnEconomy
Many Hanoi economic sectors have managed to make remarkable accomplishments inspite of high inflation and sluggish economy. Seventy nine new investment projects totalling 30,745 billion dong with the overall land area of 136.4 hectares have been licensed in the first six months of the year, revealed the Hanoi People's Committee's report. Business registration certificates have been granted to approximately 8,630 enterprises, up 1 percent year-on-year with the total registered capital of 47.9 trillion dong, equivalent to 69 percent over the same period last year.
In respect of the city's economic landscape, the report suggests that the GDP has plummeted 9.3pct year-on-year, of which services, industry and construction, agro-fishery and forestry sector that have climbed by 8.7 percent, 10.4pct, 5.1pct have made up 3.9 percent, 5.1pct and 0.3pct respectively. Such relatively positive figures indicate the remarkable efforts of businesses as well as the local authorities despite soaring inflation and high interest rates.
However, GDP in Q2 this year is staying at 9.4 percent which is higher than that in the previous quarter (9.2pct), yet lower than that in Q1 last year (11.6pct). Also, GDP in the first half of the year has grown at lower rate than the same period last year (10.1pct). The city's industrial production value rose 12.8pct year-on-year (13.9 percent in 2010) and added value of the construction sector grew at 10.1 percent (11.4 percent in 2010).
The services sector has seen relatively slow growth compared to the year earlier. Four lines of businesses that have grown more rapidly than the overall rate are logistics and postal sector (10.7pct, accounting for 9.8pct of GDP), trade sector (11.3pct, representing 9.7pct of GDP), finance and banking (10.9pct, making up 3.4pct of GDP) and hotel and restaurant sector (11.5pct making up 3.3pct of GDP). These sectors accounting for 26.3pct of GDP are the main driver of added value growth in the services sector and greatly attributable to maintain the city's GDP growth.
Hanoi welcomed 3.7 million arrivals in the first six months, up 3.9 percent year-on-year. June saw a 16.5 percent fall in foreign tourists against May but the accumulative figure of six months plummeted to 615.3 arrivals, up 11.4pct against the same period last year.
Import volume over the first half of the year has steadily rose, yet recent months have seen less rapid growth than the very first months. Also, import surplus is on the rise. Import turnover is estimated to gain US $4,259 billion, a year-on-year increase of 17.2pct which exceeds the target of 14pct. It tends to stall in the recent times with the figure in Q2 growing at 11.8pct, much lower than that in Q1 (28.1pct).
FDI in Hanoi has continued to make a recovery with 162 projects of investment capital totalling US $891.8 million, up 6.8 fold against the same period last year (US $130.1 million). Among such projects, some 125 were newly licensed with the total registered capital of US $420.1 million, some 37 projects with the total capital increase of US $471.7 million. The implemented capital is estimated at US $370 million, up 46pct year-on-year.
ODA disbursement is estimated to reach 1,100 billion dong, up 1.5 fold against the year target which was set at 570 billion dong.
RESOURCES - Update 1-PetroVietnam insurance says in stake sale talks
Reuters
PetroVietnam Insurance Co, the insurance arm of Vietnam's state oil and gas group PetroVietnam, said on Wednesday it was in talks to sell a stake to a strategic investor, but did not name the investor.
Oman Investment Fund owns 12.6 percent in the Hanoi-based firm, which holds a monopoly on Vietnam's energy insurance market. PVI Chair Nguyen Anh Tuan disclosed the talks at a news conference to announce its half-year results.
Vietnam allows foreign investors to hold a maximum 49 percent in a domestic company.
The company said six-month gross profit rose 13 percent to 220 billion dong ($10.7 million) and accounted for 52.3 percent of the annual target set for 2011.
The profit was made as revenues jumped 18.6 percent from a year ago to 3 trillion dong, PVI deputy Chief Executive Officer Pham Khac Dung told reporters.
The company now has a 25 percent share of Vietnam's non-life insurance market, providing risk coverage and insurance for property in the energy and maritime sectors, he said.
Chief Executive Bui Van Thuan said PVI planned to insure Vietnamese fishermen against risks in the South China Sea if their vessels and equipment are damaged by disasters or by foreign ships.
"We are going to launch this product in the next month or two," Thuan said.
PVI said its insurance coverage for offshore oil and gas projects, including those in overlapping waters, make "important contributions to ensuring the national energy security and sovereignty at sea."
Vietnam and China have had territorial disputes since late May over resource-rich areas in the South China Sea, which covers the world's busiest sea lanes and provides rich fishing.
PVI shares closed 2.0 percent up at 15,200 dong ($0.9) each on Wednesday.
In June 2010 PVI signed a $3 billion contract to provide insurance to the $2.2 billion 130,500-barrel-per-day Dung Quat oil refinery, Vietnam's sole facility invested and run by PetroVietnam.
Are there too many oil refineries in Vietnam?
Vietnamnet
Vietnam has been warned that if it cannot well calculate pluses and minuses, it may face risk when developing oil refineries, especially when the crude oil price is on the rise, while the investment rates on oil refineries become big.
According to the Ministry of Industry and Trade, about 10 petrochemical refinery projects with the total design capacity of 60 million tons a year have been developed, or have been waiting for investment licenses.
Of these, the Vietnam National Oil and Gas Group (PetroVietnam) is the investor of three big projects, including Dung Quat in Quang Ngai, Nghi Son in Thanh Hoa and Long Son in Ba Ria-Vung Tau. The conglomerate is considering building the fourth oil refinery in Quang Ninh. If counting on the fourth project, the total capacity of PetroVietnam invested projects would be 40 million tons a year in total.
Meanwhile, other investors are moving ahead with four other projects in other localities with the total designed capacity of over 20 million tons.
Worries persisting
To date, only the Dung Quat oil refinery has become operational with the capacity of 6.5 million tons a year, which is expected to increase to 10 million tons a year after the scheduled expansion. Meanwhile, other projects remain on paper.
The Nghi Son project, a joint venture among PetroVietnam and Idemitsu (IKC), Mitsui (MCI) and KPI, capitalized at seven billion dollars, is now under the capital arrangement. The project is expected to be completed by 2015 which would have the capacity of 10 million tons a year. Especially, the Kuwait partner KPI has committed to provide crude oil to the oil refinery for its whole life.
As for the Long Son project, Vietnamese PetroVietnam is seeking partners for the joint venture. It is estimated that the total investment capital of the oil refinery is 10 billion dollars, while the refinery would run with the oil sourced from Venezuela.
Meanwhile, many questions remain unanswered at other oil refinery projects. The Can Tho 2 million ton project, developed by Vietnamese Vien Dong Trade and Investment Corporation and the US Semtech Limited B.V.I, is an example. The join venture got the nod from the Prime Minister in 2008 and got the investment license in the same year.
However, the investors have later changed the project’s scale, reasoning that they have chosen a new technology for the refinery. The land area of the project has reduced from 250 hectares to 50 hectares, while the estimated investment capital decreased from 538 million dollars to 350 million dollars. Especially, the foreign partner has withdrawn from the joint venture.
The Can Tho City People’s Committee has many times extended the project. However, to date, there has been no information about how the project will be implemented.
The Vung Ro oil refinery project in Phu Yen province has not been kicked off, though it was licensed three years ago. Meanwhile, sources have said that the investors – the British Technostar Management Limited and Russian Tell Oil Group – have asked for the permission to raise the investment capital to 2.5 billion dollars from the previous level of 1.7 billion dollars.
The Nam Van Phong petrochemical refinery complex, capitalized at two billion dollars, registered by Petrolimex and other partners, has also not been started yet, though the project has been expected to become operational since late 2013.
Experts have warned about the difficulties investors would have to face when developing oil refinery projects. The crude oil prices keep rising on the world market, while the profits from oil filtration are not high, just about 20 dollars per ton. Meanwhile, non-PetroVietnam investors will not get investment incentives from the State.
Oil refinery capacity redundant?
Opinions still vary about how many oil refineries Vietnam should have. Some believe that the total capacity of 60 million tons a year would much exceed the domestic demand. It is expected that the total demand for petroleum products would be 15-20 million tons in 2011-2015 and 27 million tons a year by 2025, which means that the supply would be double the demand.
However, according to Tran Ngoc Toan, former Head of the Oil and Gas Institute, the forecast demand of 27 million tons is too low, if comparing with the demand in other countries, including China and Thailand.
With the announced oil reserves, Vietnam is listed among the countries which are poor in oil natural resources. In general the countries choose to develop downstream industries, using the profits from oil refineries and distribution services to settle the problem of energy security.
Fuel price to operate under market rules
VNS
The domestic market price of petrol and gas is set to operate under market mechanisms from the fourth quarter of this year, according to Bui Ngoc Bao, chairman and CEO of the Viet Nam National Petroleum Corporation (Petrolimex).
As part of Resolution 11, the Prime Minister had confirmed that the price of coal, petrol and oil would develop under market mechanisms, Bao confirmed.
“Seeing that petrol and oil are sensitive goods, both related to energy security, the Government has not yet opened the fuel market completely, remaining in control of the market in necessary cases,” he said.
Bao added that the management of retail prices for petrol and oil on the domestic market fell under Decree 84, which has allowed petrol dealers to start earning profits from trading activities.
Nguyen Cam Tu, deputy minister of Industry and Trade, said that the Goverment had led the development of petrol and oil prices via market mechanisms and direct management.
Such form of management was aimed at ensuring the interests of the State in stabilising tax collection, of the people buying fuel at reasonable prices and of traders accumulating capital for investment development, he said.
Therefore, as part of Decree 84, if world oil prices were to increase or decrease by 0-7 per cent, enterprises would be left to decide the retail price of petrol and oil on the domestic market. If world prices changed by 7-12 per cent and beyond, the Government would co-operate with enterprises in setting suitable petrol and oil prices.
In some special cases, the Goverment would have the right to adjust fuel prices in order to stabilise the economy, Tu said.
Last Friday, the Ministry of Finance decided not to raise import duties on petroleum products in the face of “complicated” fluctuations in the global market. The decision was expected to maintain the sales prices of petrol, diesel oil and kerosene.
During the last 30 days, although world oil prices fell, domestic prices remained unchanged, Tu said.
When world oil prices increased, the Government kept traders from raising local prices in order to compensate them for their losses from the State budget, he added. When world oil prices decreased, the Goverment increased import taxes in order to refund its budget, collecting money for the petrol price stabilisation fund.
According to Tu, if world oil prices continued declining, the Governemnt would consider permitting dealers to cut retail prices.
Regarding calculation measures for local prices, Bao said that Petrolimex had the most transparent calculation methods for petrol and oil retail prices on the domestic market.
Bao said that, every year, Petrolimex invited independent auditing firms to audit its parent corporation and subsidiaries, adding that the auditing of petrol and oil prices was easy.
Domestic retail prices have been transparently calculated using data based on world prices, import tax rates and the rate of collecting money for the price stabilisation fund in a market report on the Petrolimex website. The current price for petrol is VND21,300 (US$1.01) and VND21,000 for diesel oil.
ENERGY – Enterprises sell electricity to China, Government purchases electricity from China
Vietnambusiness.asia
A paradox has existed: while power plants have capacity in excess and they have to sell electricity to China, the Electricity of Vietnam (EVN) still plans to purchase electricity from China in the upcoming years.
Power plants which have the total investment capital of up to tens of trillions of dong have been left idle. Meanwhile, the government is still calling for more investment in power projects, while EVN has been insisting on raising the sale prices.
They problem lies in the mechanism?
In fact, the electricity sale to China has been existing for years; however, no proper solution has been found to stop the problem.
There are now two 110KV electricity networks in Lao Cai province, including one in Lao Cai City and the other in Tang Loong, while the big additional charge gathers in Tang Loong. Therefore, when the 110KV transmission line linking Lao Cai and Tang Loong broke down, the Lao Cai province lost 80 percent of the load capacity (100MW). Meanwhile, most of big hydropower plants, including Muong Hum and Nam Khoa 3 all use the line As a result, electricity has been transmitted to China.
The lack of a 220KV station in Lao Cai has made the situation more serious. In fact, Cong an nhan dan has quoted its sources as saying that the station has been built, but it has not been put into operation, since there has been no electric wire due to the tardiness in site clearance.
The Northern Power Corporation is in charge of purchasing electricity, while it is the National Power Transmission Corporation which takes responsibility for building transmission networks, while the provincial authorities need to take responsibility for site clearance.
A comprehensive measure needed
The Northern Power Corporation has announced that a new network will be put into operation which will consume a big proportion of generation of the plants. However, the problem still has not been settled yet. An officer of the corporation said that even if the network is put into operation, it would be able to handle 100MW at maximum.
“The power plants would be able to run at 80 percent of the capacity only. I am afraid that in July and August, when it rains, power plants will have excessive water to generate power, the electricity will have to go to China,” he said.
According to the Lao Cai provincial Department for Industry and Trade, by the end of 2011, the total electricity capacity of local power plants would reach 400MW, which is triple the current capacity. The figure would be 750 MW by the end of 2013.
Meanwhile, the electricity consumption in the area is forecast to be much smaller than the supply, and if there is no transmission line, the current situation will not be improved–power plants have electricity in excess, but they cannot sell electricity, while other areas are seriously lacking electricity.
“We have tried to contact the National Power Transmission Corporation to learn about the building of the transmission lines, but we have been told to keep waiting,” an official said.
According to the Lao Cai provincial Department for Industry and Trade, under the power network development plan, the Lao Cai 2 110 kV – 40 MVA transformer station will be invested by EVN. However, as EVN has not had investment plan yet, the investors of power plants have decided to contribute capital and empowered the Northern Power Corporation to build the station. However, too many problems have arisen in the implementation of the project
Besides this, the construction of the 110KV Tang Long – Van Ban – Than Uyen backbone line, the 220KV Bao Thang transformer station and the 220KV Bao Thang-Yen Bai line has also been going very slowly.
Purchasing power lowest, inventory highest than ever
Vietnamnet
Most of industries have reported the high level of inventory, saying that the big stocks are the consequence of the high inflation. Experts have also warned that this is the first manifestation of the economic stagnation which needs to be settled as soon as possible.
Goods unsalable
Pham Chi Cuong, Chair of the Vietnam Steel Association (VSA), said that the sales of steel products plummeted in the first six months of the year, because many construction projects have been delayed in the plan to cut down public investments.
The steel sales have been decreasing continuously since March 2011, with the sold steel volume down by 11.4 percent in May and 24.6 percent in June. To date, the stocks have reached 430,000 tons, an increase of 6.9 percent over May, which is reportedly the highest inventory level so far. Meanwhile, every month, enterprises have to pay 300,000-400,000 dong in loan interests for every ton of unsold steel.
Meanwhile, steel manufacturers have been dealt another blow when the Ministry of Finance has submitted to the government the plan to impose 1.5-3 percent tax on steel exports, reasoning that the steel industry consumes too much electricity. Commenting about the proposal, Cuong said that the taxation, if implemented, would block the way out of steel manufacturers, especially when they cannot sell steel products on the domestic.
He went on to say that the electricity price just accounts for 1-1.2 percent of the production cost of laminated steel, while accounting for six percent of the production cost of ingot steel. VSA has proposed not to impose export tax at this difficult moment.
Pham Duc Binh, Deputy Chair of the Vietnam Animal Feed Association, has also complained that the inventory level has been high, since the demand has dropped by 30-40 percent. Even the well known producers, who always have high sales, have also reported the inventory level of 10-20 percent.
Meanwhile, wooden furniture producers have complained that the consumption level has dropped by 30-50 percent due to the low demand, partially caused by the sale price increases of 15-30 percent.
According to Tran Quoc Manh, Deputy Chair of the HCM City Fine Arts and Wood Processing Association, there are two scenarios for wooden furniture manufacturers. In the first scenario, they will incur loss because of the increasing input material prices. Meanwhile, if they do not deliver goods to the partners as contracted, because they do not want to incur loss due to the input material price increases, they will have big stocks.
According to Vu Vinh Phu, Chair of the Hanoi Supermarket Association, the total retailed goods and services in the first six months of 2011 still increased by 22.6 percent over the same period of the last year. However, if not counting on the price increases, the actual growth rate would be 5.7 percent only.
This is really a worrying increase if noting that in 2010, the actual growth rate was higher at 11.2 percent.
The sales have been going very slowly because the purchasing power has been decreasing considerably. Phu said that in 2010, on average, a consumer paid 700,000 dong for his bill, while the figure has dropped to 500,000 dong
Inventory level highest so far
According to Do Thuc, General Director of the General Statistics Office (GSO), the stock index in industrial production in the first five months of 2011 was much higher than that of the previous years. The stock indexes of manufacturing and processing industries increased by 15.9 percent.
The industries which have high inventory levels include brewery production (increased by 94.3 percent), wooden furniture (71.7 percent), non-alcoholic drinks (39.9 percent), animal feed (37.6 percent), fibre (35.4 percent), car and motorbike (30 percent).
“The high stock indexes should be seen as a worrying problem, which shows that the production has been increasing, but the inventory level has been increasing even more sharply,” Thuc said.
“Enterprises cannot sell products to take back capital, while they still have to pay bank loan interests,” he added.
GE gained first wind power turbine contract in Vietnam.
VIR
General Electric has gained a contract with domestic partner for providing its first wind turbines in Vietnam, setting a milestone for the firm to penetrate into renewable power industry in this Southeast Asian country.
Under the contract, General Electric (GE) will provide ten turbines and operations and maintenance services to Cong Ly Company Ltd for the phase one of the Bac Lieu wind power farm, totaling 16 megawatts of power generation capacity.
This is the first contract for providing wind turbine in Vietnam since GE started manufacturing wind turbine in northern Haiphong port city factory in May last year.
The Bac Lieu wind project further expands GE’s role in Vietnam, where the company has been active since the 1960s, providing technological support for a variety of power generation projects throughout the country. With an installed base of more than 2,000 megawatts, GE equipment today supplies approximately 18 per cent of the country’s power generation capacity.
“The Bac Lieu project illustrates our commitment to offer our customers the best technology to meet their specific project requirements,” said Nguyen Xuan Thang, country executive for GE Energy in Vietnam.
“We are focused on helping Cong Ly achieve success with this project, which is a significant milestone for the Bac Lieu province,” he added.
The GE wind turbines chosen for this project feature an 82.5 meter rotor for class III wind conditions, making it a good match for the Bac Lieu site. The 1.6-82.5 builds on the success and the global experience of GE’s 1.5MW wind turbine, the industry’s most widely deployed megawatt-class machine with more than 16,000 installed worldwide.
“This will be the first large-scale industrial and energy project in Bac Lieu province, which has huge potential in wind energy, along with agriculture and seafood farming,” said To Hoai Dan, chairman of Cong Ly Company Ltd.
In the second phase, Cong Ly Company Ltd plans add up to 120 megawatts of power to help resolve the country’s chronic power shortages.
“We expect that the project will help to improve the social and economic conditions of the province by creating new jobs requiring technical and industrial skills, while producing much-needed power. We also hope this first large-scale wind farm project will help to attract more investments into the Bac Lieu province in the future,” said Dan.
CONSTRUCTION - Coteccons selected as contractor for body part of Mandarin Garden project
Dau Tu Chung Khoan
Hoa Phat Group (HPG) has selected Cotec Construction Joint Stock Co (Coteccons - coded CTD) as the main contractor for the third bidding package of constructing the body part in Mandarin Garden project.
The construction on Mandarin Garden project was officially started in July 2010. At present, the construction on foundation part of the project has been completed. From July 15, 2011, Coteccons will start carrying out the body part. The apartments in Mandarin Garden are supposed to be handed over in Q4 of 2013.
Tran Tuan Duong, Hoa Phat Group's general director has confirmed that they have arranged sufficient capital for carrying out the prject.
Located in Hoang Minh Giam St, Hanoi, Mandarin Garden is a complex with about 1,000 high-class apartments to be situated on 25,886 square metre land plot in Southeast Tran Duy Hung urban area, Cau Giay Dist, Hanoi.
Plan to shut old factories making building-materials
Vietnambusiness.asia
Ho Chi Minh City ‘s Department of Construction has targeted eliminating ineffective building-materials production establishments by 2020.
This is one of the main objectives of the city’s VND1.67 trillion building-materials development plan for the 2011-20 period.
To realise this goal, the city will close all establishments that produce clay bricks and roofing tiles with rudimentary methods.
The closure of building-material production establishments that use outdated technology, cause environmental pollution and have low economic efficiency is expected to be completed in 2015.
Another objective is to relocate all cement production factories to areas that have proper planning.
Other building-materials production establishments that are now outside industrial parks will also be relocated to city industrial parks or to localities that have proper planning.
Also under the scheme, the city will become the country’s large-scale centre specialising in transactions and exhibition of construction materials and products.
FINANCE - Vietnam bonds rise as lower bank deposit rates may fuel demand
Bloomberg
Vietnam's bonds gained on speculation decreases in deposit rates at banks may bolster the amount of cash available to buy government debt.
Deposit rates are showing signs of falling and there is surplus cash in the market, the central bank said on July 8.
"Bond yields will probably slide with the drop in deposit rates" as banks have more cash to invest in government securities, said Nguyen Tuan Phong, the Hanoi-based fixed-income manager at Bao Viet Fund Management Co., a unit of Vietnam's biggest insurer.
The yield on the benchmark five-year note declined five basis points, or 0.05 percentage point, to 12.44 percent, according to a daily fixing from banks compiled by Bloomberg. The dong was unchanged at 20,575 per dollar as of 5:31 p.m. in Hanoi, according to data compiled by Bloomberg.
The central bank fixed the reference rate at 20,608 today, the same as the previous two days, according to its website. The currency is allowed to trade up to 1 percent on either side of the rate.
Overseas remittance via Vietnam banks heats up
StoxPlus
Overseas remittance via Vietnam banks have heated up, the online newspaper Dau Tu reported July 13.
Overseas remittance via Sacomrex, Sacombank's subsidiary, was estimated at $800 million in the first six months of the year, up 30 percent on year, said Tran Xuan Huy, the lender's CEO, adding that Sacomrex targeted to achieve 10 billion dong profit from overseas remittance in 2011 compared to 3-4 billion dong in the previous years.
Meanwhile, Jan-Jun overseas remittance via Western Union under Asian Commercial Bank edged up 8 percent on year compared to growth target of 10 percent in 2011.
"It is likely that overseas remittance to Vietnam will be more abundant in the remaining months on end of the year peak season", said Tran Cong Binh, Western Union's manager, adding that the company targeted to boost up overseas remittance revenue by 20 percent from last year.
Local lenders started to launch many facilities in payment to attract overseas remittance, local media reported, citing that Ficombank joined with the Australia-based Remit2Vietnam company in transferring remittances to Vietnam from overseas.
Nguyen Van Giau, the State Bank of Vietnam (SBV)'s Governor said that Vietnam currently has about 55,000 workers overseas with annual revenue of $1.8-2 billion, helping to generate overseas remittance of about $6.5 billion each year.
Overseas remittance plays an important part in narrowing the current account deficit and supplying foreign currencies to the country, local media reported, adding that it also helps reducing risks of attracting capital and dependence on capital flows.
From now to August 31, Saigon commercial bank also announced to give gifts and offer to buy foreign currencies at above ceiling prices for those who receive overseas remittance via Western Union and the bank.
Foreign institutions worried about EVN’s $400m debts
Vietnambusiness.asia
The banks and foreign institutions who fund PetroVietnam’s projects expressed their worries about the big debts of $400 million which the Electricity of Vietnam (EVN) owes the national oil and gas group.
In a document sent to the government, ministries of finance, industry and trade, PetroVietnam said EVN owed $400 million debts to the group’s members, equaling to nearly 8.2 trillion dong including 7.682 trillion dong of electricity costs and 422 billion dong of arising interests due to payment delays.
Additionally, EVN owed PetroVietnam 895 billion dong in unpaid costs of Ca Mau 1 and 2 thermo power plants which were prolonged from 2007 to 2009.
PetroVietnam for many times has requested EVN to pay off the above debts. But, the electricity producing group has still delayed payment deadline for which PetroVietnam’s affiliates are being affected negatively. This also caused domino effects to providers of fuel, maintenance and repairing services, banks, credit institutions funding the projects of Nhon Trach 1, Ca Mau 1 and 2.
EVN’s $400 million debts, according to credit institutions, may impact to PetroVietnam’s payment capacity in borrowing contracts.
This was not the first time PetroVietnam sent similar documents to authorities about EVN’s lateness in debt payment. Earlier, other creditors such as Vinacomin, Hiep Phuoc Electricity Co (who sold electricity to EVN) also complained about EVN’s payment delays. Even, Hiep Phuoc producer announced it would cut power if EVN does not pay a $36 million (756 billion dong) debt.
ECONOMY - State budget collection estimated at 327.82tr dong in H1
VnEconomy
Statistics from the Ministry of Finance (MoF) shows that from April 2011, domestic collection tended to decrease gradually and the average revenue in Q2 fell by 7 percent compared to the average revenue in Q1, 2011.
However, the state budget collection in the first six months of this year was estimated to reach 327.82 trillion dong, or 55.1 percent of the year's estimate thanks mainly to the collection from land use tax of 21.8 trillion dong.
In addition, the surging prices of goods and services made the taxable revenue increase, leading the increase in state budget revenue.
Many groups of import goods and commodities that are subject to high duties posted satisfactory turnover, contributing to the overall result such as the iron and steel turnover increased by 31 percent, making up some 1.6 trillion dong to the state budget, the increase of 27 percent in electronic components group made up 1.08 trillion dong, and the 25.4 percent rise of machineries, equipments and spare parts contributed 1.5 trillion dong to the state budget.
Regarding budget expenditures, the total spending in H1 was estimated at 355.6 trillion dong, or 49 percent of the year's estimate, of which, notably the spending on repayment for foreign debts and aids reached 45.9 trillion dong (over $2.2 billion), or 53.4 percent of the year's estimate.
MoF said that it cut down and adjusted the capital for urgent projects some 8.333 trillion dong, including 5.556 trillion dong from the state budget and 2.777 trillion dong from government bonds.
In addition, state-owned corporations and groups also reviewed and reduced some 39.21 trillion dong public investment.
For frequent expenditures, in H2, some 10 percent or nearly 3.858 trillion dong of frequent spending estimate is expected to be saved from central and local ministries and departments, including 900 billion dong from central agencies and nearly 2.958 trillion dong from localities.
The state budget deficit in H1 was estimated at 27.78 trillion dong, or 23 percent of the year's estimate, lower than the estimated figure of some 30 trillion dong given by the General Statistical Office (GSO) previously.
This is the lowest state budget deficit against the same period of recent years (it was 25 percent in 2010 and 32 percent in 2009).
FOOD PROCESSING AND BEVERAGE - Vietnam shrimp import duty may be dropped
blog.al.com
Four months after the US International Trade Commission voted to continue import duties for five more years on shrimp from Vietnam, a World Trade Organisation panel ruled today that those tariffs break international trade rules.
Gulf of Mexico shrimpers and processors, who won the February ruling as their industry struggled with the impact of last year's BP oil spill, said Monday that the ruling is clearly bad news for them.
The federal government dropped tariffs in 2007 against Ecuador in response to a similar WTO ruling.
"We certainly view this as a setback for American commerce," said David Veal, executive director of the Biloxi-based American Shrimp Processors Association.
In its report today, the three-member WTO panel found that duties the United States imposed in February 2005 because of alleged price dumping by Vietnamese exporters were inflated because of Washington D.C.'s use of "zeroing" to calculate whether the shrimp were being sold at below-cost price.
Under zeroing, commerce economists ignore - or "zero" - import prices above market levels and consider only those below when calculating what duties should be.
According to previous WTO decisions, zeroing leads to inflated margins of dumping, and thus higher duties.
Argentina, Brazil, Canada, Ecuador, the EU, Japan, Mexico, South Korea and Thailand have won zeroing cases at the WTO. In January, the United States promised its trading partners that it would change the method.
Three months later, however, the ITC voted to continue import duties for five more years on shrimp from Thailand, China, Vietnam, Brazil and India. That ruling was the result of a five-year "sunset" review of the antidumping tariffs won in 2005 by a coalition of seafood industry leaders.
Veal was among 11 business owners from Mississippi and Louisiana who testified before the commission that lifting the tariffs would lead to material injury to the domestic shrimp industry.
Veal said Monday that the WTO appears to be slowly undoing the work that he and many others have done for the past several years. The federal government "unfortunately hasn't shown much intestinal fortitude so far in standing up" against its rulings, he said.
Efforts to contact lawyers for Vietnam in the WTO case were unsuccessful today.
Viet Nam forced to import coal
VNS
The nation is becoming a coal importer due to high demand and dwindling domestic supplies. Last month, the State-owned mining giant Vinacomin Group accepted the country’s first-ever batch of imported coal for domestic use.
The shipment of 9,570 tonnes imported from Indonesia arrived at Cat Lai Port in the southern province of Dong Nai and would be used as fuel for thermal power plants in the central and southern regions.
Viet Nam has been a coal exporter for decades, relying on its large coal deposits, but the imports have become necessary as buying imported coal has become cheaper than extracting domestic coal, according to Vinacomin.
Importing low-energy bituminous coal for use in power generators became preferable to using domestic coal, a high-energy anthracite mainly used in chemicals and metallurgy, said Vinacomin’s acting deputy director Vu Manh Hung.
“We should sell our high-quality coal and import cheaper coal,” Hung said. “Power plants have been advised not to waste anthracite to generate electricity.”
Earlier projections had said coal imports would become necessary in 2015, but heavy exports of domestic coal and inadequate policies for stockpiling supplies have pushed that date forward, said Vinacomin general director Le Minh Chuan.
It was also a purely economic decision, Chuan said. The price of coal imports from Indonesia were US$100.60 per tonne while the cost of domestic coal transported from the north to the south had reached $122 per tonne.
“The imports from Indonesia were done on a trial basis to test the strategy of importing larger volume in the future,” Chuan said. “Finding supplies is also not easy. Previously, Vinacomin spent a lot of time negotiating with Australian and Russian partners, to no avail. Recently, however, we were able to win the agreement with Indonesia.”
Viet Nam was also competing for supplies with more established buyers like Japan, South Korea, India and China, Hung said. “These importers have eaten up most of the available coal from mines in Indonesia and Australia. Viet Nam would be hard-pressed to obtain a large volume of coal from those countries.”
“The important thing is to have a strategy and familiar import markets,” Chuan added.
To ensure overseas supplies in the future, enterprises would need to buy rights to exploit or to the production of particular mines.
“Local enterprises need good financial conditions to invest in coal mining abroad,” said the director of Vinacomin’s Red River Energy Co, Nguyen Thanh Son.
China has invested $5.6 billion in Australia for the rights to exploit 30 million tonnes of coal per year, Son said.
“To ensure coal imports to meet domestic demand, Vinacomin and some other groups were working out financing arrangements for importing coal from abroad,” Hung said.
Meanwhile, the group was exploring a new mine with a capacity of 1.5-3.5 million tonnes per year, Hung said.
The group also expected the Government to approve the plan on exploring and exploiting the coal basin in the Red River delta. Meanwhile, Vinacomin was co-operating with Hung Yen and Thai Binh provinces in the delta to conduct trial exploitation on small scale, with the target of obtaining coal and providing local jobs.
Deputy Minister of Industry and Trade Nguyen Thanh Bien said the ministry would build a reasonable strategy on coal imports and exports to ensure energy security.
Vinacomin would need $1 billion annually to increase coal production to 48 million tonnes in 2015 – 8 million tonnes higher than the current output – and to 55-70 million tonnes in 2020. Demand was estimated to reach 54 million tonnes in 2015 and 150 million tonnes in 2020.
The group expects to import 10 million tonnes of coal annually this year and next, mostly low-energy bituminous coal for use in power generation. The figure was estimated to reach 100 million tonnes by 2020 to meet the urgent demand for electricity as well as demand of other industries such as steel and cement.
LEGAL NEWS - Vietnamese ex-official in corruption case involving Japan loans gets another 7-
Imports to Vietnam must have certificates of origin
VOV
Starting on July 1, fruits and vegetables imported to Vietnam need certificates of origin (COs), announced deputy minister of Agriculture and Rural Development, Diep Kinh Tan, at a press briefing on June 30.
Deputy minister Tan said that the requirement of COs for imports to Vietnam goes in line with the country's commitments to the World Trade Organisation (WTO), showing equal treatment among WTO members.
Vietnamese exports must also follow strict regulations before entering foreign markets, he added.
According to Nguyen Nhu Tiep, deputy Head of the Seafood, Farm and Forestry Produce
Quality Control Department, it is important to require COs from all products imported to Vietnam to ensure food hygiene and safety.
By June 30, four countries namely the US, Canada, Australia and Thailand had registered to follow COs regulations of Vietnam.
GOVERNANCE - NA considers government proposal on tax policies
StoxPlus
The 12th National Assembly Standing Committee opened its 42nd session in Hanoi on July 13 to review the government's proposal on tax exemptions, reductions and extensions in 2011.
The report on the supplementary promulgation of solutions on tax presented by Finance minister Vu Van Ninh said the government provided an extension on tax payment for small and medium-sized enterprises and continued to expand groups of subjects eligible to enjoy tax payment extension for labour-intensive enterprises in forestry and seafood processing, garment, footwear, electronic accessories production, socio-economic infrastructure projects, and some important trading services.
Tax exemption is applied to dividends for investment in securities and shares in enterprises, for securities transfer operations and from salary, pay and business incomes.
However, Chair of the NA Committee for Finance and Budget Phung Quoc Hien said that many opinions from his committee stressed the need to cautiously consider and review the application of tax exemptions and reductions.
Chair of the NA Economic Committee Ha Van Hien said that although the banking sector currently has high interest rates, many businesses still need loans to maintain production. In the first six months of this year, they faced more difficulties.
At present, they are awaiting tax policies to ease their difficulties, because it is not easy to promptly reduce the banking interest rates, he explained, saying that it is necessary to promulgate policies on tax exemption to give a positive sign to the market.
The NA permanent committee agreed with the government's submission to the first session of the 13th National Assembly for further consideration.
Also at the meeting, the NA permanent committee gave opinions to the draft resolution on promulgation of tariffs on environmental protection.
The draft resolution is expected to be approved on July 14 by the NA permanent committee.
cid:image001.jpg@01CC42F1.B62855B0
UPDATES
JULY 1 to 15, 2011
Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com
in case you have questions on the content.
* Press Watch $
2012 – New year, new changes to Labour Code.
There has been so many proposed amendments to the current Labour Code since the original draft amendment, and it is finally scheduled for review by the National Assembly this year and adoption by 2012. As it is now, the Labour code fails to make the distinction between industrial workers and white collar employees. As it is never a case of “one size fits all”, greater flexibility would always be a welcome means to moderate impacts. Proposed changes are in relation to retrenchment rights, Labour contracts, salary scale, overtime, collective labour agreements, - with a new item added : ‘Industry collective labour agreements’; trade unions, rights and protection of trade union officers at the enterprises, unilateral termination of labour contracts with trade union officers, female workers, labour discipline, resolution of labour disputes and strikes.
VIR. July 11
Vietnam wins deals in shrimp dispute
The U.S. was found by a WTO judge panel to have ‘acted inconsistently with the Anti Dumping Agreement’ after Vietnam filed early last year against the US’s anti-dumping measures on Vietnam’s frozen warm water shrimps. This was the first time Vietnam has taken such an action since the country joined the WTO early 2007.
Saigon Times . July 13
Export Processing Zones and Industrial Zones in HCM City
Accumulated export turnover from the EPZ and IZ has amounted to USD 23.2 billion, accounting for 12.5% of the city’s total export turnover and 40% of the city’s industrial export turnover. The HCM City Authority for Export Processing and Industrial Zones (HEPZA) targets to reach USD 6 billion of export earnings per year by 2015 with an annual export turnover growth of 15%.
JICA – Help in Infrastructure improvement
Japan shall transfer its latest road maintenance technology to Vietnam in a project with a total budget of JPY 345 Million. The project shall introduce new information technologies to the management and monitoring of the road system rather than conventional forms of road maintenance. The Japan International Cooperation Agency (JICA) has also signed a minute of meeting for a project to enhance HCMC’s flood management capacity, by developing the city’s sewerage and waste water treatment system.
Poverty reduction in Vietnam
Disbursement of 17 Million Euros (around 24.6 Million USD) was made in account of the clear progress in policy reform made by Vietnamese authorities in key areas, among others, internal audit legislation to improve public financial management; establishment of national standards and a framework on consumer protection. Another 12 Million Euros were for raising the living standards of ethnic minorities in Vietnam. The EU delegation plans an additional 150 million Euros (USD 212 million) of support grant for poverty reduction and the health sector – however, such budget support shall only be possible if public financial management modernization is steadily pursued and a stable macroeconomic environment maintained.
Vietnam News. July 2
French investors keen on Public Private Partnerships
Energy, transportation, water treatment and supply are prioritized areas that French company wish to invest into via PPP. The Ministry of Transport made estimates that the State Budget, Government Bond sale and ODA loans would only meet about 55% of the huge investment capital needed for transportation projects in 2011-2015, and the rest had to be raised from other sources. An international airport in Dong Nai Province is one of the projects that have their components planned for PPP. Saigon Times. July 6
Saturday 20 August 2011
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