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INVESTMENT - UK businesses seek investment opportunities in Vietnam
VOV
Many
UK businesses and Vietnamese experts gathered at a seminar in Liverpool
on September 21 to promote trade and investment in Vietnam.
The
seminar was held by the Vietnamese Embassy in the UK and Northern
Ireland, the Liverpool Chamber of Commerce and the UK Trade and
Investment
(UKTI).
UKTI
trade adviser Peter Thompson said Vietnam is a dynamic and potential
market. After the two countries signed a joint declaration on strategic
partnership in 2010 bilateral trade has increased considerably. The UK
is currently the Vietnam's second largest trade partner in the European
Union.
Vietnam's exports to the UK were estimated at $1.3 billion and imports at $315 million in the first seven months of this year.
Vietnam
Airlines will open the Hanoi-HCM City-London air route as from December
9, 2011 to facilitate cooperation in trade, investment, tourism,
education and training between Vietnam and the UK.
Viet Nam, Netherlands strengthen defence ties
HA
NOI — Besides co-operation in national defence, Viet Nam and the
Netherlands should continue expanding co-operation in other fields,
Prime Minister Nguyen Tan Dung told visiting
Dutch Defence Minister Hans Hillen.
Speaking
at a reception in the capital city yesterday, Dung put emphasis on
economy, investment, coping with climate change and managing water
resources as fields in which the
two sides needed to focus on.
The
Prime Minister applauded results between Hillen and his Vietnamese
counterpart Phung Quang Thanh, in which a memorandum of understanding on
national defence co-operation
and an agreement on co-operation in defence materials were signed.
Dung
said he wanted the two defence ministries to cooperate more on defence
techniques aimed at the navy, exchanging experiences in military
training and raising national defence
capabilities.
In
response, the Dutchman affirmed that his country's Defence Ministry
would cooperate closely with Viet Nam to implement signed documents.
Priority
would be given to speed up co-operation in national defence, sharing
experiences in military training and providing relief for victims of
natural calamities, he said.
Heavily
affected by climate changes, Hillen suggested that Viet Nam and the
Netherlands cooperate more actively in coping with aspects related to
rising sea levels amongst others.
Earlier,
the two defence ministers also agreed on strengthening the exchange of
visits between delegations at different levels, participating in United
Nations peacekeeping activities
and establishing relations between military enterprises from both
countries. — VNS
PM demands greater quality FDI
VIR
Prime minister Nguyen Tan Dung has demanded the strict management of foreign direct investment nationwide.
Dung's
directive aims to improve the quality of foreign direct investment
(FDI) projects and encourage projects which apply state-of-art
and environmental friendly technologies.
New
FDI projects must effectively utilise natural resources, reinforce
linkages with domestic enterprises, and lure more investment into
auxiliary industries, agriculture, preferential services, IT and hi-tech
industries.
Dung
ordered local authorities not to grant investment certificates to
energy and natural resource intensive projects. Projects which use
outdated technology and pollute the environment are also prohibited.
Dung asked ministries and local authorities to make preferential investment policies and "improve
the quality" FDI appraisements as well as effectively apply investment certification and management decentralisation procedures.
Dung noted the importance of efficient FDI flow management as well as inspection of large-scale projects.
The
Ministry of Planning and Investment was assigned to work with other
ministries and localities to raise the efficiency of FDI attraction,
spending, and management during 2011-2020. Meanwhile, the Ministry of
Industry and Trade is in charge of drafting a project to better state
management and FDI focus in the areas of supporting industries,
electricity and commerce during 2011-2020.
The
Ministry of Natural Resources and Environment is responsible for
raising the efficiency of the state management in the areas of land,
environment, and consumption of natural resources and minerals.
Polish firms explore local opportunities
Bloomberg
A
multi-sector delegation of Polish companies met executives of more than
60 Vietnamese companies in HCM City on September 20 to seek trade
and investment opportunities.
The
visiting companies mainly specialise in manufacturing machinery for the
food industry, trailer and truck chassis, pumps, steel, poultry
products and pharmaceuticals.
Nguyen
The Hung, deputy director of the Vietnam Chamber of Commerce and
Industry's HCM City branch, said with a population of nearly 40 million
and per capita income of more than 18,000 USD per year, Poland Is a
promising market for Vietnamese products.
Bilateral
trade between Vietnam and Poland has increased considerably in recent
years, reaching 400 million USD last year, of which Vietnamese
exports made up a much larger part.
Vietnam
mainly exports garments and textiles, agricultural products and seafood
to Poland. It imports machines, equipment, milk powder and
medicine from the country.
Polish enterprises have invested in eight projects in Vietnam worth a total registered capital of roughly 100 million USD.
Poland has been an important partner of Vietnam in Eastern Europe for long, Hung said.
ECONOMY - Update 1 - Vietnam's GDP in Jan-September grows 5.76pct: GSO
Vietbiz24
Vietnam's
GDP (gross domestic product) in the first nine months of this year is
estimated to have reached 406.308 trillion dong (basing on
the base price in 1994), up 5.76 percent from the same period last year.
According
to the real price, the country's GDP in January-September is estimated
to have reached over 1,700 trillion dong, general Statistical
Office (GSO) reported on Wednesday September 21.
This figure is lower 0.76 percentage points against the GDP growth in last January-September.
Particularly,
the growth of agro-forestry and fisheries sectors in January-September
is estimated to have increased 2.39 percent year-on-year
and the rise of industry and construction sectors at 6.62 percent and
service segment at 6.24 percent.
In the first nine months of 2009 and 2010, the country's GDP growth was 4.59 percent and 6.52 percent respectively.
Earlier,
according to the data from GSO in the first six months of this year,
the country's GDP growth was 5.57 percent year-on-year.
The country's GDP growth targeted by the government for this year is 6 percent.
Vietnam set cash up to 20pct of the national reserves
Vietbiz24
Vietnam
has set cash reserve at 20 percent of the national reserves, according
to the national reserve development strategy in 2020 proposed
at a meeting on Wednesday chaired by minister of Finance Vuong Dinh Hue.
During
the meeting, the State Reserve Agency under the Ministry of Finance
said that it has prepared the strategy to develop the national
reserves in 2020 to ensure that by 2015, total national reserves reached
about 0.8 to 1 percent of GDP and 1.5 percent of GDP by 2020, of which
the cash reserve was set to reach 10-20 percent of the national
reserves.
At
the same time, the participants of the meeting also proposed that
Vietnam should not include fertiliser products, liquefied natural gas
to the list of items to stock in the current period because local firms
have stable production of those items, fully meeting the consumer need,
if any changes in macro policies, the government will support for
reserves of these commodities.
In addition, most participants of the meeting recommended that the government should not make direct reserves for crude oil.
Also,
the meeting clarified the basis of the need to take a number of lists
such as equipment on the sea, weapons of all kinds, precious
materials into the national reserves.
Adjustments
of a number of agricultural products were made at the meeting such as:
salt, seeds, vaccines, veterinary drugs, plant protection
drugs and others.
FINANCE - Vietnam's 5-year bonds drop before inflation report; dong gains
Bloomberg
Vietnam's five-year bonds fell the most in more than two weeks before an inflation report due this week.
Consumer
prices climbed 23.02 percent in August from a year earlier, the fastest
pace since November 2008, official data show. The general
Statistical Office is due to publish data for September by Saturday.
The
yield on five-year government notes rose two basis points, or 0.02
percentage point, to 12.47 percent, according to a daily fixing from
banks compiled by Bloomberg. That's the biggest increase since September
7.
"The
trend is still unclear and investors are waiting" for the inflation
report, said Nguyen Thanh Danh, a HCM City-based money-market dealer
at Saigon Thuong Tin Commercial Joint-Stock Bank.
The
dong strengthened 0.1 percent to 20,812 per dollar as of 3:20 p.m. in
Hanoi, according to data compiled by Bloomberg. The central bank
fixed the reference rate at 20,628 today, unchanged since August 24,
according to its website. The currency is allowed to trade up to 1
percent on either side of the rate.
US dollar price rises to 21,200 dong on free market
Vietbiz24
The
US dollar free market has started showing signs of stress as the US
dollar price on this so-called black market continued to rise up
to 21,200 dong/US dollar on Friday.
In
this morning September 23, Thien Quy Jewellery Shop at Au Co Street,
District 11, HCM City said the dollar price strongly rose 30 dong
to 21,200 dong (selling) and 21,120 dong (buying).
Yesterday afternoon September 22, the dollar price of the HCM City free market already exceeded 21,000 dong/ US dollar.
A
currency exchange shop in Ben Thanh Market area, said the bid and ask
price of dollars stood at 21,120 and 21,170 dong. Meanwhile, a gold
shop in the area of District 5, said the bid and ask dollar price stood
at 21,130 -21,180 dong/US dollar.
On
the Hanoi market, in the morning of September 22, the US dollar bid
price rose 30 dong to 21,080 and ask price increased 20 dong to 21,100
dong.
This
morning, the State Bank of Vietnam kept the inter-bank average exchange
rate unchanged for the 26th consecutive session at 20,628 dong/US
dollar.
US
dollar prices quoted at commercial banks remained unchanged. The
selling price was still at the ceiling kept by the State Bank at 20,834
dong/dollar, while the buying price was lower by from 4 to 24 dong.
According
to an economist, the exchange rate is expected to get more tense in the
fourth quarter because in the last months of the year,
demand for dollars to import consumer goods for Christmas, New Year and
Chinese New Year often increases highly.
In
addition, businesses' US dollar loans in the first half of 2011 falling
due at the end of 2011, which will make demand for dollars increase
on the free market when banks cannot provide enough dollars.
ENERGY - New high hopes raised on bot power projects
Vietnamnet
The
construction of two BOT power projects: Hai Duong and Mong Duong 2,
just within a week, has once again raised the high hopes on the
returning
of the investments under the mode of BOT (build-operation-transfer).
After
six years of negotiation and preparation, the construction of the main
unit of the 1120 MW Mong Duong 2 power plant project, capitalized
at 1.95 billion dollars was started last week. This has been described
as the good news for the Quang Ninh province’s economy and for foreign
investors as well, because this shows that foreign investors now can
find good opportunities when investing in the
power sector.
At
the ground breaking ceremony of the Mong Duong 2 power project, Deputy
Minister of Industry and Trade, Le Duong Quang, emphasized the
important role of the plant in the implementation of the power
generation development strategy in 2006-2015 and of BOT power projects.
The
BOT invested Phu My 3 power plant was completed in March 2004. After
that, the Phu My 2.2 power plant was completed in November 2005.
And none of the project had been kicked off until now.
Prior to that, on September 9, the 1200 MW Hai Duong Power Plant project was also kicked off.
Both
of the two power projects with big designed capacities of 1200 MW have
the project development undertaken by foreign investors under
the mode of BOT. Therefore, they have caught the special attention from
the public.
The
BOT Mong Duong power project will be developed by the US AES Group,
South Korean Posco Power, and Chinese CIC which contribute 51 percent,
30 percent and 19 percent of capital, respectively.
Initially,
the project was developed by the US AES and the Vietnamese Coal and
Mineral Industries Group (Vinacomin). However, Vinacoal later
decided to give up the project, and AES quickly found out new investors –
Posco Power and CIC which not only overtook the 10 percent of stakes
from Vinacomin, but also contributed more capital to raise their
ownership ratios to 49 percent.
Becoming
a 100 percent foreign invested project, but the conditions of the
project implementation were negotiated on the basis of foreign-invested
BOT project. Therefore, the new investors of Mong Duong 2 did not meet
with any difficulties in having the investment license amended.
Just
one month after getting the new investment license in July 2011, the
investors completed the arrangement of the loan worth 1.46 billion
dollars from KEXIM and KSURE and 12 international commercial banks.
Paul
Hanrahan, President and CEO of AES Group, said that with the project,
the investors want to make their contribution to the sustainable
development of Vietnam’s economy. He has also revealed that the EPC
contractor of the project is Doosan Heavy Industries Vietnam Co. Ltd and
its subsidiaries.
As
planned, the Mong Duong power plant will be put into commercial
operation in July 2015 and generate 7.6 billion kwh or electricity a
year.
After 25 years of operation, the Mong Duong BOT power plant will be
handed over to Vietnam.
As
such, if both the Mong Duong 2 and Hai Duong projects can be completed
on schedule, the national power grid will have 15 billion kwh of
electricity a year which will serve the socio-economic development of
the country.
As
such, it took the two BOT projects six years at maximum to complete the
steps of the negotiation process. Commenting about this, experts
say that the time needed to negotiate for a BOT power project still has
not been shortened as expected, if compared with the two projects of Phu
My 2.2 and Phu My 3 conducted 15 years ago.
Sources
say that nine other BOT power projects are under negotiations and
Vietnam has high hopes to speed up the negotiations to soon start
the construction.
Under
the power generation plant development system in 2011-2020, Vietnam
needs five billion dollars a year in investment capital.
Energy association backs EVN in seeking financial sources
Vietnam
Energy Association (VEA) has proposed to the government and relevant
agencies on seeking preferential loans for the Electricity of
Vietnam Group (EVN) to speed up the pace of energy projects that are
under construction, according to newswire Vnexpress.
According
to VEA, in fact, the pace of most power projects, such as Nhon Trach 2,
Hai Phong 1, 2, Quang Ninh 1 and Duyen Hai, has been delayed
because of weak capacity, inexperience and finance issues of
contractors.
VEA
said that the provisions on allowing maximum lending 15 percent of
equity for each enterprise and the short term capital use ratio for
long-term loans at maximum 30 percent have impacted the capital
mobilization of commercial banks for energy projects, especially key
projects that are scheduled for long-term construction.
Therefore,
VEA proposed the government to allow EVN to sign commercial loans and
soft loans with suitable lending interest rate to invest
in its power without appraisal and collateral, at the same time expand
the domestic soft loans for all power projects.
In
addition, according to VEA, Chinese contracts will be allowed to join
support sections only when they win bidding contracts as prescribed.
In tenders, financial capacity and experience should be given priorities rather than auctions as in the past.
VEA
stressed that it is necessary to encourage contractors and investors in
the group of G7 countries and EU to strongly develop coal-fired
thermo power sources.
When
those foreign investors investing in Vietnam under the form of BOT
(build-operate-transfer), BOO (Build-Own-Operate) and IPP, if they
have enough capacity, experience, and finance, it will be better to
choose investors from developed countries.
Burdened with debts
As
of August 2011, EVN has posted total accumulated loss of about 31.565
trillion dong, according to Dinh Quang Tri, EVN’s deputy general
director. EVN’s solvency is very difficult because the group cannot
balance its capital sources for debt repayment, Tri said.
Currently,
EVN owes many other economic groups such as Vietnam National Oil and
Gas Group (PetroVietnam) with over seven trillion dong debt,
Vietnam National Coal and Minerals Industries Group (Vinacomin) with 10
trillion dong and Song Da Group with over 5.5 trillion dong.
Many economic groups are proposing the Ministry of Industry and Trade to urge EVN to repay for debts.
EVN
has recently sent documents to the government asking to give priorities
in repaying for foreign debts totally at about 4-5 trillion dong
per year.
If EVN is allowed to hike electricity price, it will use the difference in power price to repay for debts at PVN and Vinacomin.
But
the Ministry of Finance has urges EVN not to raise rates more than once
per quarter due to possible negative impacts on the economy,
Vietnam News Agency quoted minister of Finance Vuong Dinh Hue as saying.
Hue
has sent a document to minister of Industry and Trade Vu Huy Hoang
responding to Hoang’s proposals on taxes, fees and prices for a number
of commodities, including electricity.
In
the document, Hue agreed in principle that electricity rates needed to
increase to reflect actual costs, but the rate and timing of increases
needed to depend on the economic situation.
In
the current economic situation, he said, EVN needed to co-ordinate with
the ministries to establish a general plan for increasing electricity
rates based on input costs, such as coal prices.
The plan should consider specific economic impacts on major industries from increase in electrical rates, Hue said.
EVN arm eyes divestment
EVN
Telecom, a subsidiary of state-owned Electricity of Vietnam (EVN), is
submitting to the government a plan to sell its stake to Vietnam
Multimedia Corp or Vietnam Television Corp (VTC), Dau Tu newspaper
reported.
Initial
information said that EVNTelecom will sell 12 percent stake to VTC. VTC
plans to spend an amount of VND800 billion on this deal.
In
January 2011, the government agreed the plan to make equitization for
EVNTelecom whereby EVNTelecom will sell a part of state holding
to strategic investor and offer preferential shares to the employees.
Of
which, EVN will hold 50.6 percent stake, 0.4 percent stake will be held
by the employees and 49 percent stake for FPT Co and FPT Telecom
Joint Stock Co (FPT Telecom).
However,
FPT would like to hold 60 percent stake in EVNTelecom, therefore, FPT
withdrew this deal although the group had already deposited
over 700 billion dong for this trade deal.
Presently, FPT is not sure when to take back the deposit.
EVNTelecom manages and develops mobile and fixed phone services and internet.
Currently, It has over 4.7 million subscribers including both mobile and landline users.
EVNTelecom’s
3G network has covered 63 provinces and cities but it is only providing
basic services in HCM City, Hanoi, Hai Phong, Da Nang
and Can Tho.
Vietnam will not issue licenses to projects that ’waste energy’
Bloomberg
Vietnam
says it will not issue licenses to foreign-invested projects that
“waste energy”, use outdated technology or pollute the environment,
according to a statement posted on the government website today.
The
government will give licensing preference to high- technology projects
and ones that are “friendly to the environment,” the statement
said.
Prime
Minister Nguyen Tan Dung has ordered ministries and provinces to
step-up monitoring of projects to ensure they meet the guidelines,
according to the statement.
Raising electricity price would mean “putting more oil into the fire”
Businesses
and households are now in a state of anxious suspense after the
Electricity of Vietnam proposed to raise the retail electricity
price. Meanwhile, analysts comment that raising electricity price at
this moment would make the situation more serious.
Electricity price hike will come contrary to the government’s plan
TBKTSG
Right
after the Circular No 31 by the Ministry of Industry and Trade, guiding
the implementation of the electricity market pricing mechanism,
the Electricity of Vietnam (EVN), the only electricity retailer in
Vietnam, has asked for the permission to raise the electricity price
from September 2011.
Duong
Quang Thanh, Deputy General Director of EVN, said that it is necessary
to raise the electricity price now, or EVN will continue incurring
losses and Vietnam will not have capital to build more power plants.
However,
analysts comment that helping EVN escape from losses is not the most
important task at this moment. If the electricity price increases,
this would lead to the increases of a series of other goods and
services. And if this happens, the move will come contrary to the
government’s plan to curb the price increases of essential goods and
prevent the possible “price fever attacks” in the last months
of the year.
The
analysts have every reason to worry about a possible price increase
wave, if the proposal to raise the electricity price is approved.
Right after the increases of electricity and petroleum prices in late
March 2011, the consumer price index (CPI) in the next two months
skyrocketed.
The
scenario would repeat now, and the inflation which has been eased a
little recently, would be more serious, if the electricity price
is lifted once again this year.
They
have also pointed out that in the electricity pricing, it is necessary
to weight the pros and cons for the sake of the whole national
economy, not just for the benefit of one enterprise. For a long time,
EVN has been enjoying preferences from the State, including the ones in
accessing ODA (official development assistance) cheap loans. They can
purchase coal and gas for power generation plants
at low prices.
It
is clear that the electricity price increases would bring bigger
revenue to EVN. However, the price that the national economy has to pay
for the profit of EVN will be heavier by tens of times.
It
is really unreasonable to raise the electricity price now, when basic
factors in the national economy allow to keep the prices stable.
The dong/dollar exchange rate has been stable since April. The oil land
petrol price increases in the world do not have big influences on the
electricity price in Vietnam, because Vietnam has been relying on
hydropower plants and gas and coal run power plants,
while the supplies of coal and gas have been stable in prices.
What prices are right?
When
proposing to raise the electricity prices, EVN always stresses that the
electricity price must be the “market price”, i.e it must truly
reflect the production costs based on the market conditions, instead of
the prices which are below the production costs.
However,
the problem is that it is still unclear about what the “market price”
means, because the input costs for the electricity production
remain unclear.
If
comparing the current retail price in Vietnam with the electricity
price at which EVN is buying from China, one would see that the retail
price in Vietnam is not too low. Why has EVN still been incurring such
heavy losses, then?
In
fact, there are still many questions which remain unanswered. The
consumption levels of input energy of thermopower plants prove to be
very different. Is it because the investors use backward technologies
and equipments?
The
question about the investment rate also remains unanswered. Several
months ago, EVN once asked PetroVietnam to help check bidding documents
to find out why the thermopower plants invested in EVN are 100 million
dollars more expensive than that invested by PetroVietnam.
According
to EVN, in the first eight months of the year, the total electricity
output and purchased volume was 69.411 billion kwh, while
the merchandise electricity was 61.723 billion kwh only, which means
that 7.67 billion kwh. Experts have pointed out that high loss
percentage in transmission is also an important reason behind the high
production cost.
RESOURCES - MOF to inspect imported petrol prices
The
Ministry of Finance (MoF) has established three teams to inspect the
prices of imported fuel at four major domestic distributors
The
Ministry of Finance (MoF) has established three teams to inspect the
prices of imported fuel at four major domestic distributors including
the Vietnam National Petroleum Corporation (Petrolimex), PetroVietnam
Oil Corporation, Sai Gon Petro Co Ltd and Dong Thap Petroleum Trading Co
Ltd (Petimex).
Inspection
teams are assigned to look into these distributors' inventory fuel
prices as of August 26, 2011 and imported fuel prices from
January 1, 2011 to September 15, 2011.
Fuel trading activities and related expenses by these enterprises are expected to be clarified through the inspection.
The MoF is also taking a close look at the use of the Price Stabilisation Fund as of the middle of this month.
This move was part of MoF's efforts to manage this essential commodity more effectively.
Vietnam
News Agency is scheduled to conduct an exclusive interview with
minister of Finance Vuong Dinh Hue about this matter later today.
Major fuel distributors to be inspected
Tuoitrenews
The
Ministry of Finance has established three inspection teams to look into
the pricing management of four major fuel wholesalers.
The
inspectors will inspect the pricing of fuel imported by Petrolimex,
PetroVietnam Oil, Saigon Petro Co. and Dong Thap Petroleum Trading
Co. Ltd., other expenses affecting their operation, as well as their use
of the Petrol Price Stabilization Fund.
At
a conference on fuel price management held in Hanoi on Tuesday, the
Ministry of Industry and Trade strongly criticized the Ministry of
Finance’s proposal to cut fuel prices on August 26, saying these
wholesalers were suffering losses at that time.
Petrolimex,
the country’s largest fuel wholesaler, also lamented its loss of VND1.8
trillion (US$90 million) in the first eight months of
this year.
However,
its Chairman Bui Ngoc Bao on Wednesday admitted to earning profits
between VND129 per liter and VND400 per liter at the time fuel
prices were cut.
Nguyen
Anh Tuan, Deputy Head of the Ministry of Finance’s Price Management
Department, said he was skeptical about this giant distributor’s
administrative management.
He
said customs data was crucial for the finance ministry to reduce retail
prices, and data showed Petrolimex was making a profit of VND780
per liter on top of the fixed profit of VND300 per liter allowed by the
government.
But
as Petrolimex said its profit was only VND440 per liter, Tuan said the
ministry’s audit would determine the real profits these wholesalers
were enjoying.
Tuan said inspection would begin next week and the results would be accessible to the public.
INFRASTRUCTURE - CapitaLand completes first residential project in Vietnam
Southeast
Asia's largest property developer CapitaLand has announced the
successful completion of its first residential development in Vietnam,
The Vista.
Construction
works for the project, which was jointly developed by CapitaLand, Phu
Gia Investment Joint Stock Company and Thien Duc Trading
Construction Co, commenced in January 2008 and were completed on
schedule this month.
"The
Vista marks several milestones achieved by CapitaLand in Vietnam. When
The Vista was officially launched in October 2007, it received
overwhelming response from the Vietnamese. At that time, The Vista also
set new benchmarks in Vietnam in terms of its design, landscaping,
quality finishes and a comprehensive range of recreational facilities.
In addition, The Vista's unique sales gallery
was the first-of-its-kind in Vietnam to have mock-up units that provided
customers a close simulation of living in an actual apartment in the
development," said Yip Hoong Mun, deputy CEO of CapitaLand (Vietnam).
Located
in HCM City's District 2, The Vista is a prime residential development
close to the city centre. It comprises 750 luxury apartments
across five 28-storey towers overlooking the Saigon River and the city.
The project also offers 100 serviced residence units and 35,000 sq m of
commercial space, including a retail podium.
"By
combining the strengths between CapitaLand and the local Vietnamese
developers, we are able to deliver a benchmark project like The Vista
for the Vietnamese," said Le Nu Thuy Duong, general director of Thien
Duc Trading Construction Co.
"The
Vista has incorporated good building and design practices established
from other CapitaLand international projects while Vietnamese
developers add to the success of the partnership with our extensive
knowledge in the local real estate realm and our understanding of
Vietnamese custom and taste."
Meanwhile,
buyers of the residential apartments were recently invited to an Open
House at The Vista. Around 350 buyers, along with their
families and friends, attended the event.
PROPERTY - Real-estate firms must look to private sector
Vietnamplus
The
construction sector needs to intensify technological application and
attract investment from non-State-owned sources to better satisfy
the domestic demand, according to deputy prime minister Hoang Trung Hai.
Discussing
targets set for 2011-15 with the Ministry of Contruction, Hai pointed
out that weaknesses in urban area management, the low quality
of urban areas, unstable development of the real estate market and
inconsistency in construction regulations need to be addressed.
In
the next five years, Hai stressed that planning remained one step ahead
of population growth and the increasing demand for accommodation
in rural and urban areas.
Suitable
regulations are also needed to mobilise the maximum amount of social
resources for infrastructure implementation, he added.
Minister
of Construction Nguyen Dinh Dung said that during the next five years,
the sector will focus on improving the quality of construction
material production industries and construction equipment manufacturing
while expanding construction markets abroad.
At
the same time, it will make all efforts to develop urban infrastructure
systems, including transportation networks as well as water supply
and solid waste treatment facilities.
The
ministry would continue its rural planning programmes as scheduled,
which will be a fulcra for socio-economic development and narrowing
the gap between rural and urban areas.
Plans
are currently underway for the ministry to actively cooperate with
relevant authorities in inspecting people's abidance by legal documents
of investment, housing development and real estate business to timely
detect speculation and price distortion activities.
The
construction sector has done much to cut public investment, save
expenditure, boost social housing programmes and stabilise the materials
market, Dung said.
Currently,
the average house size per capita is 18.3 sq.m, while 77 percent of
urban residents have access to clean water, he added.
To
date, the production value of ministerial enterprises has been
estimated to have reached 100 trillion VND (4.7 billion USD), a rise of
10.3 percent over the same period last year.
Real estate lending restrictions should continue
The
State Bank of Vietnam (SBV) should continue its restriction on loans to
real estate projects next year in order to reduce financial risks,
said an official.
Unstable property market causes difficulties for banks
Dr
Le Xuan Nghia, vice Chair of the National Financial Supervisory
Committee said that as much as 70-80 percent of capital for real estate
projects comes from banks, and an unstable market has put pressure on
them, especially smaller banks.
In
many commercial banks, real estate projects account for 30-40 percent
of their total outstanding loans. At some banks it is as high as
50 percent.
By the end of June, the real estate sector made up 8.3 percent of banks' bad debts.
Different rules for different banks
After
the SBV has applied policies to curb credit growth in the
non-production sector, the real estate market slowed significantly.
According
to the National Financial Supervisory Committee, in the first six
months of this year, bad debt in this sector increased by 37
percent, totalling VND1.766 trillion (USD84.9 million).
Nghia
noted that the same lending restriction should not be applied to all
banks. Even though the SBV needs to curb credit growth in real
estate next year, it should lift the restrictions on banks that do not
have liquidity problems.
These banks would be able to make real estate loans which do not surpass 10 percent of loan portfolio.
He added that another reason for flexibility on real estate lending restrictions is that there is a real need for housing.
"Construction
of industrial parks, export processing zones and urban areas is of
value to the economy. Credit restrictions for these activities
has affected the construction material market, leaving steel and cement
companies with high inventory," Nghia emphasized
INDUSTRY - Vietnam Steel finally begins equitisation
Vietnamplus
State-owned
Vietnam Steel Corporation will re-organize as a joint stock company
next month, Chair Mai Van Tinh announced on September 20,
vowing no more delays to its equitisation process.
"We've
been behind schedule for the past nine months, so the first fiscal year
under the joint stock model will begin on October 1 of this
year," said Tinh.
The
State currently holds nearly 94 percent of the corporation's charter
capital of 6.8 trillion VND (328 million USD). As the company equitises,
39.1 million shares, representing a 5.76-per-cent stake, will be sold to
investors. Another 29 percent will be offered to foreign strategic
investors, leaving the State with a controlling interest of 65 percent.
"We
will finish finding foreign strategic partners in the fourth quarter of
next year," said general director Le Phu Hung, noting that Vietnam
Steel would be offering the maximum interest to foreigners allowed by
law.
Vietnam
Steel has already received feelers from potential Russian investors
such as Novolipetsk Steel Corporation and Evraz Group SA, Hung
said.
"Next
month, we will learn more about the interest of some major Japanese
steelmakers, including Nipon Steel, JSE, Tokyo Steel, Kobe Steel,
Mitsubishi and Marubeni-Itochu," he added.
Upon
equitising, Vietnam Steel expects to increase its charter capital to 8
trillion VND (386.5 million USD). Expecting earnings this year
of 14 trillion VND (676.3 million USD), it targets to pay a dividend of 7
percent on this year's profits and dividends of 9-11 percent over the
next two years.
LEGAL NEWS - MOIT's suggestions to help ease difficulties for businesses refused
VietNamNet | Thoi bao Kinh te Vietnam
The
Ministry of Finance (MOF) has officially refuted the suggestions made
by the Ministry of Industry and Trade (MOIT), on the issues relating
to the credit policy to help ease the difficulties burdening
enterprises.
MOF
has sent a document to MOIT, expressing its disagreement to the
suggestions made by MOIT, in an effort to help businesses escape from
the current big difficulties.
Regarding
the interest rate policy, MOIT suggested that MOF should propose the
government to apply a policy allowing to gradually reduce
the short term credit interest rates to reasonable levels, and offer
preferential interest rates to the enterprises that make products for
export and labour intensive enterprises.
MOIT
believes that this would be a reasonable solution that can help boost
exports now, when the export markets have been narrowed.
In
reply, MOF said that the Law on State Bank stipulates that the monetary
policies management is the function of the State Bank of Vietnam,
and the management of the monetary policies falls within the competence
of the State Bank of Vietnam which will take management over the lending
to all businesses, not only the enterprises making products for export
and labour intensive enterprises.
Also
according to MOF, the export credit policy is clearly stipulated in the
Decree No 151 dated December 20, 2006, under which some categories
of products that listed as the subjects to the state's export credit
policy can borrow money at the preferential loans of 11.4 percent per
annum for VND loans, and 6.6 percent per annum for foreign currency
loans. The loans are disbursed by the Vietnam Development
Bank.
MOIT
has also suggested allowing the enterprises, which have earnings in
foreign currencies, to borrow money in foreign currencies, which
will allow the enterprises reduce the capital costs. At present, the VND
dong lending interest rates are higher than the dollar interest rates,
which make it more profitable to borrow in dollars.
On
this issue, MOF believes that it is necessary to consider slashing the
proportions of the loans in foreign currencies in the whole banking
system in order to settle the dollarisation in the national economy. The
current dong lending interest rates are higher than the dollar interest
rates, and this should be seen as a reasonable thing in the current
circumstances. When banks lend in dollars,
they do not face the exchange rate risks, while the dong interest rates
fluctuate in accordance with the market performance.
"The
current exchange rate is stable, but when designing the interest rate
policy, it is necessary to anticipate the exchange rate risks
in the long term," the document of MOF reads.
In
an effort to help develop key mechanical engineering projects, MOIT has
proposed MOF to instruct the Vietnam Development Bank to allocated
sufficient capital to the approved projects, and cut down the
preferential interest rates applied to the projects to less than 10
percent.
At
present, the interest rate of the loans disbursed by the bank to the
key projects is considered overly high at 11.4 percent, which is
believed unaffordable to mechanical engineering enterprises.
However,
the suggestion has been rejected, since MOF believes that the current
preferential interest rate of 11.4 percent applied to the
projects is relatively low already, if compared with the average market
interest rate of 19 percent. MOF believes that no need to ease the
interest rates further, or this would create a type of "interest rate
subsidy" which would distort the capital market.
Under
the current regulations, the Vietnam Development Bank decides the
credit limits to be provided to mechanical engineering projects.
In all cases, the loans to be disbursed by the bank must not be higher
than 85 percent of the total investment capital of the projects.
Stock Transfer and Dividend Tax: A Burden Eased
Vietnam Financial Review
Given
the ongoing economic uncertainties, the submission of Official Letter
No. 8217/BTC-CST to the prime minister in early June on tax exemptions
applicable to stock investors was welcomed by many financial experts as
they believe it will relieve pressure on investors amid a tumbling VN
Index
According
to the Vietnam Association of Financial Investors (VAFI), the stock
market is experiencing its most difficult time ever. The VN
Index and HN-Index have fallen 20 percent compared with 2010, making the
stock transfer tax an important issue. In Vietnam the difference in tax
provisions for stock market investments and interest earned on bank
deposits is stark, as interest payments are
tax-free while the dividends tax stands at 5 percent. So the appearance
of the Official Letter has been welcomed by market players.
The
Letter proposes that, from August 1 to December 31 this year, stock
transfers by individuals will enjoy a partial tax exemption (20 percent
is not taxed, or 0.1 percent paid on the total transferred value). Taxes
levied on dividends accrued from investments will also be cut by 5
percent during the period. A representative from the Ministry of
Finance, however, said that the tax cuts are not applied
on dividends from commercial banks, financial investment funds, or
credit institutions, as their dividends can be quite high, at more than
10 percent at times.
The sooner the better
From
VAFI's perspective, the proposal to cut tax rates will stabilise the
stock market and maintain its role in the economy. Once the tax
cuts are applied, investors will see the stock market as being more
profitable than depositing in banks. Money will then flow into the stock
market - a direct funding channel - not the banking system, so
entrepreneurs, especially those in production, can access
cheaper capital, which is a positive as regards economic recovery.
Commercial banks are also pleased because it will ease the pressure on
them to limit credit growth to less than 20 percent this year The idea
that tax rates should have been adjusted earlier
has merit, when comparing Vietnam' stock market with Thailand's.
The
Thai stock market is much larger than Vietnam's both in terms of scale
and value, with a market value of about $140 billion. The future
prospects for the Thai economy are also brighter, with low interest
rates, low inflation and a trade surplus. Yet it applies no tax at all
on stock transfers and dividends, to promote the market. In Vietnam,
meanwhile, with a smaller market scale,of some $40
billion, ongoing high interest rates and inflation and a trade deficit,
economic expectations remain gloomy at best. Moreover, the attraction of
other investment channels such as gold, real estate or foreign
currencies has seen the appeal of the stock market
diminish. From 2008 to 2010, value and liquidity in Vietnam's stock
market fell 60 percent. Losses among some investors were significant and
not helped by the 20 percent personal income tax applied on stock
transfers and dividends. "It would be better for
the market if taxes on stock transfers and dividends had not been
included in the Law on Personal Income Tax when it came into being in
2007," according to VAFI.
Fair play?
"Exemptions
on personal income tax from stock transfers and dividends are not fair
for all," said Phung Quoc Hien, Chair of the National
Assembly's Finance and Budget Committee. Stock transfers, he continued,
are a business activity and so should be taxed. Tax reductions are
reasonable, he argued, but exemptions should only be applied to urgent
cases. Moreover, the Committee believes that tax
payable should be calculated on profit levels: the lower the profit, the
lower the tax.
Some
social activists have also expressed opposition to the official Letter.
The Ministry of Finance argues that the cuts to dividend taxes
are aimed at bridging the difference between income from bank interest
payments and income from dividends. But most depositors are in the
middle- and low-income brackets, while financial investors tend to be
high-income earners. The Letter therefore benefits
the wealthy, and the gap between rich and the poor within society will
become greater.
According
to estimates from the Ministry of Finance, if the proposal is accepted
then in 2011 the tax exemptions will cost VND450-500 billion,
or only 8.5 percent of the total tax exemptions the government has
planned for this year. The effect of such tax exemptions on the State
budget is therefore not overly significant. And because it also
stipulate tax cuts for many types of earnings - not only
stock investors but also entrepreneurs and employees - it comes with a
degree of fairness. The "side effects" are not as great as many believe.
More
importantly, tax exemptions on income from stock transfers and
dividends have a positive psychological effect. Once the stock market
shows signs of recovery, belief in an economic upturn will also come.
Vietnam may have the chance to attract more foreign capital and the
future of the economy will be brighter as a result.
Minimum wage up, income down
VietNamNet | Saigon Tiep Thi
The
decision by the government to raise the minimum wage from October 1,
2011, or three months earlier than previously planned, has brought
more worries than joys to labourers. Meanwhile, this has also raised the
worry about the new wave of strikes.
Businesses cut down allowances to raise salaries
Truong
Thi My Duyen, a worker of Starelec Company in the Tan Thuan Export
Processing Zone, said that the minimum salary at her company is
now at 1.9 million dong. The company once raised the minimum waged once
before, therefore, Duyen does not know if the company continues raising
the minimum wage this time. If it does, the minimum wage would only
increase by 100,000 dong to meet the required
level.
The
information about the minimum wage increase has made Duyen more worried
than joyful. She fears that the company would raise the minimum
wage, but would cut allowances.
MD,
a worker of Tosok, said that her minimum salary is 1,743,000 dong.
Besides, she can enjoy some types of allowances, totalling 2,483,000
dong. The company has informed that it will raise the minimum wage to 2
million dong as requested, but would cut 200,000 dong in allowances. If
so, D would have the total income of 2,540,000 dong which include the
basic wage and allowances, which means that
her income would increase by 57,000 dong only, which is not big enough
for her to cover her basic needs.
In
principle, when the minimum wage increases, labourers would enjoy
higher levels of social insurance and healthcare insurance. However,
the benefits will only come later. Meanwhile, in the immediate time, the
only thing labourers can see is that their income is decreasing.
Disagreements
Le
Thanh Tam, director of the HCM City Department for Labour, War Invalids
and Social Affairs, said that the minimum wage adjustment does
not have much significance, because the prices of goods and services
have increased by 40-50 percent. He said that the most important thing
that needs to be done now is to curb inflation, not to raise wages.
Tam has also expressed his worries that the minimum wage adjustment may lead to the increase of strikes.
Nguyen
Tan Dinh, deputy Head of the HCM City Management Board of Export
Processing Zone and Industrial Zone, said that a lot of enterprises
do not build up the salary scale, therefore, the gap between the old and
the new salaries is too narrow, which has made workers angry. This is
also the main reason behind the tens of strikes recently.
Dinh
said that the management board had a working session with the
enterprises in industrial zones and export processing zones, where he
advised the enterprises, which now offer the minimum wages higher than
the stipulated levels, to raise their minimum wages once again. If they
do not, they should explain to workers, so that the workers understand
and do not go on strikes.
The
management board has also advised enterprises to both increase minimum
wages and preserve allowances in order to satisfy workers.
The
decision on minimum wage increase has not only worried officials, but
businesses as well. Huynh Le Khanh, Personnel director of Nissei,
said that the company has been applying the minimum wage of 2.2 million
dong per month already, which is higher than the required minimum wage.
Therefore, the company is still considering if to raise the minimum wage
further.
Khanh said that Nissei is still listening to the news, and that if other companies raise minimum wages, Nissei will follow them.
Cu
Phat Nghiep, Chair of the Trade Union of Pouyuen Company, also said
that the newly recruited workers' minimum wage is now approximately
2 million dong, while experienced workers have the salaries much higher
than the minimum wage levels. However, the company still plans to raise
the wages further, because it fears that the workers would complain.
Oliver Massmann
Rechtsanwalt
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